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Tuesday, August 29, 2006

Wired On the PlayStation 3 Release

Wired offers up a fairly honest overview of what could be Sony's most precipitous launch in recent history:

The PS3 is much more than a game box. Kutaragi likes to say it's actually a computer, one that's designed to lie at the center of the networked home, serving up films, navigating the Internet, doing nearly everything a PC can do, and delivering jaw-dropping videogames besides. The new console relies on two extremely ambitious yet untested technologies. At its core is a highly sophisticated microchip that can cruise at teraflop speeds (equal to the fastest supercomputers of less than a decade ago) and that might someday revolutionize home electronics. Also built into the machine is Sony's new Blu-ray hi-def disc player, which is proudly incompatible with a rival format from Toshiba – and which represents a bold, some would say reckless, attempt to control the multibillion-dollar market in next-generation video discs.

All this makes for a daring strategy, but not one that plays to Sony's strengths. Sony has always been at its best as a personal hardware company, coming up with nifty gadgets that delight consumers. In recent decades, though, it's become oddly fixated on imposing its own standards – Betamax for VCRs, the Mini-Disc for digital music players, the Universal Media Disc for PlayStation Portable, the Memory Stick for anything you can think of – despite the world's unwavering rejection of those standards. And Sony has never displayed an aptitude for software or had great success with networking, the key feature Microsoft has built into the Xbox. Yet Sony has to face Microsoft not just in videogames but across the entire panoply of home electronics, which Microsoft is determined to control through software. And Sony has to do this with cash reserves of $6 billion – compared to Microsoft's $38 billion hoard – while losing hundreds of dollars in manufacturing costs alone for every PS3 sold. Eventually, Sony's costs will come down. But in the meantime, Goldman Sachs projects, Sony will lose nearly $2 billion on the PS3 by the end of this fiscal year in March.

Sony lovers – and they are legion – have been watching all of this with awe and trepidation. It's not every day that a $64 billion-a-year corporation puts its future on the line. "It's very un-Japanese," observes Rishad Tobaccowala, who tracks the entertainment business as a future-of-media specialist at the global ad giant Publicis. "It's betting the company. If this thing bombs, there is no second coming. Everything else about Sony is a sideshow. This is the show."
-- Can the PS3 Save Sony 

It's four pages and worth every word. Avoids all of the "OMG TEH CELL SUX" reporting which has become way too common. Just a couple extra thoughts:

It's Not The Launch Price
If you were to stick one thing onto the blogosphere bulletin board on this topic - it's the price of the PlayStation 3. I still gotta say that it's a pretty narrow and reactive little sticky. $600 is still cheap for a Blu-Ray (and likely an HD-DVD player) and dirt cheap for a PC gaming rig. It's not cheap for the mainstream consumer gamer, it's true.

Sony could, however, overcome this by appealing to the power rig set, the early adopter crowd or to showcase a truly killer app or game upon launch. The problem isn't the launch price, per se, it's Sony's almost oblivious trumpeting that the price isn't an issue - without trying to do any of the above. Except, perhaps, the early adopter crowd - but that crowd won't sustain a full lifespan.

Eventually the price will drop, of course. Probably not soon enough for Sony if they try and compensate somehow, however (and let's not forget how little control there really is over that).

Blu-Ray isn't the crippling technology here
Everyone loves to bemoan the fact that they are being forced to buy a player which supports Sony's format to play Sony's game. Of course, every game console utilizes it's own format for games anyway. And you can blame Blu-Ray for the price, but as this article points out - you can't even blame it on the delay of the console. That's the DRM being paraded out with these new formats (HD-DVD included and is already causing problems with Vista and Toshiba drives). Plus, there's the slow adoption of HDTV in general. By the time Sony runs out of early adopters, not even half of households will have HDTV's. Gamers may disporportionately purchase the equipment needed to view (and let's get specific here and stop using verbs like "appreciate", games like Dead Rising show that HDTV is not optional equipment) ... but we again go back to the first problem of Sony appealing beyond the common gamer.

If that $600 purchase would look great on my SDTV and then truly excellent when I finally upgrade ... I might consider it. There's no way I'm stacking the two together (and I'm something of a common gamer).

And yet, here Sony's size will definately hurt them. How can they pass up making their PlayStation 3 only really compatible with HDTV screens when the company makes both? Microsoft went this route and they don't even have any stock in selling HDTV's.

It's all about the timing
In many ways, this holiday season doesn't even feel terribly important. This feels like Sony is seeding the ground for perhaps a year or two away. Before the PS3 can become the commonplace living room product that the PS2 attained, it will need:

1) A lower price point. This is out of Sony's hands and probably can't occur until a year or so after launch.
2) Mass HDTV adoption. Again, before HDTV saturation hits the average living ... set you calendar for at least another 365 days.
3) Blu-Ray acceptance (be it dominance or co-existence). Right now, neight HD-DVD or Blu-Ray has a library to speak of ... so who cares about these formats? The people spending $1,000 on burners?
4) Cell processor excellence. Some developers seem to think that the PlayStation 3 has the capacity to clearly have the graphical edge ... but nobody quite knows how to make it dance like that yet. So first gen titles are likely to resemble 360 titles and Sony fanboys will have to wait for at least the second gen for any kind of bragging rights (unless Sony has an ace up it's sleeve - which is highly unlikely).

All four of these are entirely possible, if not probable. Just not anytime before the next holiday season (or the one after that).

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Unknown said...

Good article. Thanks for pointing it out.

The DRM crap is frustrating, and together with the CD fiasco, shows how Sony doesn't understand the simplicity of the PSOne.

Josh said...

Yeah, I think that's true. And another indication of how size is greed. They're not happy with making one simple product ... they need a lynchpin to carry them.