Yes The PS3 Really is a Disaster for Sony

I wrote back in January that the PS3 was a disaster for Sony, and like all good posts the best content was found in the comment thread. Some agreed with my assertion and a few disagreed, but here we are 6 months later and the PS3 is getting outsold 4-to-1 by the Wii, they slashed the price by $100, and a big promotion for Sony’s Blu-Ray entertainment content still hasn’t ignited the one reason why I would get a PS3, a manufacterer subsidizeded Blu-Ray player.

Even with the price drop, there are still many questions about Sony’s PS3. The console, released in November, was outsold 4-to-1 in May by the Nintendo Wii and almost 2-to-1 by the Xbox 360. The Xbox 360, introduced in fall 2005, has sold about 5.6 million, followed by the $250 Wii with 2.8 million. The PS3 has sold just 1.4 million.

The PS3 has been a complete failure for Sony and that comes as a consequence of them over-reaching on a price point, not catering to developers, and misinterpreting the direction of the larger gaming marketplace.

About that price cut. Just last week Sony was issuing official denials only to come out at E3 (which opens tomorrow) today announcing the price cut they denied last week. Clearly this was less of a denial and more like "we can’t afford to have anyone wait a week to buy a PS3" plea.

What I do find interesting to consider about the price point is that more than a million people shelled out $500-600 for an iPhone (plus $80-100 a month). What does that tell me? Not sure because the Apple reality distortion field makes people do things they would otherwise consider irrational (me included), but perhaps it’s that communication capabilities outweigh all others in terms of the perceived value of a device. Let’s also not forget that the iPhone is fashion, the PS3 simply isn’t.

Sony has earned criticism in the past for not releasing top shelf developer tools, while on the other side of the Pacific Microsoft went all out to build developer tools for the Xbox360 that developers really wanted, and as a consequence the market saw a library of really good titles blossom.

An interesting thing also happened and that was that platform exclusivity disappeared. If you are wholly owned subsidiary of Sony or Microsoft, well clearly you won’t be cross-platform but for the vast majority of game developers that is not the case. Just a few years ago you could play the market being either a PS2 or an Xbox title but today you simply have to be on both, and on the PC as well.

The problem is that developing for the PS3 is difficult and as a consequence they didn’t enjoy the fat library of titles they needed when they launched 6 months ago, and they still don’t have a competitive library of titles. Bottom line: Microsoft outplayed Sony and attracted more developers earlier in the Xbox360 cycle, which itself was a full year ahead of the PS3.

This eliminated Sony’s primary competitive weapon, it’s market penetration as an attractor for new titles. The old axiom "the more market share you have the more you will get" doesn’t seem to apply in gaming.

The gaming market has changed in that women, families, and older segments are primary markets and hardcore gamers are diminishing in importance. The fact that my wife suggested we get a Wii shows not only how effective Nintendo’s marketing has been but also how gaming consoles are now evolving into family entertainment.

Even with a Blu-Ray player and networking, Sony could resist the temptation to market the PS3 to hardcore gamers and that hurt them. Speaking of entertainment, where is the integration with Sony Connect (oh yeah, that sucks too), and integration with the PSP and digital imaging products?

Lastly, Sony’s Home service is something I have written about positively in the past, even though I have not seen the actual service yet, but at this point they need to be more assertive in order to leapfrog everyone else, acquiring Linden Labs would do just that.

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10 thoughts on Yes The PS3 Really is a Disaster for Sony

  1. It’s a move that competes with Microsoft, especially with the latest billion dollar added cost Microsoft is facing with fixing the faulty units (Sony’s price cut in NA comes conveniently at the same time) and until the time Microsoft is able to push better version of X-Box out to market.

    Wii is still in a different price range compared the other two.

  2. Even if you remove the price component the PS3 still loses hands down. Here is my non-definitive list of rubbish features.

    * Online support, how arrogant Phil Harrison was before the launch, yes we will have everything xbox 360 has, here we are months down the line and ive seen better online service on a ZX81.
    * Graphics – Most of the graphics comparisons are still showing the 360 ahead, so where did this 3-4x more power go? it never existed.
    * Controller – So we go from saying rumble is not needed, but now its going to be re-introduced.. the current controller is outdated, the last minute inclusion of sensing poorly throught out (and I know it was last minute as I have friends at Sony who confirmed it)
    * HD Play back, upscaling/downscaling has errors galore, a good presentation of the future of video? i think not.
    * Upgrade process – Needs controller plugged in via USB???? why? plus you have to page through 100’s of T’c & C’s.. Xbox 360… 1 button press.. done..

    I could go on and on.. If it wasnt for 1 or 2 (and I mean only 1 or 2) titles in the next 12 months it would be dead as a dodo. Lets face it if the 360 didnt have the horrible disadvantage of being associated with Microsoft (i.e. it had a N logo on the front) it would be crushing Sony.

  3. yeah, the Xbox360 fiasco is looking worse with each passing day.

    On the price point, I did consider that but when you take into account that the Wii is outselling the PS3 4:1 yet the price is basically half that of a PS3, well you have to wonder who played a better pricing strategy. Especially when you consider the BOM cost is way lower on the Wii so they have to be making $$ on each unit, which is not the case with the PS3.

  4. and the Xbox is still outselling the PS3 2:1 despite having the same price point (slightly lower).

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  6. On price point: Nintendo is clearly the winner this season for 3rd generation consoles, no argument there. They’ve made themselves relevant again, and good for them. Good for the consumer as well, having a third player in the mix will benefit.

    Different price/technology choice does give Wii a complementary element — I could imagine owning both Wii and PS3 since I believe the content for the two consoles will differ. I don’t see Wii games porting directly to PS3 or vice versa. This is different case when comparing PS3 and XBox, they tend to exclude each other (exceptions exist of course).

    XBox outselling PS3: it will be interesting to see if the latest will change this. It’s partly a momentum game (people buy the console they see others having) and Sony’s NA price cut is a smart move — competitor is tripping and they’ve added an extra punch to keep them down a bit longer. Overall PS3 has been a disappointment to Sony but I don’t think it’s game over for them yet.

  7. Two other things to consider is that the iPhone is a status symbol, PS3’s aren’t. You can’t really carry around a PS3 to show off.

    Secondly, perhaps more importantly, communication is far more important to people than games. Shelling out dollars for a communications device is more easily “sold” that shelling out dollars for a games device (what ever else is included in it as well).

    Communications has more value to people than games while you get to show of your social status with an iPhone which you can’t with a PS3.

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