The story is now as old as the hills. Sony (SNE) took a huge lead in the gaming business almost a decade ago and built it up with its PS2. It was so far out in front that no competitor would ever catch it.
Then Microsoft (MSFT) took the big gamble of getting into the business with its Xbox. It struggled for years until the XBox 360 came out and it began to take share from Sony. Sony launched it PS3, only to find that Microsoft and Nintendo’s Wii were already selling like hot cakes.
The PS3 turns out to have had too many features and too high a price. Gamers do not need a machine that will play high def movies. According to Reuters, Sony will sell a new version of the PS3 which will come with a 40-gigabyte hard drive and cost $400. That is what they should have been selling all along. The company will also drop the price of its 80-gigabyte version to $500 from $600.
Someone should call Tokyo and tell them it is too late. The holiday buying season in the US starts around Labor Day, and, in the Midwest people already have their Christmas lights and fake trees up. Bringing new products to market in November just does not cut it.
Sony blundered. It can put on a brave face, cut prices some more, and hope to make a very modest profit on the PS3 in a year or two. But, its lead in gaming is gone, and it ain’t coming back.
Douglas A. McIntyre