COMMENT: Sony Computer Entertainment is in deep trouble and has been for many years because of its obsession to be a key player in the gaming market. They are fast becoming a tired old yesterday’s brand that is more about products in the past than products for the future.
While the PS2 was a big hit, the PS3 is costing them serious money as it wallows in third place behind the highly successful Nintendo Wii and the Microsoft Xbox 360, which while not being as good as the PS3, is proving popular because of its low price and broad array of games.
The PS3 has never made a profit despite Sony Computer Entertainment price gouging Australians for several years with unit costs that have at times been almost double the cost of the console in the USA.
Now Sony’s pricing strategy is set to bite them on the backside unless Sony can deliver a low cost PS4 that is as much a gaming console as it is a home content gateway and player.
For a long time Sony has been telling consumers that the big difference between the PS3 and the Nintendo Wii or Xbox 360 is the inclusion of a Blu ray player however this does not wash anymore.
Now Blu ray players are down to $200 and the PS3 is looking very tired, expensive and noisy.
When the PS3 was launched, Sony deliberately designed it so that it was not backward compatible. Instead the Company tried to get two bites of the cherry by continuing to sell the PS2 as a low cost console and the PS3 as a premium console, thus forcing die hard gamers to buy a new Sony PS3 console and new PS3 compatible games.
Combined the two consoles have sold close to 265 million units worldwide however the Sony gaming division is still bleeding big money. Last week Sony announced that it will make over $3.8 billion dollars in losses with a big chunk of those losses being made by the gaming division.
Very soon they will have no option but to introduce a firmware upgrade that will allow PS2 games to be played on a PS3 in an effort to generate sales.
Two divisions of Sony are in deep trouble, their mobile phone joint venture with Ericsson, which has seen a 23% sales slump, and their Playstation division. From being runaway leader in the last console generation Sony are now running third and last in this generation with nothing in sight that could improve matters.
The Company that has been kicking Sony’s backside is Nintendo because they have done what Sony could have done but failed to so because Sony engineers are more interested in grunt and performance than something as simple as family entertainment and a device that is exciting to use and cheap to produce.
So as games like Wii Fit and the Wii interactive sporting games clean up sales because of a simple interactive controller Sony is still contemplating what to do next.
This is not the first time that this has happened, Sony engineers did a great job of designing the walkman until Apple came along and gave them a software lesson that was more about designing an IPod that was consumers friendly and easy to use than the Walkman. Now Nintendo has done the same but this time in the gaming market.
The fact is that you don’t have to be a rocket scientist to work out why the Nintendo Wii is not only highly successful as a gaming console but highly profitable for Nintendo. And you only have to look at the $14 Billion in cash reserves on Nintendo’s balance sheet or the $19 Billion in reserves on Apples balance sheet or the $1.8 Billion in Apple profits for the last quarter to work out that Sony is facing a very, very bleak future.
This is a Company that is living off yesterday’s products and a brand that is looking sicker by the day. One also has to wonder whether they have the resources necessary to produce the Playstation 4 or even the people that are smart enough to actually deliver a breakthrough product that will get them out of the mess they are in.
