Ken K. Rocks the House in Japan
Here are some quotes from Sony's "Crazy Ken" Kutaragi about the PS3 (courtesy of The Guardian)--http://tinyurl.com/733nu:"We're looking at a life cycle of 10 years with the PlayStation 3. We're currently shifting from standard TVs to HD TVs," said Kutaragi. "But in the next couple of years, most flat-panel TVs will be full HD. We're releasing the PS3 with full HD features from the start so that consumers won't have to buy another version of the console in the future. For the same reason, we're using Blu-ray as the PS3's disc format."
"I'm aware that with all these technologies, the PS3 can't be offered at a price that's targeted towards households. I think everyone can still buy it if they wanted to," said Kutaragi to a mostly Japanese crowd. "But we're aiming for consumers throughout the world. So we're going to have to do our best (in containing the price)."
Then Kutaragi issued a somewhat ominous warning. "I'm not going to reveal its price today. I'm going to only say that it'll be expensive," he stated.
So many bizarre, business-destroying statements in just three paragraphs. Remember when I said that Sony was the only thing that could stop Sony? Well, here we go.
We're looking at a life cycle of 10 years with the PlayStation 3.
For starters, read between the lines. I don't think Sony arrived at that "ten year" figure by accident. I'm guessing that the Cell processor cost so much to develop that Sony needs the PS3 to be viable for ten years to justify the investment. And it's very narrow thinking to assume that full HD resolution is all consoles need to last (essentially) forever. Not so. Even having "Toy Story" levels of animation in games wouldn't make a console last ten years. Technology is just improving too rapidly.
Within three years, consoles are going to look terribly limited because they don't have a dedicated processing chip for physics calculations. I think that's the next big advance in terms of realism. For a console to last ten years, technological innovation needs to be relatively dormant for ten years. That is never going to happen. Never.
I can see the PS3 lasting for five years, just like the PS2 did. It’s not going to last any longer, not if Sony wants to remain in the forefront in terms of performance.
I'm aware that with all these technologies, the PS3 can't be offered at a price that's targeted towards households.
But we don’t want all your damn technologies. You’re trying to jam a convergence box down our throats and many of us don’t want it. If it doesn’t cost us any more than a game system would, we’ll happily accept everything else, but if you’re going to take a $299 game box and charge us $499 because of extra features we don’t want, it’s going to suck. For you.
I'm not going to reveal its price today. I'm going to only say that it'll be expensive.
For anyone who was still hoping that the PS3 was going to launch at $299, I think that’s your death knell, unfortunately. That’s a clear indication that Sony isn’t even going to attempt to match Microsoft’s launch price (which should be in the $299-$349 range).
Here’s who will buy a PS3 if it comes out at $499 and the Xbox 360 is $299: nobody. I don’t mean that literally, but the PS3 will not match Microsoft’s market share if they charge $200 more for their console. They’re at risk even in the $150 delta range.
Here’s something else that a significant price delta will change: developer loyalty. And how. It won’t happen overnight, but in a two to four year period, the number of games being developed for the PS3 would drop significantly compared to Xbox 360 development.
Now it’s possible that these statements were just trial balloons. I think both Sony and Microsoft do that all the time. But I don’t see Kutaragi calling the console “expensive” if it was coming out at $399 or less. It’s also entirely possible, even likely, that Sony is going to adjust their launch price outside Japan based on what they perceive as the Xbox 360 market penetration. If Microsoft’s launch goes extremely well, and strong sales continue into early 2006, they may have no choice but to take a larger internal loss on the consoles to keep the price down.
I’ve mentioned this before, but I believe that Sony is far behind schedule for a Spring 2006 launch. I would be shocked if we see the PS3 in the U.S. before June of next year, and it wouldn’t surprise me in the least if it wound up being September.
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