Everytime I hear some news about Sony, it seems to be always bad news. I don’t really remember any good news the last 2-3 years. The latest, really, really bad news is about the Playstation 3 (PS3). Sony unveiled the new PS3 at the Electronic Entertainment Expo (E3) in LA. At the same time, Nintendo intruded their new Wii and Microsoft stole Sony the show by announcing lots of news around Xbox 360…
You remember the slogan “It’s not a trick, it’s a Sony”? The last, really big news from Sony, really big break-through good news, was around 20 years ago with the Trinitron screen. After that (well, I know, there was the ill-fated MiniDisc with the most-stupid audio solution and a lot of technology crippling around it), I’ve never ever heard anything ground-breaking from Sony.
I mean, I don’t even talk about groundbreaking technology, invention or such. A long time ago, Steve Jobs said that when they look for good design, they first look at Sony and mostly steal from them. Nowadays, when you look out for good design, you look at Apple – you inherently ignore Sony.
From what I know, Sony’s profits nowadays come from three sources: Financial Services (the biggest chunk of all), games, and movies/music. Electronics is making loss all the way since… since when actually? It’s been so long that I really got used to it – so long, that it seems natural for me that Sony Electronics is a loss-making business unit – though, it is still the largest business unit by revenues…
So, this weeks announcement really knocked me off of my feet. There it was… the Sony PS3: A bloated bit of expensive, stupid, copy-cat’ed, no-game-exists-for-it-yet, GTA-doesn’t-come-out-exclusively-for-it-anymore, highly-stupid-presented piece of … what? What is it actually? Is this going to be a game console?
I was always bitching about the ugly design of the Xbox. The new Xbox 360 is okay, it’s not too nice but not ugly either. The problem I have with the PS3-design is that it doesn’t really reflect anything. It doesn’t resemble my Hi-fi-system at home but it doesn’t really look like a game console, either – it looks like it wants to be something of everything. You know, a dish you come up with when you come home very late, very hungry and there is actually nothing to eat in the fridge and you put everything you can find into a pot and cook them together hoping that you won’t really taste it because you are tired, probably a bit drunk, and dead-hungry and don’t really care about its taste as long as it feeds you. That’s the way the PS3 looks like.
And the functionality? A bit of stolen functionality from the Nintendo Wii, some graphics – well, the PS2 games on new hardware.
From what I read from the journalists reporting, even the presentations must have been so boring that the articles they write sound like: “Microsoft … barbl… great… astonishing… wow…” and “Nintendo… geee… was that funny… great … I laughed my ass off…” and “Oh, yes, Sony was there too“…
In business schools, you learn a specific curve, which is mostly described as “Dell-Apple-curve” (I forgot the real name of the curve but it doesn’t matter, since the Dell-Apple-comparison shows it more pragmatically). This curve has three specific areas:
1. Dell-Zone
2. Apple-Zone
3. Death-Zone
The Dell-Zone resembles the low-price, mass-market market. It’s called “Dell-Zone” because Dell, the computer manufacturer, actually mastered to stay there perfectly (though Dell is having problems staying there in the meantime) by optimizing the processes and offering their computers in a fast, low-priced version. I.e. Dell was fighting on the price and undercut every other competitor in the market, until most of them went out of business (DEC, Gateway, Packard-Bell, Peacock) or were sold (Compaq) or sold their PC-business (IBM).
The Apple-Zone on the other hand resembles the high-price, niche-market market. It’s called Apple-Zone specifically because Apple managed to charge a high price for their PCs in a niche market by differentiating on the functionality, technology (always bleeding edge), design, ease-of-use but not on the price.
The Death-Zone is called so because everybody in between these two zones is condemned to death (SGI, DEC, Gateway, …) or have to run quickly to one of the other zones.
Now, when we look at the console market after E3, I’d like to rename the zones appropriately, especially after the grandiose announcements.
Accordingly, I’d like to rename the Dell-Zone to Microsoft-Zone, rename the Apple-Zone to Nintendo-Zone and rename the Death-Zone to the Sony-Zone.
Why?
Because this the way it looks like for me: Nintendo has a great console, with great features, ease-of-use, and some special “connotation” to it that I’d call it a great niche-market console. It doesn’t compete head-to-head with the Xbox360 for the hardcore-gamers, instead it goes for families, games-for-fun people, and so on. Xbox360, on the other hand, is targeting the mass-market, hardcore gamers, including the addition of Windows Live and the connection between Xbox360 and Windows-games through Xbox-Live.
Where does Sony stand with their high-priced, stupid, no-new-technology console? Yes, in the middle – stuck between Nintendo with really great technology and game-play (assuming that the Wii is not competing on graphics but instead on gameplay features because graphics-wise it’s even worse than PS3), and an extremely funny and thought-through controller.
And if the pundits are right, Sony is losing at least around US$ 300 (three-hundred) per PS3 sold when it comes out at prices of US$ 499 and US$ 599 for the 20GB and 60GB versions, respectively. That makes a whopping US$ 600m loss on the planned production of 2m units for the initial launch. I wonder, how Sony is ever going to make a profit with the PS3.
The most stupid thing here is that Sony is offering the PS3 at such an high-price because it contains a Bluray-Disc player with which you could even play BD-movies if … yes, if there were any. It’s stupid because (a) nobody needs the BD-drive in that stupid thing and (b) Sony wants to protects its original, home BD-player business where standalone BD-players will cost around US$ 1,000 when introduced later this year. So, there they go again: Their loss-making electronics business is killing just another profit-making business.
If Sony top management doesn’t really turn around the business ASAP, the only thing to say in a couple of years will be: “It was not a trick, it was Sony!”