Sony's Killer: PS3

may 12, 2006

The PS3 is going to kill Sony. Even though SCEA doesn't contribute a lot to Mother Sony upfront, it does make a sizeable contribution in the back-end when you think about it. Sony has put a lot of technological eggs into one basket and I am sure that the basket is getting pretty wobbly just about now. Sony is relying on the PS3 to promote the Cell processor and Bluray. There are electronics in there that are going to be sourced from internal Sony groups. There is a lot riding on this piece of hardware. The thing that will kill the PS3 is execution. Instead of coming out with a pure game playing console, Sony has gone down the same path that Microsoft has. They are trying to invade the livingroom with a game console plus media center. The problem here is that Sony has stuck a lot of high cost components into their system and it has jacked up the price to an exobanant level. HDMI, 60GB harddrive, Cell processors and Bluray all add up to something: A machine that no sane person is going to pay for. At $600 just for the system, it is too costly. You are nearing $1000 when you add in a controller and a few games! Have I ever watched a DVD on my PS2? Not in all the years that I have owned it. The PS2 makes for a very low-end, mediocre DVD player. If I got a PS3, would I watch Bluray movies on it? Probably not. Why? Because all I want is a game console that I can play games on! Here are my predictions for how things will play out this generation of game consoles. Nintendo will launch their Wii console at $199. Casual gamers will go nuts over it. Hardcore gamers will also pick one up to augment their Xbox 360 because of the innovative control scheme and fun games -- plus at $199, it is an impulse buy for hardcore gamers. Nintendo will not take the lead in this generation of consoles -- but they will not be far behind Microsoft. Right before the PS3 launch, Microsoft will slash the prices of their two Xbox 360 models from $299/$399 to $199/$299. Microsoft will release Halo 3 at the same time as the price cuts. At this point, anyone with $600 in hand to buy a PS3 has the option of getting a Wii, the high-end Xbox 360, and a few games instead of the PS3. Sony will release the PS3 at $499/$599. Only Sony fanboys will pick up the system. There will still be a few million sold, but it will not be the bonanza that Sony was expecting. Instead of the PS2 type uber-console sales that Sony saw in 2000, the PS3 will be more like the PSP release. Only hardcore gamers, who are Sony fans, will pick one up. There will be not be solid sales for the PS3 as it is priced too high and the return on investment is not that great. It is much like how the Nintendo DS is holding is own -- and maybe even beating -- the Sony PSP in the handheld market. Sony's Bluray will die an early death, just like Betamax did. Sony has so much riding on the PS3 being the trojan horse to bring Bluray into the livingroom, Bluray for movies will be a complete disaster for Sony. The PS3/Bluray combination will work as well as the PSP/UMD combination -- in other words, it will not work. There will be some reorganization within Sony as the technology trojan horse named the PS3 fails to bring most of its technology to the masses. Ken Kutaragi, "The Father of the Playstation", will quietly be asked to leave Sony. These are my predictions.