I've been meaning to weigh in on the news of
PlayStation 3 pricing but just haven't had the drive to make it happen.
Sony's big news at the Electronic Entertainment Expo in L.A. last week was that the PS3 will cost at least $500, with a higher-end model to go for $600. The dual-pricing scheme resembles Microsoft's decision to make "core" and "premium" versions of the Xbox 360, separated in price by $100. Sony initially heaped scorn on Microsoft's plan, saying it would confuse the customer, but it turns out they owe a huge debt of gratitude to Bill Gates, whose market researchers apparently correctly figured there was little downside and some potential upside to such an untried pricing mechanism.
Both versions of the PS3 will come with Sony's Blu-ray next-gen DVD format for hi-def movies. The $500 model has a 20Gb hard-drive while the $600 one comes with triple that storage, plus built-in Wi-Fi and HDMI digital outputs that will be needed when 1080p become available.
By contrast, the Xbox 360 basic version costs $300 and has no hard-drive, while the premium version costs $400 and has a 20Gb hard-drive. Microsoft said that later this year it will sell an add-on hi-def DVD player using HD-DVD technology that is a rival format to Sony's Blu-ray.
Sony's pricing is very interesting because it doesn't point to a clear outcome in the console wars. If Sony had come it at $700 it would have been game over for them because being double the 360 clearly would have been too much for most consumers to swallow. And if they'd come in at $400 or under, they would have put the fear of God into Microsoft. This sort of splits the difference and it is hard to predict how consumers will react.
My initial feeling is that Sony's video game dominance is nearing an end. What are they touting most about the PS3? Oddly, it's not the games, which appear to be on par with the 360's. It's Blu-ray first. The PS3 is thought to cost Sony some $700-$800 to make, with the biggest piece of that coming from yet-to-be-finalized Blu-ray hardware. By selling the boxes at $600, it appears at first blush that Sony is subsidizing the consumer. Let me flip that around and posit that, because consumers are the ones subsidizing Sony's Blu-ray fixation, because they
have no choice about whether the technology is included. If the PS3 was a pure gaming machine, it might only have a price tag of $300. But this way, Sony gets a couple hundred extra bucks per box to offset its Blu-ray costs.
Sony wants Blu-ray in tens of millions of homes to make sure it wins against HD-DVD. I guess the two technologies deliver equally good video, but HD-DVD has another data layer that would allow regular DVD and hi-def DVD versions of the movie to be carried on one disk. This is sort of smart because people could future-proof their movie collections years ahead of actually buying an HD-DVD player. Plus, I'm just not sure how many people use their game consoles as a primary DVD player. Maybe college students do, but with DVD players available for $50, I would bet the vast majority of people have standalone players. Another point is that hi-def DVD is only worth it if you have a hi-def TV. Now, how many college students have HDTV? I am guessing that those with the means to throw down a couple grand for an HDTV aren't going to be satisfied using a game console as their primary hi-def DVD player.
If that wasn't concern enough, Sony has to play catch-up to the Xbox Live service, which Microsoft has spent the past four years beefing up and polishing. Sony scoffed at Live when it first came out, saying gamers wouldn't want to be locked into a Microsoft system. But the centrally controlled online functionality and consistent user interface of Live has proved to be one of Microsoft's aces. It will be tough for Sony to match right out of the gate.
Of less concern, but still telling as a measure of how Sony is thinking these days, is their decision to badly ape the motion-sensing controller of Nintendo's upcoming Wii console. The inclusion of axis-sensing features in the PS3 controller is so clearly a blatant attempt to steal Nintendo's thunder by saying "Look, we do motion-sensing, too! No need to buy their product!" Sadly, it might actually dupe some folk who don't realize that the Nintendo controller does motion in a much deeper way, with angle, force and acceleration all being reflected in gameplay. Sony's controller might let you waggle a plane's wings, but Nintendo's will let you hit a soft grounder or put some real-world muscle behind a virtual home run. That Sony felt they had to rush to include some sort of motion-sensing tells me that the team is too fixated on what everyone else is doing that it isn't really focusing on what
Sony can do best.
Don't take my word that Sony is losing its mojo, check out
this video of the doors opening at E3. Sony's booth is on the left, Nintendo's is on the right. Watch where the stampede heads. Now, to be fair, I was E3 in 2001, when the big story was supposed to be the Xbox. Microsoft even announced a price and launch date for the first time, but Nintendo's GameCube stole the show as people were wowed by the quirky games on display. However, Xbox sales pulled ahead of the GameCube's, pushing Nintendo to third spot in the console who's who list. So what you see may not reflect the world in 5 years' time.
However, there's no doubt that Sony is in deep trouble right now. The company that practically invented personal audio with the Walkman completely missed the MP3 boat and they are flailing about in desperation to stay relevant in an iPod-dominated world. Sony also failed to see the shift to flat-panel television, and gave Korean rival Samsung an opening to steal the crown in that market. If the PS3 bombs, Sony is going to be in a world of hurt.
I had kept myself open to the possibility of buying a PS3 as well, but nothing I've seen in the past week has convinced me that I absolutely
need one. I will buy a hi-def DVD player in a couple years after a clear format winner has emerged and when the cost is reasonable. There aren't any exclusive Sony games I just gotta have. The graphics don't look like they're going to be better than my 360's. And the online service is a big unknown. In fact, I've been a lot more intrigued by the Wii than anything Sony's doing. They have the motion-sensing controller, and they've eschewed hi-def, in essence saying: "We don't care what the other guys are going. You want a hi-def space alien shooter, go buy one of them. What we're going to give you is something quirky and fun that you've never seen before." By doing this, they are staying true to what Nintendo is all about, differentiating themselves from the pack (okay, a pack of two), and as a result are generating all kinds of interest and praise and likely purchases.
It was Sony's game to lose, and from here it sure looks like they're hell bent on doing just that.
Addendum: As I was getting ready to post this, I came across this take on Firing Squad that also argues that the PS3 is dead in the water.