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Why Sony is Ready to Self Destruct
jammmma writes "Before even launching the PS3, Sony is ready to self destruct." From the article: "PS3 is doomed, thanks to Sony's ignorant attitude. None of us had the chance to seriously evaluate PS3 and the experience it has to offer. It's impossible without a series of titles and an official product at hand, but from where we stand, Sony's damaging attitude is all it takes to diminish the value of PS3. Kutaragi may be right in defending PS3; after all, he can't criticize his own product, but instead of exciting users with valuable features and winning them over so they can start saving, Kutaragi makes bearish statements in response to Nintendo's announcement and Microsoft's take on Sony. Last I heard companies were at E3 to impress media personnel, which yielded positive publicity, not make childish remarks when chances were against them."
SONY isn't ready to self-destruct, but it may be nearing the final disposition of its actions the past ten years including more and more proprietary technology, higher prices, and disdain for the customers.
Consider:
I don't know who's truly at the helm at SONY, but it's almost as if they've intentionally dug this hole, about six feet deep. I long ago eBay'ed and divested myself of all SONY equipment (still have SONY music CDs, sorry... ) and swore that, until SONY plays a little more nice, I'll never buy, recommend, anything SONY again.
I've never been a video game fan, so I don't know about SONY's escapades around those, but from what I see and hear it seems SONY is consistent across their offerings and markets.
So, it isn't SONY "ready to self-destruct", it's SONY reaping the rewards of what it's sown. It's too bad, they've shown they're capable of creating sophisticated and innovative new technologies.
Sony isn't going to win this round 'cuz they're too high off their own success to see the writing on the wall. How stupid are they? I mean, are they total morons? Could they possibly be any dumber? I mean, really--Sony is sooooo stupid!
For some reason, it took the author two pages to get this point across.
Obliteracy: Words with explosions
A corporation is doomed because their arrogant atitude upsets some geeks. You know, because that's going to cause millions and millions of kids and their moms around the world to decide not to buy a PS3.
Poor Sony, we hardly knew ye.
provided it's at least 10 years old. The newer stuff just doesn't stand out from the fray very well, especially stereo-wise, since high-end companies are offering entry level equipment at prices competitive with practically any component system, even Sony.
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Unfortunately, they seem to be banking on the fact that people will think the PS3 is better and they'll dish out the extra money for it. Guess what? It's not. Sony isn't what it once was - Microsoft and Nintendo give it valid competition, and it's looking more and more like the Walkman-created giant is toppling.
It's nice to see that history hasn't taught them that the "We're the best, so people will like us no matter what!" attitude doesn't work too well.
Goo goo g'joob.
Hmmm. While I do think that it is true that Nintendo won E3, based on all the blogs at Washington Post, Seattle Times, Seattle PI, and New York Times, as well as more typical ones on gamer sites, I don't know that, as an investor, I'd say that Sony killed themselves.
I would instead say that they missed an opportunity and need to rethink their marketing price points and possibly their game releases.
Sure, Microsoft (nope, don't own it, sold it to lock in a technical loss, and as of today don't own any of these companies) did manage to get the media to cover their GTA release on the xBox360 and most press never clued in that it is releasing on both the P3 and the 360.
Sure, Nintendo got all the buzz and those of us who really aren't into FPS very much are buying the Wii (hate the name). Heck, they even demo'd a really cool FPS or two, and Red Steel swordplay sold me on the controller more than even the fishing and driving demos.
But, in the end, if they pick themselves up, dust themselves off, reset the retail price for the non-crippled P3 to something reasonable - as in, less than $500 US and less than 500 EUs - then they can still regain the market.
Battles frequently can be won even with major setbacks - sure, Sony was routed at E3, but they've got six months to get their act in gear and learn from their mistakes.
-- Tigger warning: This post may contain tiggers! --
I think I can sort of understand Sony's strategy with the PS3, but I also think they're too early.
At this time the PS3 is intended to be an inexpensive blu-ray player - just as the PS2 was more popular as a DVD player than as a game machine when it first came out in Japan.
Problem is, blu-ray isn't DVD. Blu-ray isn't the only standard out there, nor is blu-ray that established.
I've yet to meet anyone who's actually interested either of the next-gen DVD formats at this time - mainly because of the uncertainty of having competing formats on the market at the same time. Does anyone actually want to take a shot at having 50% of his next-gen media being declared "Obsolete"? Not to mention that if Sony wants the PS3 to sell as a blu-ray player, they're going to have to convince the high-end A/V market that the PS3 can stand toe-to-toe with the pricier models.
In a year, there will be more Blu-Ray titles on the market, players will begin to drop into the range of mainstream consumers, and the technology in the PS3 will be cheaper, allowing Sony to still position the PS3 as both a game machine and affordable blu-ray player.
If blu-ray fails to win the market, it would not surprise me to see Sony starting to talk about an earlier launch for the PS4, just so they can get away from the failed, and expensive, blu-ray.
Let's not forget video game history. The most recent example I can think of that's similar to what the PS3 is making itself out to be is the NeoGeo home system. The system was more expensive than its competitors (Genesis/SNES/TGX-16) and the games were up to $200. The system WAS higher quality. It DID bring the arcade experience home. But guess what? It was way more expensive than the competition and sold poorly (except as a coin-op machine).
I'm looking forward to seeing the PS3 in action on its release. And I'm wondering if the $600 price tag will stick for very long. It will be interesting to see what will happen. Will Sony get poor sales (at least initially)? I think so, but could be wrong. Will reducing the price of the system cost Sony a TON of money because of the major cut they will face at "giving" it away for less than it costs to manufacture, or will the adoption of the system and licensing fees balance it out and make the endeavor still profitable? It's tough to say, but if I was betting on this, I'd bet that Sony may have their first living room console flop.
It seems a lot of bad PR is coming up lately.
I'm not sure that spells the end of Sony in the video game arena, however. Anything can happen and Sony, as a whole, is not doing too shabby (yet).
Only time will tell...
Blu Ray is probably the biggest reason why the PS3 costs so much. It was a mistake for Sony to push that tech into the PS3. I would say over 95% of the consumers interested in the PS3, are not interested in Blu Ray or HD DVD for that matter. Their home systems can't even handle it. The 5% that can, can go out and buy a stand alone Blu Ray player.
Sony is not going to self-destruct because their console is priced high on release day, it was simply a tactical decision to attempt to capitalize on the willingness of their most eager fans to spend whatever it takes to get one on or near release day. Recall how with many console releases they can sell out the initial batches to the point where it is difficult to find one in a store for the first while? Sony is avoiding that by pricing their console higher on day one, they will make more money from the initial adopters and run less risk of selling out. THEN, when they have ramped up production and can produce more units at lower lost, then they will drop the price to a more reasonable level and all of a sudden the console looks a lot more affordable in comparison with the less-powered consoles from Nintendo and Microsoft.
At least that is the theory. It could easily backfire, as it seems to be doing judging by comments on this and other sites, by having a backlash against the initial price so strong that it actually turns people away from the console and onto the other platforms instead of them waiting for the price of the PS3 to drop as it inevitably will. But still, people are looking at this scene like it's all based on what happens in November and December of this year instead of looking at it like it's a multi-year game. In 1 year, in 2 years, in 3 -- the initial price of the PS3 will not be a big deal anymore.
501 Not Implemented
Anti-SONY Alarmists: Remove your horse blinders and take a look around. Let's take a step back and look at this again.
Price:While I will wholeheartedly agree that the price is about $100 too much on the PS3, is it really THAT big of a deal? Nope. Everyone planning on getting one before the announcement will continue to do so. They're early adopters who pay for the masses to buy at cheaper cost. How is this different from any other product launch?
Convergence:My comment about horse blinders is appropriate here, because nobody is seeing the pink elephant in the room. Or, should I say blu-Elephant. Blu-ray is the next generation format for watch-at-home movies. So is HD-DVD, as some would argue. There's only one catch-- MILLIONS of blu-ray readers will already be in the clutches of PS3 owners. They'll get a next generation HD format with the bonus of a next-generation game machine. Stand alone players will cost $600 to $800 at the time the PS3 launches but you won't get a game machine with those. And because this all comes standard on BOTH the low and high end PS3, it's a winner. If this was optional equipment I wouldn't be singing the same tune. HD-DVD will not win the format war because SONY will have blu-ray standard on the PS3. End of story.
Proprietary what?Some complaints have arisn about SONY's stance on proprietary technologies. Well taken. And while I am the last person to say ATRAC was a good idea, please point out the problems in the PS3 for me. I don't see them. Memory sticks come from many vendors. Bluetooth is a communication standard. Blu-ray is a movie standard backed by almost the entire movie industry. USB? Check. HDMI? Yep. Also a standard.
Market TimingMicrosoft has had a pretty good launch with the 360. They haven't done much wrong here. I'm amazed by that as much as anyone else. They have a cool UI, online distribution, etc. But so will SONY. The difference is that people with gaming PC's won't see much original (or better looking) content on a 360. They'll get unique titles on a PS3. SONY has sat back and looked at what was good and bad with the 360 (and Wii) and made their priorities known. While there may be a people who can't affor gaming rigs buying 360's, I would challenge that PS3 owners will own more games per console.
My point is that SONY isn't making a lot of mistakes with this launch aside from the costs of a blu-ray movie trojan horse. They'll have a great system, some great titles, and probably the same run-up time to first-class titles like any other new platform launch. Sure they could have better PR ... but I don't think that matters as much as some people are claiming.
"Politicians find new names for institutions which under old names have become odious to the people."
I don't think Sony is going to have nearly as big a problem with this generation of the console wars as people think. The entire American consumer system is based on a flawed precept anyway, and Sony is well-poised to take advantage of that.
It is expected that people will push their spending to match their income. This results in people with a lot more house than they need, a lot more car than they need, and so on. It's not uncommon for people working low-end jobs to have a new car that they can't actually afford, and sure as hell don't need (as an example, my brother works as a restaurant manager... he has a 2001 Honda something or other, with a $119/month car payment. One of his employees, a waitress, has just traded in her previous car, a 2004 something or other, because she couldn't afford the $379/month payment. Her solution: Get a 2006 something or other with a $325/month payment). This is, unfortunately, not the exception to the rule.
People will buy expensive stuff as a status symbol. How often have you been at some gathering of people (high school reunions are notorious) and heard people talking not about their kids, but about how much they spent on their boat? Doesn't matter that they're going to estate sales every weekend to stock their pantry (Sweet, 10 cents for a box of cereal, just because the guy who died opened it and had a bowl or two? I'm there!), they still have the status symbol of the boat, and their 3,000 square foot house, and their brand new H3.
It's soulless and evil to take advantage of that attitude, but Sony never claimed to be a church. And there are enough people out there who will buy the more expensive console for either the status symbol, or just to shut their kids up about the damn thing (you might be amazed how far that one will push parents... ever done a price-check on a Disney World vacation? Compare that with a run to DC to hit up the Smithsonian museums for a week). And hell, they don't even need the high market share they've enjoyed in the past... with that price point, they'll have outstanding revenues even if the number of units sold is only 30% of what the PS2 did.
As much as I hate to admit it (the side of me that co-owns a business is fighting with my pseudo-hippie minimalist personal life on this), my hat is off to Sony for this. I think they've found a capitalist's utopia for this cycle.
Ya'll realize, right, that whether the PS3 fails or not on its own right is going to have a minimal impact on Sony compared to the value of the Yen in the coming months/years.
Sony is a Big Corporation in the Big Game, and they're far more concerned with the BoJapan than a bunch of Fanboys. In the past 2 months the Yen has appreciated about 7%... which dwarfs just about everything.
Don't forget Digg. With their insignificance complex they might cry foul! NO DIGG!!!
I'll wait and see what actually happens when the console becomes available. While certain facts point to Sony taking a serious hit, it has been proven over and over again that the US market is often overestimated in their sophistication.
Are hardcore gamers pissed of at Sony? Sure. But there are more than enough fanbois doing damage control for free.
Is the video game media a little miffed about Sony's attitude at E3? Sounds like they are, but that is kind of a moot point. Game magazines CANNOT put a major player out to hang, or they run the risk of losing subscribers. With the constant barrage of criticism that the gaming press constantly receives, they don't want to lose any more readers than they have to. Otherwise the doors close.
Has Sony done this type of thing before? You bet.
Have they been removed from the face of the earth? Not yet.
DVD was introduced in 1997 in Japan and 1998 in North America and was out for two full years before Sony released the PS2 with it as a component; this meant that the production costs were dramatically lower then they had initially been, and their was a demand that had built up of people wanting DVD movies (not to mention that places like Blockbuster were carying every new movie in DVD format). Also don't forget that it wasn't until 2003 that DVD movies were more popular to rent than VHS movies; meaning it took 5 years to get DVD to account for more than 50% of the marketplace. This means that if Blu-Ray is adopted as fast as DVD was (which was one of the fastest formats excepted) it will not become a major factor until 2009-2010; at this point in time the "Console War" is basically over (people will have bought they system they planned on buying).
The question is whether Blu-Ray will make people choose the PS3 rather than another system; I personally think it will not because:
1) Blu-Ray dramatically increases the cost of hardware because of how new the technology is and how high the licencing fees are.
2) Blu-Ray dramatically increases the cost of games to consumers; this is the one that hasn't been demonstrated yet. People forget that there is always an extra cost associated with new formats because the volumes are low and the companies involved had to build new factories (or retrofit old factories) to produce the new media; this cost is usually $10 per disc. When Sony announces that their Blu-Ray based games will cost $60-$70 per game.
16 terraflops is what the cheap $499 PS3 can do. You'd need a room full of pentiums to touch that and even then you'd never have the interrocnnection band width to equal it.
the PS3 is an unbeatable number cruncher. The question is only if they can wrangle it into a game with enough differences to matter to the consumer's experience.
As for costs, the POWER chips and Intel CPUs you find in an Xbox or a desktop will never ever be able to match the price per performance. Ever. There's no way to go from ten gigaflops to terraflops with those general purpose CPUs. And the Sony's will only get cheaper with time, and the games get better at taking advantage of it.
So really it's more like a race. Will Sony be able to hang on with early tepid sales till the games become worth it? Will developers come to their rescue?
It's not a question of the PS3 being overpriced. it's prices inexpesively for what it is.
Some drink at the fountain of knowledge. Others just gargle.
Looking around at a lot of these posts, it seems even the basic facts aren't being referenced (just more alarmist articles from other sources). Let's get back to basics for a second.
from google finance
Sony (ADR)
2006 Revenue (USD): 67.53B
Net Profit Margin: 1.47%
2006 Employees: 152,700
Microsoft (MSFT)
2005 Revenue (USD): 39.79B
Net Profit Margin: 31.59%
2005 Employees: 61,000
What do these basic, high level overviews tell me?
Not much, really. I don't even know how revenue is calculated, and based on the posts I've seen, neither do you. It's okay. If you think the PS3 costs too much, that's fine. If you think Blu-Ray will fail, that's fine. But please, pretty please even, don't confuse your convictions with actual knowledge.
There are three kinds of ignorance: ignorance, abject ignorance, and quoting random statistics.
I agree with the parent and grandparent's views as well. Sony always positioned itself as a "cutting-edge" premium brand, and priced itself accordingly. The difference between then and now was that in those days, Sony's products were THAT good that people were willing to pay even double for the brand.
We still have a Sony Trinitron television that is is over 10 years old but still runs as good as new. Those trinitron picture tubes were truly revolutionary and the quality of electronics that went in was excellent as well, which is why they still run like new and give the best of LCDs a run for their money. Looking at a product like that, i would gladly pay through my nose for it. The modern day equivalent would be, i guess, to drop $500 for a pair B&W (or equivalent) speakers, i guess.
The problem is, these companies end up suffering from hubris more often than not, and things get dramatically worse if say, they miss a couple of key innovations. Now, you have a company that's a little behind the technology curve, and is still pricing itself way more than the market. Perhaps, the company will ride on the strength of its brand for a few years but not for too long.
Intel is, i feel, in a very similar situation. Like Sony, it too considers itself not as a market competitor but as a market creator or as a visionary. Both these companies actually walked the talk for quite some time, but slid real bad when they missed a couple of key market signals. The only difference is that Intel has a sufficiently strong senior management to learn from its mistakes, or at least from the really horrible ones. It's really trying to turn itself around after it has got shafted in the backside with its NetBurst offerings. In fact, i predict that it will come back stronger than ever after it successfully ramps on Woodcrest, Conroe, and Merom. I'm not so sure if Sony ever will recover OTOH, but then i only say that with the stereotype of Japanese bureaucracy in mind.
Lastly, i see this growing trend of flaming or dissing companies like Sony or Intel. Remember, these might be giants poised to fall, but its only a very very lucky and nimble David that manages to beat a very dumb and complacent Goliath. Another thing is that these Goliaths have also been responsible for creating markets and pioneering technology. Give them some respect for that, at the very least. It's easy to leech off market share AFTER a market is created, but the pioneer at least deserves the credit for having the cojones to take the first step.
As a game developer, everytime I see the next 'let's bash PS3 before we see it' story I can't help but wonder how many of the people writing these stories will turn a 180 once they see the console firsthand. One thing I don't understand is all the bitching about the two systems. The only difference is HDMI. You can use usb to add the memstick, ethernet to hook up to a wireless access point, and you can upgrade the 2.5 sata drive off the shelf at this point. Comparing the PS Network with Live before it's even launched is brilliant as well. You can't even store media on an xbox -- you have to handle the core case. Also once you get HDDVD with the 360 you'll be paying a lot more for the 360 and still not have HDMI, which is likely to be a year or more off I might add. Now consider what's missing. How many people even know what HDMI is, and on top of that have a device that can use it? The 360 doesn't even have HDMI, so how do you think that HDDVD will work? I hope the media can get this message at some point. You might want to stop and think instead of guessing in fourms and horriblely uninformed blogs. I have to tell you it's funny to me how little people know and then the meme is carried by others.
On top of this PS3 may have an 'arcade' service that allows you to develop on Linux with OpenGL, and other easy to use APIs. That was mentioned during a Japanese interview during E3, but I'm considering it as a rumor for now.
If you think the PS3 is the doom of Sony it will only be due to the fact that they sold the console too cheaply for having too many features.
I'm not even leaking super secret information here -- this is all in public anouncements no one seems to read.
The only problem I forsee is will parents run out and buy a PS3 for their young ones or their teenagers who don't have jobs? The majority of Sony's user base is partially in thanks to casual gamers and young gamers. The hardcore gamer (sans fanboys) usually has all 3 systems. At $500-$600 a pop, that becomes a problem for casual and young gamers and even a cash strapped hardcore gamer, this is where the other options (360 and Wii) become more viable. I really don't care about Blu-Ray as all it does is add more $$ to an already expensive piece of software/hardware and I seriously doubt that parents in particular are going to rush out and buy a new $1500-$3500 HDTV so they can watch a movie they already have on DVD in a new expensive format and still can't tell the difference in quality--much less to let their kids play a game on it. If this is what Sony is banking on then more power to them. I'm wondering if Blu-Ray games will start to cost in the $75-$90 range and movies $40-$50.Xbox 360 games already retail at $60 and are on regular dual layer dvds. Rootkits,DRM,UMD,Minidisc,NetMD,Betamax,Bean,and that other failed attempt of a digital music player. These are all testimonials that "Blu-Ray" and hence the PS3 may fail. I don't care how MGS4,rubber ducks,leaves,etc previews you can show, its sad to see a company who revitalized the industry become so arrogant and untrustworthy to consumers.
The PS3 is going to face some real price resistance. For most kids, it's only slightly better than the PS2, and for the parents, it's more than twice the price.
I'm definately not alone in saying, "Screw Blu-ray! Just give me a GAME console!" Do I own an HDTV? Heck ya. Am I one of the few that notice a difference between 480p DVDs and 720p HD TV shows? I'll even admit yes to that. But do I really want my game console playing HD movies, *especially* if it's going to cost me an extra few hundred dollars? Most definately NOT.
I am not going to invest in any HD movie format until it's well established which format wins, and I'm not alone (how many times did Beta/VHS get mentioned today?). Even if I did get a PS3 (and I will be getting one, but not till the price drops heavily), I wouldn't get any Blu-ray movies until I know which format to get. Additionally, I would probably just invest in a Blu-ray or HD-DVD standalone player. I know my PS2 was barely adequate as a DVD-player, so I don't have high hopes for the PS3, nor should I. Anyway, by the time the format is decided, standalone players will be a lot more affordable AND probably have a lot more features than the PS3 anyway (better audio capabilities, holds multiple discs, etc.).
Gamers said much the same thing when MS touted all of the media capabilities of the 360. It can stream music, videos, even watch TV. Woo, whatever. Now I've played around with those options on my 360, and sure it's neat. But at the end of the day, I use my 360 to play games. It'll be the same with the PS3. I just wish I didn't have to pay >$200 more dollars because some Sony execs had the same ideas you did.
-- jchenx