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."

it's been ongoing for a while

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:

• Ten years ago, SONY began making integrated stereo components, designed to interact with each other. I found this an exciting and enticing trend until I discovered if I wanted to take advantage of it, I'd have to completely replace all components in my system -- no accommodations for any "foreign" components. I know their ultimate motivation is to sell SONY, but with even a modicum of extended compatibility I would have considered their new systems. In its "introduced" form, I not only refused to buy, I steered any prospective customers away (and I had lots of people asking for recommendations).
• Also about ten years ago SONY introduced the mini-disk. It was cool before mp3, but it was theirs. I took a chance at the high school dance and got a recordable mini-disk unit... knowing (thought so) the prices would plummet in a year or so and I could round out my collection with much more reasonably priced players. It never happened. When pressed for an explanation, my local favorite salesman explained SONY refused to license the technology for anything less than exorbitant fees so no one was offering the technology other than SONY, or if they did, it was for continued outrageous prices. (This was about the time I really started developing the "fuck you SONY" attitude.)
• SONY jumped into the small-gadget fray by gambling they could introduce their idea of what was the perfect storage device, the memory stick. Memory ick ! It was expensive, held less data, and once again jealously guarded by SONY. If the rest of the world didn't like SONY's game, SONY would just take their ball and go home.
• SONY and RootKit-gate. 'nuff said.

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.

Re:it's been ongoing for a while

If the rest of the world didn't like SONY's game, SONY would just take their ball and go home.

This really shouldn't be a surprise to anyone; Sony exhabited the exact same behavior all the way back to Beta days. When it finally conceded defeat and released VHS decks, it still outpriced them comparing to other competitors.

Re:it's been ongoing for a while

all the way back to Beta days. When it finally conceded defeat and released VHS decks

Conceded defeat? they never did that. Sony simply took the BetaMax and refined it to BetaCam and BetaCAM SP and owned the professional video market ever cince. Only now is sony losing it's fooding in the pro video market with the digital standard set up by JVC called MiniDV and DVCAM. Which is robust enough to handle the HD signals on the new HD camera systems.

Sony even tried to wedge in there with their own tiny digital camcorder tape. It died a horrible death just like SACD did.

In pro video Sony is still the defacto standard. Live events still use a DME9000 editing suite made by sony, most remote live semi-trailer studios are mostly sony gear as well still to this day.

remember Trinitron

Another good piece of Sony engineering that evaded a death by hands of Sony's marketing is Trinitron CRTs. This was (and still is) the choice of DTP / photo-editing pros.

BTW, I feel really sorry for Sony's engineers: they often develop brilliant things that die undeservingly because of inadequate marketing, licensing, etc.

Re:it's been ongoing for a while

But also forgot about Sony's line of wonderful MP3 players. Those are fine pieces of technology that really enables the consumer.

Hmmm -- ATRAC, "Connect" software -- never mind.

Remember Betamax?

Just to add to your list, with which I fully agree, the wonderful case of Betamax. Sony does have the tendency to deliver truly innovative pieces of technology, but due to their licensing strategy, which you already described, this technology usually goes down the drain. Sony Betamax is a perfect example of that.

Sony's philosophy of overpricing takes a toll with other items as well. For example, I find their computers vastly overpriced, thanks to their short lifespan. Unless you are producing a truly superior product, you shouldn't charge premium prices.

On the other hand, I'd like to mention one Sony product I fell in love with. A long time ago, I got one of their early Sony Clie PDAs. This was at a time before Sony realized they had a gem on their hands. The retail price of the Clie was $99; I guess they were selling it only as a platform for their memory sticks. I'm still using it on a daily basis, and I got a replacement unit, just in case.

Re:Remember Betamax?.. A little perspective

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.

Re:it's been ongoing for a while

Regarding your question about Sony videogames, their record isn't good.

They pioneered the MMOG, in a significant way, with Everquest, but since then, they seem to be dedicated to destroying valuable intellectual properties.

Star Wars Galaxies (SWG) was one of the most hyped games of all time. As the first Sony follow-up to EverQuest, with one of the best SciFi properties out there, EVERYONE expected this game to be great. The pre-launch registered users who contributed to the SWG forums daily was ridiculously high. Every gamer was desparate for info about SWG because it just looked so hot. Sony bragged on and on about all the features the game would have: you could occupy any planet, play any race, take up a multitude of professions, buy a starship, go into politics ... etc.

Well, as the launch date approached, strange things started to happen. First, the features that were cut were small. I think the first thing that was cut was owning property. Everyone said, ok, you won't be able to buy a house at launch, but with all the other features, who cares? Then came the deluge.

Amid a sea of rabidly eager fans, Sony cut the feature list in half about a month before launch. Needless to say, the release was a fiasco. Even the features that were left in were buggy, and the development team was slow to react.

The impression from the Dev team was: the higher-ups forced us to release a product that wasn't ready yet, just to get the revenue flowing. So the game was stagnant; eventually they fixed a lot of the bugs, and the addons added some of the features that were left out, but by then it was too late. Now the game is all but dead.

Outside of the MMOG arena, Sony has been similarly unsuccessful; they have some great licensed games (God of War, GTA), but the games developed in-house tend to be god-awful crapfests (imho).

I also boycott Sony products btw, but more as a response to SWG, EQ2, and rootkitgate than anything else.

Re:it's been ongoing for a while

"I want a serious game console."

Yeah, that's what I look for in a console. Not fun...seriousness.

Re:it's been ongoing for a while

If you think the launch was bad, you should see the game now.

Overall, even with all the faults that SWG had at launch, it still was really one of the most innovative MMORPGs out there. You really could follow your own path in the game. It appealed to all kinds of people, both male and female. If combat was your thing, there was plenty of choice in that path, and plenty of challenge. If you'd prefer to sit on the sidelines, non-combat professions were a very valued part of the community. Even people who just prefered the social aspects of the MMO world could server a purpose. From a community simulation perspective, it was easily the most flexable game around.

But, there was a serious lack of game content at launch. Promised features like player cities and vehicles were conspiciously missing from the game. Other features like instanced battlefields that could support massive numbers never worked correctly outside of the test lab and were abandoned shortly after launch. Quests would lead nowhere (Vader says, "Go speak to the Emperor." The Emperor says, "Go speak with Vader."). The overall point of the game (the Galactic Civil War) wasn't even really implimented, as PvP battles served no purpose other than virtual chest beating and bragging rights, and had no big-picture impact on the game. The game itself was beautiful, but shallow. Players tried their best to make up their own content, with player-hosted events and pointless (but still fun) battles in NPC cities. But by December of '03, the game was really bleeding subscriptions badly.

Then, some brilliant person at SoE decided that what everyone really wanted was to be a Jedi, and that would magically stop the exodus from the game. So, instead of adding the missing content, they dangled the prospect of unlocking a Jedi character in front of every player (something they had promised would not be the case). And it did keep a certain element from cancelling. Thus was born the Great Holiday Hologrind, which severly damaged the social aspects of the game, and also wrecked havoc on what had been a fairly healthy in-game economy.

Eventually it was passed around that the big, mysterious secret to unlocking it was nothing more than just mastering every profession in the game in turn. Now, Jedi were originally planned to be *extremely* rare, even to the point of being random and only a handful on each server. Since god-mode characters are generally not a good idea in an online game, their power would be offset by the threat of perma-death for the character, forcing you to start all over again. When enough people started unlocking Jedi characters, the ritilan-addicted "power gamer" element whined and complained about perma-death, SoE capitulated, and it was removed. Now, you had high-level Jedi running around one-hit killing everyone with no consequences. Even if by some miracle you took one down, it did little good. PvP battles became nothing more than competitions to see which side could pull out the most Jedi. People who had no interest in playing Jedi (otherwise defined as "subscribers with real long-term potential") were forced into hiding.

SoE made one blunder after another after that. Each modification to game balance seemed to throw the game further and further off-base. This can directly be traced to overpopulation of Jedi and the fact that they were never meant to be a balanced profession in the first place. The type of player who was attracted to playing a Jedi (and who could sit there and grind combat XP for 16 hours a day for a month) seemed to be the type of person who had little to no patience for complex combat systems that required forethought and strategy. So, SoE took their unique "HAM" multi-health-bar system, and turned it into EQ-style combat, dumbing it down to simple hack-and-slash.

Eventually, SoE made the amazing decision to eliminate the profession system altogether, and force everyone into clones of the same 8 "classes" and dub it the "New Game Experience". They completely eliminated

Re:it's been ongoing for a while

This sounds very much like IBM's problems in the 80's. IBM had a very proprietary attitude regarding busses (MicroChannel Architecture), networking (LUA / SNA), and probably others. My impression (and I worked at IBM for a while) was that IBM figured it could get away with designs that required end-to-end IBM'ness, because the big customers would buy ALL their kit from IBM anyway. And in that sales situation, why let other companies have an in?

Similar thing seems to happen with Microsoft in the last 10 years or so. They want soup-to-nuts control of the software ecosystem. For example, ActiveDirectory on the servers and clients. And like IBM, other companies will have to pay $$$ to MS if they want to be part of that ecosystem (i.e. if they want to provide domain servers). A bit more open than IBM, but not much.

Now, it's possible that the architects at these companies aren't attempting lock-in. Instead, perhaps that think to themselves, "We have some customers who are willing to buy everything from us. For that scenario, let's rethink (and re-build) the entire infrastructure so that it's totally clean and convenient." Thus, the strong affinity of that company's products for working with that company's other products.

But either way, the result is as the parent describes with SONY: In the end, it's just too risky and expensive for most potential customers do swallow that red pill.

Re:it's been ongoing for a while

This sounds very much like IBM's problems in the 80's. IBM had a very proprietary attitude regarding busses (MicroChannel Architecture), networking (LUA / SNA), and probably others. My impression (and I worked at IBM for a while) was that IBM figured it could get away with designs that required end-to-end IBM'ness, because the big customers would buy ALL their kit from IBM anyway. And in that sales situation, why let other companies have an in?

While you are quite right with regards to IBM's general attitude back then, MCA isn't a very good example of it, it is actually an interesting incident.

As you may know, some companies (Appricot comes to mind inmediately) produced MCA machines as well. Compaq could have if they wanted to, but had its own reasons for wanting an alternative.

What happened was that those companies that actually produced, or could produce MCA machines had settled outstanding licencing issues regarding dma and some other patents used in pcs. This was basicly a requirement for obtaining a licence on MCA technology.

It never caught on for various reasons, the fact that you could mostly get IBM hardware for MCA was an important of them (I do have MCA cards from quite a few other companies here, including 3com, creative, adaptec and intel).

(former IBM employee during the late 80s and all of the 90s)

Sony needs a Re-Org...

I think a reorganization of the company is at hand with spin offs of non-profitables inevitable. For one thing, every division of Sony is clearly at odds with every other division. Numerous examples have already been stated above.

I would not be surprised to see a Re-Org happen as soon as July, but probably no later than December. If Sony is smart, they'll spin off their record company and get back to doing what they do best.

Article Summary

For those of you who can't be bothered to read TFA, here's a quick summary:

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.

Re:Article Summary

For those of you who can't be bothered to read TFA...

Unless their server can pick up its own pieces and reboot, that would be all of us.

Re:Article Summary

I can summarize it even more: the author felt that Sony was doomed due to its arrogance. So what? Apple is snobbish and arrogant as hell but people buy their products by the truck loads. Microsoft doesn't give a crap about their customers and they are still own the operating system market. So what if he didn't get to play with a PS3 at E3. Get over it! There were plenty of other demos by various companies there and to cry over the lack of a playable PS3 is just childish.

Re:Article Summary

I can attest to that. I went on Friday. PS3 was plenty playable, it's just that no one really wanted to. There was no wait to get your hands on any of the PS3 demos. Meanwhile, as you mentioned, the line for the Wii wrapped around the entire west hall.

Re:16 terraflops on a dead man's chest.

It's not a question of the PS3 being overpriced. it's prices inexpesively for what it is.

You're making the same mistake Sony is making. It's a game console, there's no excuse for it to cost six hundred bucks. It didn't work for Neo-Geo (which was by far the most powerful console in its day) and it won't work for the PS3. It'll work better than it did for the Neo-Geo, because it will have the shiny SONY emblem on it, but it's still going to hurt 'em, and bad.

Re:16 terraflops on a dead man's chest.

2 teraflops is the claim. And that's if all you do is run adds, subtracts, and multiplies all day with no flow control/branching, function calls, cache misses, pipeline stalls, or any of that other stuff that happens in "reality".

And reality has a well known anti-Sony bias.

Common misconception - it's 200 GFLOPS

16 terraflops is what the cheap $499 PS3 can do

No-one (outside the Sony troll "community") claims "16 terraflops", but it's not uncommon to see claims that the Cell can pump out a solid 2 teraflops. However, this is inaccurate too, and is based (surprise) on Sony marketing.

Each SPE in the Cell can manage a more humble 25.6 gigaflops [wikipedia.org], when running at 3.2 GHz, and that only if it's doing nothing but matrix multiplication. Similar for the PPE, giving a total of 204.8 GFLOPS for the PS3's 7-SPE Cell. Reality, of course, usually involves fetches, stores, branches and pipeline stalls, bringing the useful total down to a rather smaller figure, and that's assuming you actually have 8 separate things to do all at once.

The difference between the Cell's performance and Sony's claimed 2-TFLOPS figure for the PS3 is of course mostly made up by the RSX GPU. Since it has 48 pixel pipes each bristling with shader ALUs, texture samplers, blend units, depth comparators etc, it's total theoretical performance is around 1.8 teraflops. Not that it's particularly useful for anything except rendering 3D graphics, and likewise never gets fully utilised in reality, rarely even faintly close.

Fact is, any single PC with a modern high-end GPU has a total compute capacity similar to the PS3, but if that was actually useable, universities everywhere would be tossing out their expensive supercomputing clusters in favour of a couple of quad-SLI machines.

Sony equipment is great...

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.

Well...yeah.

Honestly, they're asking for a lot with the PS3. $600 for a console is too much, and most of the people I know could honestly care about the additional features. It can play blu-ray? Great...except I can't afford a TV that the movies will look good on, and I'm not too keen on replacing my (perfectly fine) DVD collection this soon.

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.

Re:Well...yeah.

You are assuming that HDTV is going to hit critical mass by 2008. You are also assuming that HD-DVD or Blu-Ray will become the preferred medium for movies in the next few years. Heck, it's far from certain that Blu-Ray won't become the next Betamax.

The fact of the matter is that Sony is using the PS3 in an attempt to drive the market towards HDTV and Blu-Ray because Sony sells HDTV sets and owns the Blu-Ray format. Worse, Sony is apparently willing to gamble its lead in the ridiculously profitable gaming industry on the off chance that it helps it maintain an edge in the electronics market where margins are razor thin.

Sure, the PS3 might be a value to consumers that already have a HDTV and $600 burning a hole in their pocket, and who happen to be looking for a gaming console combined with a Blu-Ray player, but that's a ridiculously small segment of the community compared to folks that simply want to play some games on an existing "normal" TV set, and are willing to spend $300-$400 on new hardware. While the PS3 might sound like a better deal when transported to a mythical HDTV/Blu-Ray future, the PS3 has to compete with the XBox360 and the Nintendo Wii today in a world where HDTVs are relatively rare and where no Blu-Ray content is available.

If the PS3 doesn't sell in today's marketplace then developers won't support it, and the PS3 will find a place in the gaming history books with the NeoGeo and the 3DO.

Re:Well...yeah.

If anyone can get away for charging a premium on their hardware, it's Sony. When we look at their other consumer lines, it's not so out of place.

Their consumer TVs? Circuit City right now has several 32" conventional TVs to choose from. At the low-end you have a Sylvania for $340. Other brands, like Sharp, Magnavox, Phillips and RCA, command up to $499. The Sony TV? $649.

What about MP3 players? Sony has their bean-shaped Walkman players (1GB) available for $120-$160 depending on features. Compare that to an iPod shuffle for $100 or an iPod Nano for $140.

Sony has, through a combination of marketing and engineering, managed to convince a lot of people that their products are of a certain quality and demand a premium. It doesn't mean their worth the extra price, it just means people are convinced (In the same way that Mercedes-Benz, Starbucks, Bose, and Banana Republic customers are convinced).

Outside of consoles, paying 50% to 200% more for something with Sony in the title is commonplace. So I can see how they can continue to expect that. Whether consumers will follow suit is another story completely. I'm thoroughly convinced that if the PS3 launched at $899 with LuminesBlu and Ridge Racer 7, they would sell out of their initial 3 million in shipments. Whether they reach 100 million in shipments again is an entirely different matter.

Re:Well...yeah.

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.

One of the basic tenets of business is that the quickest way to go from the #1 spot to the #2 spot is to act like you're #1. The best way to stay in the #1 spot is to keep acting like you're #2, always driving to improve your products and your methods of business.

Sony clearly does not have a handle on this principle.

While Nintendo may have won E3, Sony ...

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.

Re:While Nintendo may have won E3, Sony ...

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.

You seriously think they will adjust the price point? Sony is going to ride this $600 to their demise. To think they will drop it is absurd. Sony is notorious for over-pricing products in the hopes of selling on some sort of reputations, which they still have with many normal consumers.

Now, granted they have undershot the price of their launch Blu-Ray player (and everyone elses really), but if they go much lower the other companies will start screaming foul, which they already should be, because Sony is technically selling a BD player for almost 1/2 the market price. Though I still believe Blu-ray players will drop below the PS3 price sooner rather than later.

Also, using estimated number the penetration of HDTVs has been projected, at best, near 30%...by 2010. This means that nearly 70% of televisions (probably close to 80-90% now) will have no gain from the new format, making Blu-Ray (and HD-DVD) largely pointless for most Americans. I think Sony might be signing their deathwish by making the console with a blu-ray player.

I do not want to come out sounding too much like a conspiracy nut, but Sony is trying to use the PS3 to launch BD and not the console itself. There is much more money to be made in movies then in the game market, since movies are a much more "universal" form of entertainment. If Sony made the console with only DVD support, like 360 and Wii, I would almost bet that they would have pricing that is much more competitive to the other consoles; however, I think their true competitor is HD-DVD and other Blu-Ray drive makers.

Why Sony is ready to self destruct:

Because people on the internet hate them. I mean, just read any Slashdot article and you'll see. And just look at these cooltechzone.com people. They're clearly really cheesed off.

With the combined might of the Slashdot userbase and "cooltechzone.com" aligned against them, how can Sony possibly survive?

Keep dreaming.

Sure Sony is run by a bunch of jackasses. Sure their PS3 product doesn't seem to match up to the current competition. Sure they're schizoid with regards to their music distribution, etc.

But they are not today, nor in the next 10 years, at all likely to "Self-destruct". This is a corporation, not a political party. They're not losing money at present, and if they pull off the PS3 thing well enough to set blu-ray as the new hd standard (who cares about the games?), their entire board of directors is going to spend the next decade snorting coke and gold dust off the asses of high priced prostitutes.

They're taking the long view in this situation, and I'll be surprised if we'll know how it worked out for a decade or more. The value of owning the dominant video standard cannot be overestimated.

Re:Keep dreaming.

Sony IS losing money

really? [yahoo.com]

and when i do a google search, the 3rd result states that " Sony's profit jumps 68 percent [zdnet.com]".

Sony INSURANCE was the big contributor

If you actually read the article you linked to: "Sony's earnings were inflated in the past business year by windfall profits at its life insurance unit". Sony expects to lose about $900 million dur to PS3 launch. Since this article is about games, the context indicates that "Sony IS losing money" is about their games business.

Think the PS3 is one year too early

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.

I already made this comment !

http://games.slashdot.org/comments.pl?sid=179036&c id=14837957 [slashdot.org]

The problem with Sony is That the media division control the development division!

They can do thing that can eventualy and may be remove some little part of the profit of the media division !

So Sony will be in 5 (or lest) year a Media company only !(...)

Well if they don't change !

NeoGeo

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...

Re:One of the things I find interesting about this

To be more specific, Nintendo has reported only 1 loss (partially due to the dollar-yen exchange) in 116+ years.

Re:One of the things I find interesting about this

Wow, I wonder what the video games were like in 1890.

According to Nintendo's Company History [nintendo.com], the games produced in 1889 apparently looked a whole lot like Japanese playing cards.

(I freely admit that I initially scoffed at the '116+ years' history for exactly the same reason that you did.)

Blu Ray is the PS3's Biggest Mistake

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.

bollocks

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.

Tunnel Vision strikes again

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 Timing

Microsoft 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.

Re:Tunnel Vision strikes again

"Everyone planning on getting one before the announcement will continue to do so".

Apparently you missed the thundering herd of people abandoning their PS3 plans in favor of Wii and Xbox 360.

Who is wearing the horse blinders again? Also I find it rather amusing that you write SONY with all caps.

I smell a plant.


"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."

Again, this is assuming that those MILLIONS actually want BluRay and PS3 at all, when they are tempted by competing products with much better prices.

Both HD-DVD and BluRay are a waste of time, but nonetheless, HD-DVD is already off to a big head start. The prices will drop faster than BluRay, and let's not forget that M$ has an add-on device for X360 which will still keep the price lower than PS3. Atleast with the X360 route you have a CHOICE whether to be flogged or not.

Let's also not forget that NEC backs HD-DVD while Sony backs BluRay. NEC is a true technology leader and pioneer, they will outweigh the cash-strapped Sony in this fight.


"They have a cool UI, online distribution, etc. But so will SONY."

Don't put the cart in front of the horse just yet. Sony has only announce plans, they don't have anything to show for it yet. If precedent is any indication, they will come up short against Xbox Live.


I would challenge that PS3 owners will own more games per console.

That's quite an assumption. For $600 people could get a Wii and 8 games, or an X360 with 6 games.


"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."

OK, by now it's obvious that you are a lunatic fanboy, or an astroturfer.

The unique games will be on Wii, not PS3. The best looking games will be on X360, as we learned from this E3. For all of Sony's hype, they won't be able to surpass X360, because X360 developers are a generation ahead and most Japanese devs haven't figured out how to use a pixel shader yet.

Re:Tunnel Vision strikes again

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.

Re: The format war.

First off, the low-end PS3 does not have HDMI output. If the studios choose to enable the ICT (on a per-title basis) Blu-Ray movies will NOT be watchable at full HD resolution. At best, you get 720p resolution over component cables. At worst, you get DVD resolution, making your investment into a movie player worthless.

Second, Blu-Ray is an extremely new and extremely untested technology. To compare it to DVD ca. fall 2000 is a fallacy.

A. Timeline. By the time the PS2 came out, DVD players were not $50, but the format had been established for years. You could buy thousands of DVDs. When the PS3 is out, Blu-Ray discs (BRDs) will be out for a few months, and you can buy maybe a 100 titles. Selection will be similar to UMD, and we know how well that does.

B. Incremental benefits. DVD offered clear benefits over VHS.

DVD benefits over the previous format winner (VHS):

• Better picture and audio quality without the need of expensive equipment upgrade.
  
• More convenience than the previous tape-based format: chapter skipping, etc.
  
• Extra features beyond just the basic film on most titles.
  
• Easier storage of packaging for consumers and retailers.
  
• Considerably cheaper pricing for new releases (remember, VHS had the rental window).
  

How many of those benefits are delivered by BRD and HD-DVD? Zero. Read through that list again. If anything, BRD/HD-DVD will introduce higher pricing for new releases ($5-$10 more on average) and have more DRM.

To suggest that people are buying PS3s as replacements for Blu-Ray players is nothing short of insane. For years, Blu-Ray and HD-DVD will be fringe technology enjoyed by the same people who have D-VHS tapes, SACD players, Kaleidescapes, laserdiscs, and 7.1 surround systems today. Consider that the top selling movies on HD-DVD barely crack the top 600 DVDs sold for the day. This will continue once BRD players hit the street.

Look at Amazon's page on the BDP-S1 [amazon.com], (Sony's flagship BRD player) under "What do customers ultimately buy after viewing items like this?"

- 5% buy the Sony player
- 23% buy the HD-DVD player
- 63% buy a regular DVD player

That to me says, very strongly... "Oh... movies on HD are here. Wait, I don't care."

You seem to share the same blind optimism that Sony has.

Re:Tunnel Vision strikes again

"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?"

This is untrue. I make plenty of money, I am an early adapter, and I buy video games and video game systems at the drop of a hat, if there's something that I like on it. The price tag for the non-gimped PS3 is really, really high. There's no way I'm buying a cheaper system that is unupgradable to a better version. I am the target audience, and I no longer want it at that price.

Too much credit for the common man

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.

The Yen Is Mightier Than...

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.

Well, this is all conjecture.

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.

$600 -- wtf ?

So when I see $600, I just wonder, are these going to be available in stores, or is Sony moving the first batch directly on E-bay ?

Worse Than Damn Lies

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'm pretty sick of all of this

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.

Xbox 360 price: $287.00

That's what a core system just went for on eBay. So that's the real price, the amount a willing buyer will pay a willing seller. There's been slow price erosion on eBay, from the premium above retail at launch to slightly below it now. The "pent-up demand" is gone. When Microsoft relaunches the thing, they'll probably have to cut the price. (Or, more likely, throw in unsold game and accessory inventory.)

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.

Re:Yeah, sure.

The $600 price tag and the $60 games, on the other hand, might just cause those "millions and millions of kids and their moms around the world to decide not to buy a PS3."

Honestly, if you had the choice between the PS3, Xbox 360, and Wii for your kids...well, I sure as hell wouldn't choose the one that costs more than the other two combined.