Console Post of the Week
The Times (online) published an article on Monday that alleges Sony will be making sweeping changes in their corporate structure next month. Here are a few excerpts:Company sources have told The Times that operations across the group are braced for a series of “sacred cow-slaying” measures that they believe will abolish or fundamentally alter many of Sony's long-established business practices.
The expected restructuring - considered by many analysts to be occurring far too late - is likely to be announced early next month, with the lion's share of the changes imposed on Sony's domestic Japanese operations in the form of factory closures and the abolition of several major divisions.
Sony released a non-denial denial (thanks GameLife) to Reuters:
"We do not plan to announce additional restructuring measures at this time," spokesman Atsuo Omagari said, in response to the report. "We don't have any such plan."
I think the simplest way to explain what's happened to Sony is this: when your product costs too much, then the entire focus of your marketing has to be why it doesn't cost too much. That is not an effective way to sell a product.
On Tuesday, there was this from Ian Jackson (VP of sales for SCEA):
Early internal data points to an increase of more than 130 percent of PS3 hardware sales for the holiday season--since Black Friday--and we're also seeing a growth of nearly 40 percent in total PS3 hardware sales for the calendar year. We remain confident this momentum will continue into the new year.
Well, let's check that out. In the U.S. in 2007, the PS3 sold 2,558,000 units. For there to be 40% growth in 2008, they would need to sell 3,581,200 units. Through November, they'd sold 2,819,500.
So for that part of Jackson's statement to be true, or close to true, Sony would have sold a little more than 750,000 units in December. That sounds doable, although it would be nearly 50,000 units less than December 2007.
However, the other part of his statement--that hardware sales have increased 130% "for the holiday season"--is impossible to evaluate. Increased 130% from what? November? January through November? It's nonsensical.
That 40% number sounds reasonable, and for many other businesses, it would be outstanding. For a console coming off an absolutely disastrous first year, though, it's failure.
Oh, and if you want context for the word "disastrous," here you go. From the November 2006 launch to the end of 2007, the PS3 sold 3,246,000 units. Microsoft, from the November 2005 launch to end of year 2006, sold 4,532,000 units of the 360. And, by almost all accounts, Sony was supposed to dominate Microsoft in this cycle.
That's disastrous.
This isn't a linear process, necessarily, between Sony and Microsoft--it's more like leapfrog. Sony will cut the price this spring (to $299, I assume), and at that point, they'll leapfrog Microsft. Microsoft will respond this fall, and may well make up all the ground they lost earlier in the year. But there is no story arc right now that encompasses Sony dominating during this generation. Parity with Microsoft? That seems likely, and they might even surpass Microsoft to a limited degree. Parity with Nintendo? No chance.
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