E3 Post #1: Sony
I think some perspective would be interesting.After Sony announced the $100 price drop (North America only, allegedly), SCEA President Jack Tretton sat with with several people for interviews. One was N'Gai Croal (here), and Tretton said something in that interview that I couldn't get out of my head (bold for N'Gai's question, italics for Tretton's response):
You and I spoke extensively before, during and after launch about the value proposition that the PS3 represented: Cell, Blu-Ray, the built in hard drive and backwards compatibility. Why do you think that the perceived value of PS3 was unable to overcome the high launch prices?
Well, the value message is one that is extremely easy to appreciate once you understand it. I think the challenge is providing that education to consumers in a typical retail venue. There's so much for them to absorb before they can appreciate the value, that it's more of a challenge than we faced in previous generations.
I've been thinking about that quite a bit, because something important was in his response. Today, it hit me, and it explains quite clearly why the PS3 is failing: Sony has created a "value" product for a "cost" market.
Yes, the PS3 is "quite the value" for the new price of $499 (and, according to Sony, was "quite the value" at the launch price of $599). But has a $499 console ever succeeded? No.
Don't e-mail me about the Neo-Geo. It was awesome, but it was a boutique console, essentially. If the PS3 winds up being a boutique console, Sony executives are going to be flinging themselves off buildings.
Look, if you want to sell 100 million units of a consumer electronics device, you don't have time to "educate" the consumer. Most consumers can't be educated, anyway. It better be damned obvious, it better be cheap, and it better be on the shelf.
For the sake of perspective, let's take a brief look at the history of the PS2.
Launch dates:
--March 4, 2000 (Japan)
--October 26, 2000 (U.S.)
--November 24, 2000 (UK)
Shipment milestones:
10M--March 24, 2001 (12+ months from Japanese launch)
20M--October 10, 2001 (6+ months)
30M--May 9, 2002 (7 months)
40M--September 19, 2002 (4+ months)
50M--January 16, 2003 (4 months)
60M--September 9, 2003 (8+ months)
70M--January 14, 2004 (4+ months)
100M--May 19, 2004
That's right--they hopped from 70M to 100M in just five months, apparently.
Price reductions (North America):
$299.99--October 26, 2000
$199.99--May 14, 2002 (18+ months)
$179.99--May 13, 2003
$149.99--May 11, 2004
All the shipped units number came from an SCEE document, which you can see in full here.
Those are incredible numbers, particularly when you remember that the PS2 was severely supply constrained during the first year, so the shipped number essentially represented the sold number. Plus, for the first seven months, the console was only available in Japan!
So it was roughly 25 months to get to 30 million units shipped. Price cut, and 30 million more units ship in the next 18 months. Staggering.
60 million units shipped in just over three and a half years? Are you kidding me?
The PS2 was at $199.99 eighteen months after launch in North America. The PS3 will be at that price point after what--four years? Why would anyone believe the PS3 is, in any way, similar to the PS2?
Here's the answer: because Sony told us it would be. And most of the gaming press is so cowed that when Sony says the PS3 eats burgers from the year 2050 and shits pure joy, they just write it up.
So when you read all of the analysis from industry pundits about how Sony can "recover" from the last year, don't let yourself be fooled. There is no recovery, not to the level of dominance the PS2 enjoyed.
Sony isn't going to win this generation. They're just hoping they won't be last.
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