Business Approach Comparison Sony PS4 and Microsoft Xbox

[Johnny Awesome]

I also think consumers have caught on and released that the big IPs are going to be on both platforms. Further if PS4 has better graphics and a more diverse library there are plenty of the core who will be happy to wait 6 months to access games like this.

Because the core are so patient for their games.... LOL.

Listen, if Sony can get 10 million units out quickly then $399 might make sense, otherwise it was foolish.

 

[Xalion]

Mebbe in the "big data world" clouds are different, y'know like they're just a magical buzzword for anything accessed online or something?

Big data is a buzzword that has been picked up and misused by marketing/managerial folk to mean something entirely different than what it seems like. It doesn't actually refer to a large database most of the time from my experience. Instead, it refers to a combined remote compute/storage system (think HADOOP instead of SQL). The important part of this is actually the compute - not the data. It is easy to record a lot of stuff. It is far more difficult to run compute functions on that stuff to get useful information out. Hence the need for "big data" - companies are typically looking for people who are used to writing tasks on distributed "cloud like" systems.

While I would agree that his initial statement sounds nothing like a cloud, he could actually be working on one. I know we use cloud services to offload portions of our data computation from our "big data" systems like HADOOP.

 

[temesgen]

Because the core are so patient for their games.... LOL.

Listen, if Sony can get 10 million units out quickly then $399 might make sense, otherwise it was foolish.

What does price have to do with timed exclusives???

 

[digitalwanderer]

Big data is a buzzword that has been picked up and misused by marketing/managerial folk to mean something entirely different than what it seems like. It doesn't actually refer to a large database most of the time from my experience. Instead, it refers to a combined remote compute/storage system (think HADOOP instead of SQL). The important part of this is actually the compute - not the data. It is easy to record a lot of stuff. It is far more difficult to run compute functions on that stuff to get useful information out. Hence the need for "big data" - companies are typically looking for people who are used to writing tasks on distributed "cloud like" systems.

While I would agree that his initial statement sounds nothing like a cloud, he could actually be working on one. I know we use cloud services to offload portions of our data computation from our "big data" systems like HADOOP.

Thanks for the explanation Xalion, that actually makes a lot of sense to me. Appreciated.

EDITED BITS: Went another tab I had open read this and laughed.

 

[Cranky]

I don't believe that argument is reasonable.

Sony has said that they targeted the $399 price point specifically. I believe them. I believe them because of what I know about consumer electronics. From what I have seen, there is a price barrier to mass consumption for even good products. I would bet that both Microsoft and Sony have pretty good ideas of where their consoles started to sell in large quantities. Sony targeted that price point, MS went for a supply constrained launch.

Sony seemed worried coming into E3 that MS would go for a loss leader of ~$299. I would bet they have absolutely no concerns with competing with Microsoft at $399, and are ecstatic that Microsoft ended up at $499. From the business side of things, I would bet they will either start selling hardware at a profit immediately or have it as a target in the first year. I would bet they are aiming for the mass adoption price range of $299 at their first refresh. Remember, that is the price point that they caught up with Microsoft this generation.

As for entry price, the subscription plans for both consoles cost the same (about $50 a year), so even when Microsoft drops to $399 they are playing on an even field - MS won't "beat them on entry price with their subscription plan". As for the lower price translating into a larger market share, it is very likely. It is doubtful that MS would drop their price in the first 6 months, and consoles are rarely supply constrained for much more than the first holiday season.

Microsoft does position itself to generate hype for the second holiday season with a price drop - which may or may not be a good thing.

I didn't say that I thought that was the case. However, it is fairly reasonable. PS3 got trounced in the US. For the US market, MS has a much more compelling package. As I said previous, at least for US folks, MS is bringing much more to the table. Even with the price discrepancy, I fully expect MS to outsell Sony handily in the US once supplies are no longer constrained.

Perhaps I wasn't clear with my subscription comment. I was referring to the $299 plus 2 years of live deal. I suspect that goes live once supply issues ease. The fact that it is not available this holiday is a good indication that supplies will be constrained. When that goes live, MS can eliminate the upfront price gap WITHOUT reducing the price. Sony has a more difficult time with the strategy as their fans aren't used to paying for online yet, although a side benefit of requiring plus is that it does make this potentially easier for Sony to offer.

The key variable in all of this is supply. I find it hard to believe that sony will have 10,000,0000 available in the first 6 months. However, that would be great justification for the price.

 

[Cranky]

Big data is a buzzword that has been picked up and misused by marketing/managerial folk to mean something entirely different than what it seems like. It doesn't actually refer to a large database most of the time from my experience. Instead, it refers to a combined remote compute/storage system (think HADOOP instead of SQL). The important part of this is actually the compute - not the data. It is easy to record a lot of stuff. It is far more difficult to run compute functions on that stuff to get useful information out. Hence the need for "big data" - companies are typically looking for people who are used to writing tasks on distributed "cloud like" systems.

While I would agree that his initial statement sounds nothing like a cloud, he could actually be working on one. I know we use cloud services to offload portions of our data computation from our "big data" systems like HADOOP.

It would take a titan weeks to run one of my compute jobs.

 

[MrFox]

And you know my business how? more concretely, unless the phrase "forests of forests" has any meaning to you, you are not in any position to comment.

I'm not always in a position to comment, but when I am, my hands are positioned over my keyboard.

Database == storage
Compute == processing

Very different beasts. You said database.

 

[dobwal]

Big data is a buzzword that has been picked up and misused by marketing/managerial folk to mean something entirely different than what it seems like. It doesn't actually refer to a large database most of the time from my experience. Instead, it refers to a combined remote compute/storage system (think HADOOP instead of SQL). The important part of this is actually the compute - not the data. It is easy to record a lot of stuff. It is far more difficult to run compute functions on that stuff to get useful information out. Hence the need for "big data" - companies are typically looking for people who are used to writing tasks on distributed "cloud like" systems.

While I would agree that his initial statement sounds nothing like a cloud, he could actually be working on one. I know we use cloud services to offload portions of our data computation from our "big data" systems like HADOOP.

So "big data" is whats happens when big iron and the internet gets together?

 

[Rangers]

I didn't say that I thought that was the case. However, it is fairly reasonable. PS3 got trounced in the US. For the US market, MS has a much more compelling package. As I said previous, at least for US folks, MS is bringing much more to the table. Even with the price discrepancy, I fully expect MS to outsell Sony handily in the US once supplies are no longer constrained.

Perhaps I wasn't clear with my subscription comment. I was referring to the $299 plus 2 years of live deal. I suspect that goes live once supply issues ease. The fact that it is not available this holiday is a good indication that supplies will be constrained. When that goes live, MS can eliminate the upfront price gap WITHOUT reducing the price. Sony has a more difficult time with the strategy as their fans aren't used to paying for online yet, although a side benefit of requiring plus is that it does make this potentially easier for Sony to offer.

The key variable in all of this is supply. I find it hard to believe that sony will have 10,000,0000 available in the first 6 months. However, that would be great justification for the price.

Just a general vs point here, it's fairly amazing how much better off Sony will be this gen than last...

Launching at the same time instead of 1 year late (1.5 years in Europe)

Launching at 399 and $100 less instead of 599 and $200 more...

Hell, more powerful box in theory, vs a parity box last gen.

On paper at least, in theory, Sony should have this, EASILY.

Also, there's no Wii juggernaut this time around. MAJOR difference to last gen too, for both players.

 

[Deleted member 7537]

You are making my point for me. The base case assumption is that the forgone profits from the launch price won't translate into increased share. .

That's your assumption, not mine. For you is a no win scenario for Sony (in the US i understand).

 

[temesgen]

Just a general vs point here, it's fairly amazing how much better off Sony will be this gen than last...

Launching at the same time instead of 1 year late (1.5 years in Europe)

Launching at 399 and $100 less instead of 599 and $200 more...

Hell, more powerful box in theory, vs a parity box last gen.

On paper at least, in theory, Sony should have this, EASILY.

Also, there's no Wii juggernaut this time around. MAJOR difference to last gen too, for both players.

We'll need to see what sort of subsidies are available to see the real impact of the price difference. MS may be thinking 499 with 200 off with a 24 month Live subscription is a large enough discount.

Also they may simply be positioning themselves to capture the early adopters and offset some losses due to yield issues and then announce a price drop that makes headlines and allows them not to lose momentum.

 

[Cranky]

That's your assumption, not mine. For you is a no win scenario for Sony (in the US i understand).

That only applies, your assumption that is, if 1 of 2 things happen. Sony has massive supply in the launch window or they maintain a price advantage over MS outside the launch window. I don't believe either or those things are likely. As soon as supply exceeds demand, MS will likely drop the price to $299 with a live contract. Poof, price advantage gone as the average consumer will see $299. I am not sure Sony is healthy enough to take the risk inherent in matching that deal.

 

[blakjedi]

Sony seemed worried coming into E3 that MS would go for a loss leader of ~$299. I would bet they have absolutely no concerns with competing with Microsoft at $399, and are ecstatic that Microsoft ended up at $499.

I dont remember who posted but iirc Sony was actually very concerned that MS would hit $399 because they knew that they could not price below $399.

Theres a lot going on with this pricing story and Sony in general. Even at their conference Sony didnt exude confidence in their presentations. They knew $399 and DRM that the average joe couldnt understand would win the headlines and they went for that. Good for them. But there is a nervousness about Sony right now that makes them different this generation compared to prior launches.

Amazingly, MS is just chugging along , confident as ever, as if $499 is right is where they want to be. Its actually baffling.

 

[ERP]

Amazingly, MS is just chugging along , confident as ever, as if $499 is right is where they want to be. Its actually baffling.

If they are selling more than they can produce at that price, then it's clearly fine, in fact arguably too low from an economics perspective.
The question shifts to will it cost them momentum once supply becomes readily available and how quickly can they drop the price without cutting their own throat.

I think the $100 is a big deal, but it won't have any effect for probably 6 months.

 

[Brad Grenz]

@Xenus


Considering how much money the NFL generates and the fact that MS thought it was worth $80 a year for exclusive interactive content (that's potentially 2 AAA titles a year), I think they expect significant interest.

Again that doesn't mean it's equal value for everyone.

The problem is they only support NFL.com fantasy stuff. No Yahoo, no ESPN, both of which are vastly more popular.

That only applies, your assumption that is, if 1 of 2 things happen. Sony has massive supply in the launch window or they maintain a price advantage over MS outside the launch window. I don't believe either or those things are likely. As soon as supply exceeds demand, MS will likely drop the price to $299 with a live contract. Poof, price advantage gone as the average consumer will see $299. I am not sure Sony is healthy enough to take the risk inherent in matching that deal.

1. Anecdotally retail employees have been saying their stores are being allocated 2-3 times as many PS4s as Xbox Ones for launch. 2. No one loses money on a contract subsidy but the consumer who pays more in the long run. There is literally zero barrier to Sony matching such a deal, or even undercutting it by the same $100.

 

[blakjedi]

If they are selling more than they can produce at that price, then it's clearly fine, in fact arguably too low from an economics perspective.
The question shifts to will it cost them momentum once supply becomes readily available and how quickly can they drop the price without cutting their own throat.

I think the $100 is a big deal, but it won't have any effect for probably 6 months.

I agree.

Somehow I think there is a lot more to this story which makes MS seem confident as hell. Like that fully expect to sell 100+million consoles regardless of what Sony does. Its as if they arent competing with Sony but someone else.

 

[dobwal]

Just a general vs point here, it's fairly amazing how much better off Sony will be this gen than last...

Launching at the same time instead of 1 year late (1.5 years in Europe)

Launching at 399 and $100 less instead of 599 and $200 more...

Hell, more powerful box in theory, vs a parity box last gen.

On paper at least, in theory, Sony should have this, EASILY.

Also, there's no Wii juggernaut this time around. MAJOR difference to last gen too, for both players.

Yeah, Sony really seem to do a good job with its design and its PR this gen. While MS seems like a kid that thinks he has produced a really neat flying contraption and wants to do his first test run off a 20 story building. But there a number of factors that should be accounted for when forecasting future success. The PS3 isn't the PS2 and the 360 isnt the OG Xbox. Mindshare and brand power is alot different this gen.

 

[patsu]

You mean all the things that are currently incorporated into and the focus of the One?

I agree completely. I mean, look! Now, if you buy a PS4 and pay for PSN you get to have cross game party chat!

I firmly believe that if Sony does produce a PS5, that it will contain all last generation's features and functions that were available in the One. Just like the PS4.

I don't know if it's all the things One will offer, but Sony announced some specifics so far. e.g., RemotePlay, progressive game download, integration with social network services, spectating, media sharing, remote assistance, free-to-play and MMO games, ... This gen, I think they offered Cloud Save first. We will likely see more later.

For camera base technologies, Besides simple gestures, I think surveillance and analysis type work may be interesting (e.g.., home automation, modeling, social apps). If Sony want to do these, it may be easier and faster to work with Android and iOS. Sony don't really have to roll their own. But in general, tablet input may be more suitable for direct 2D and 3D manipulation. For motion gaming/computing, I think beyond the living room, outdoor use may be interesting too.

 

[blakjedi]

The problem is they only support NFL.com fantasy stuff. No Yahoo, no ESPN, both of which are vastly more popular.

The deal is with the NFL itself... its doesnt matter whats on yahoo or ESPN... If the NFL want to blitz advertise their partnerships or whatever it is, you dont think that will make difference? 12 to 16 games on NFL network where they can blitz the hell out of you about their fantasy implementation? Every NFL game can have a commercial and call outs about the current NFL.com implementation and other additions/improvements to its fantasy implementation. They also have their own 24/7 channel.

You think ESPN and Yahoo can really compete with that? Hell NFL could advertise its own fantasy football offerings when games are being played on ESPN and theres nothing ESPN could do about it. Are you serious here?

 

[AlphaWolf]

The problem is they only support NFL.com fantasy stuff. No Yahoo, no ESPN, both of which are vastly more popular.

No. The deal is for exclusive interactive content with the NFL.

And I wouldn't give you a cent for an anecdotal about launch inventories of a product that won't be shipping to retail for months. That's fanboy drivel, Sony and MS couldn't tell you how many they will have in the wild by November yet.