Why Sony Won’t Win The Next Generation
It’s been a while since I wrote about Sony. However, this article needs a rebuttal because frankly, I think the dude is wrong. The article pretty much lays out the idea that Microsoft has squandered its potential 10 million unit head start and that Sony is going to go ahead and squash the 360. Unfortunately, this doesn’t take into account the biggest key to hitting the #1 spot in the consumer electronics world - price.
Price is a big deal. We all know that. Sony has never been able to sell a console at anything more than $199 and hit the mass market. Even when the PS2 did launch it was only $299, so it was able to sell well. Considering that the PS3 is almost TWICE As expensive, how do people expect that it will sell the exact same. In no situation ever has a product that is twice as expensive as its predecessor sold as well, especially in consumer electronics. Thus, even if the Playstation brand is the strongest brand in gaming, that doesn’t mean that gamers all of a sudden be willing to spend twice as much money before they buy a game.
Microsoft is going to try and sell 10 million before consoles before it drops the price. That’s a pretty lofty goal at $400 a console, but I think they can come close. Next year we should all see a $300 Xbox 360 and Halo 3 to boot, so that will spur things on for Microsoft, but even at $300, the Playstation 2 only was able to sell 10-20 million at that price. Microsoft knows that and at one point Peter Moore said that to sell 100 million consoles, you have to hit the $199 price point. Once Sony hit the $199 price point, it was able to sell 30 million units a year on both the Playstation and Playstation 2. So, it becomes a race to $199.
So, who is going to get there first? Sony, no. Microsoft, no. Nintendo, yep. Nintendo could launch at $199, but they didn’t because they want to get to $199 eventually, but not start there. Nintendo is delivering enough value to either break even or possibly make a little bit on each Wii sold. Microsoft is going to be the second system to hit $199 and it’s possible that the core system might get there next year. The Playstation 3 is probably 2-4 years from hitting the $199 price point. Think I’m joking?
It was 18 months between the PS2 launch at $299 before it dropped to $199(then $179 a few days later). So, with the Playstation 3 we can expect 12-18 months between each price drop. Can the PS3 get to $300 in 18 months? Maybe, but not likely. I’d say that the PS3 will drop about $100 a year until it can get to the $199 mark in 4 years. That sounds crazy, but the PS2 took 3 and a half years to go from $300 to $150. For the PS3 cut its price in half is going to take just as long.
Where will the 360 and the Wii be in 4 years? In four years we won’t be talking about the 360 anymore. We will be hearing about the next Xbox system. In four years Microsoft will be unveiling their plans for the next next gen. In four years the Wii will be about $100 and the next Nintendo handheld system will be dominating the market. In four years the Playstation 3 will maybe have sold 30-50 million units while the 360 and the Wii will probably sell a combined 100-150 million units.
I’m not saying that which system is going to be the most popular this next generation. However, I can say that price is always going to be a major factor in how many systems sell and that is one war that Sony won’t win this generation. By the time that Sony’s Playstation 3 gets to a mass-market price point(one that parents and teenagers can afford), the game will already be over for Sony.
