Microsoft’s Regional Director Rips Blu-Ray Questions Sony's Strategy

[RobertR1]

One of my of issues with the PS3 vs 360 is that:

why would you not expect a product that is released one year after and for $200 more than the competition to have some advantage?

If you bought a 7800GTX last June for $399 and a x7900GTX for $599 today, would you honestly sit there and compare them head to head?

The problem with using my example above is answering the question: is the PS3 superior enough over the competition to justify being a year behind and $200 more? What you end up is with the MS guys saying "no way" and PS3 guys fighting tooth and nail to prove otherwise. Fact remains, both systems are quite close for their primary intention: playing games. After that, each has their own advantages and disadvantages. If those particular advantages appeal to you, on top of the gaming experience provided by the machine, then that's your choice of console.

 

[patsu]

why would you not expect a product that is released one year after and for $200 more than the competition to have some advantage?

That's right. Most people will consider the price difference between XBox 360 and PS3 before buying (although I think the one year release gap is largely irrelevant).

The decision process will be based on the total package, especially the content/software. Once a beach-head is established, they will broaden the value and start to appeal to a larger crowd.

e.g.,
The original iPod (without iTunes Music Store) was released 1-2 years later than Creative Technologies. Although it was based on an OEM'ed MP3 reference design and $100+ more expensive, it still found its way into enough Mac users. In addition to the unique scrollwheel and minimalist look, the iTunes software played an important part in integrating the whole experiences and conveying the value. A year later Steve Jobs was the only man who could convince all the major labels to sign on, and the iTunes Music Store was released. The lenient DRM and the simple $0.99 pricing scheme took over the world by storm. Even more people perceived the US$100+ differences as a worthwhile investment as a result.

All the extra goodies in PS3 is to allow for its proliferation beyond the gamer crowd throughout its planned 10 year lifecycle. Sony seems to have thought through the various upgrade mechanisms (in case they are needed).

After reading through the recent Ken interviews, I think Sony is really playing by ear (That is why their messaging is confusing). Perhaps they feel they have no leader to follow after the last 2 successes, and they are trying to outdo themselves

At this point I'm pretty sure the picture inside Sony is not hunky-dory. Although there are many promising values and limited early "successes", there seem to be many loose ends to tie up. The combined PS3 feature set is also hard to place.

In one of the interviews years ago, Ken said "Distribution [of games] should be free". This seems to tie in with his recent comment about hardware being a separate business from content. I had thought that a combined approach will reinforce each other but Sony seems to think otherwise

 

[sonyps35]

MS was stupid to sell XB360 at a loss early on, because demand was insane. They could have also pretended that their system is worth more when the PS3 launches also. I'm sure half of the percieved superiority of PS3 will be from it's higher price. That happens with all consumer electronics.

Nah this is a misnomer in videogames.

People used to say price was all important in videogames, then Gamecube changed all that, because it consistently held the low price and yet was constantly outsold by Xbox/PS2. I just find amusing, having five years ago fought all the message board wars in reverse (IE back then, people always seemed to claim low price was exceedingly important advantage). Since Gamecube, many people now try to say that a low price somehow "hurts"

It isn't so much the price as the product. If the Xbox had been cheaper, I promise nobody would have perceived it as technically inferior to PS2 because of that.

Basically make a powerful product. If you have a weaker product people wont buy even if you cut the price, so somehow people associate low price with failure, when that's not the reason, the reason is the product is weak.

Low price can only HELP a good product.

 

[Nesh]

You should ask yourself then why not every good product has a low price

Nesh - I'm not sure whether or not there is a "system seller" in their launch library, but in the light of what most would consider an expensive console, it would behoove them to ensure a "must have" upon launching ps3.

By waiting a year to make a purchase decision given the potential price drop and what should be a more tempting library and some clarity on the hd movie standard, it seems to be the most logical move.

Then why are you trying to give the impression that people feel like waiting till GT is released to buy a PS3 than buy a PS3 instead with another game and wait until GT is released?

 

[MasaC]

If only 2% of the PS2 users wants to upgrade to PS3 - Sony will sell all launch PS3's on day 1.

Fact is, only 6% of the PS2 userbase need to be interested in the PS3 for Sony to sell all PS3's they can make until the end of their fiscal year.

The biggest "system seller" is being the next Playstation.

 

[RancidLunchmeat]

If only 2% of the PS2 users wants to upgrade to PS3 - Sony will sell all launch PS3's on day 1.

Fact is, only 6% of the PS2 userbase need to be interested in the PS3 for Sony to sell all PS3's they can make until the end of their fiscal year.

Based upon what? Are you using Sony's projections of production to make these claims?

MS suffered production problems, Sony very well could be in the same situation. Which means the available product to market will be lower, and thus your percentages would also be lower.

I agree that it's nearly impossible for Sony to have PS3s sitting on the shelves going unsold during their launch.

 

[Bad_Boy]

Based upon what? Are you using Sony's projections of production to make these claims?

What else is he going to go by? The only estimated shipped numbers we have are from Sony's official projections. Of course there could be production problems, no doubt, but we can't go by problems until they actually occur.

 

[bRoNx]

Based upon what?

Based on fans like me.

I'm sure there'll be more hardcore PS3 fans than what SONY can produce in the first few months at least. I think MasaC got it right when he said:

The biggest "system seller" is being the next Playstation

That is what SONY is banking on, and it's not without reason. All this talk of next gen media and all the other rubbish exec's & PR teams like to toss at each other, the bottom line is, the PlayStation name will sell the console to hardcore PlayStation fans -- period. I made up my mind about buying the PS3 before E3...heck, I made up my mind a long time ago! I'm sure it's the same case with alot of PS3 & X360 fans in B3D.

Regardless of what it is, if you are loyal to that console badly enough, you'll find excuses to overcome the 'disadvantages', and make it ok to buy it. Look for (hardcore) PlayStation fans to be buying out the launch stock in a heartbeat. That's my prediction.

 

[MasaC]

MS suffered production problems, Sony very well could be in the same situation.

MS is not a hardware company, Sony is.

 

[Acert93]

MS is not a hardware company, Sony is.

That did not prevented shortages of the PS2 at and after launch or the PS2 Slim.

And MS's shortage appears to have been related to GDDR3 availability. If Sony had shipped in 2005 they would have had the same issue.

I am not forcasting huge shortages (I think 5-6M in Fiscal 2006 is realistic), but Sony does have a number of new components to deal with. Beyond CELL and RSX, there is XDR (new memory with low volume) and Blu Ray. Blu Ray, in particular, will be interesting. We saw how limited Toshiba's HD DVD launch was. Any way we cut it the PS3 will be shipping a multitude more Blu Ray drives compared to stand alone units this fall. So its not only the "new technology" factor, but also ramping it up to large scale production.

Sony has a lot to coordinate. This may be why there will only be 2M (!!!) units at launch. Should there not be 5M+ for a global launch in all major territories + Australia? And it looks like Sony will only be moving 1M additional units a month, so production is not aiming high either. I think demand will far outstrip supply. My theory why Sony is not going to flood the market is simply this: Q1 2007 will be bringing cost reduction to both Cell and RSX on the 65nm node. The limited launch is to help control bleeding.

Anyhow, Sony being a hardware company does not make it immune to shortages. It only takes 1 part to stall the process.

 

[Magnum PI]

a lot of people still buy PS2 when the nextgen xbox360 is available

what do you think they'll do when PS3 is released ?
will they buy a PS2 ? or a PS3 = PS2 + a next gen console ?

PS3 should be a success because it will manage to sell to both these two segments of maket:

the people who prefer to buy a PS2 over a xbox360
the people who are specifically interested to translate to the next gen (xbox360 buyer).

ICT will be disabled on blue-ray until 2010 so having blue-ray with analog outputs won't be a problem for BD-ROMs made before 2010. and you can expect HDMI BR players will have become cheap by then.

http://arstechnica.com/news.ars/post/20060521-6880.html

 

[Shifty Geezer]

a lot of people still buy PS2 when the nextgen xbox360 is available

what do you think they'll do when PS3 is released ?
will they buy a PS2 ? or a PS3 = PS2 + a next gen console ?

Ummm, you do realize PS2 is a lot cheaper than the next-gen consoles, right? And that the reason people are buying PS2 over XB360 can be attributed in part to the fact it's cheap? You don't really think people euyeing up a $120 PS2 now are the sorts of people who in 6 months time will say 'hey, I can spend $120 on a PS2, or $500 on a PS3 to play the same PS2 games I want to play!'

 

[Titanio]

Are you sure? MS claims when they polled, devs were more concerned about read speed than size.

Maybe they did, but that doesn't mean they wouldn't have wanted more size too! Look at what developers who have spoken openly about this are saying. I doubt they'd have anything but asked MS for a next-gen drive.

The whole "choice" thing can be a smokescreen, but in this case it holds very true.

The whole "choice" thing should not be applied to Blu-ray versus DVD over any other component. Shouldn't SDTV owners be able to choose whether they pay for a more powerful GPU or not, since they won't be able to get the benefit of the one being "forced" on them? Blu-ray may end up being as important or more important than any of these CPUs or GPUs that we don't have any choice about. People/MS are scapegoating Blu-ray because they desperately don't want it to become a significant factor...no better way to spin that than to characterise it as extraneous technology that the consumer is needlessly paying for.

 

[sonyps35]

The whole "choice" thing should not be applied to Blu-ray versus DVD over any other component. Shouldn't SDTV owners be able to choose whether they pay for a more powerful GPU or not, since they won't be able to get the benefit of the one being "forced" on them? Blu-ray may end up being as important or more important than any of these CPUs or GPUs that we don't have any choice about. People/MS are scapegoating Blu-ray because they desperately don't want it to become a significant factor...no better way to spin that than to characterise it as extraneous technology that the consumer is needlessly paying for.

And people spin their favorite console's design choices in a favorable light, just like you do. What else is new..

What did Rancid Lunchmeat post? Sony spin PS3 as a cheap $600 computer rather than a super expensive console because they have to..

 

[Titanio]

And people spin their favorite console's design choices in a favorable light, just like you do. What else is new.

I'm glad we're in agreement.

Also, regarding titles, I think it's highly presumptuous of you to class the likes of Resistance or Motorstorm as "filler". Both had very good E3s, Motorstorm garnered awards even. We'll see how they turn out later in the year.

 

[Magnum PI]

Ummm, you do realize PS2 is a lot cheaper than the next-gen consoles, right? And that the reason people are buying PS2 over XB360 can be attributed in part to the fact it's cheap? You don't really think people euyeing up a $120 PS2 now are the sorts of people who in 6 months time will say 'hey, I can spend $120 on a PS2, or $500 on a PS3 to play the same PS2 games I want to play!'

of course you're right.

but by the time the PS3 will be released PS2 will really be at the end of its lifecylcle, and the amount of releases for PS2 will trickle while most of new content will be made for PS3/xbox360/wii. before PS3 is available, PS2 is current, after it willl be obsolete.

therefore, the relative value of PS2 will be a lot worse than now.

as we can see with the xbox which isn't selling much since xbox360 release, the PS2 sales will be reduced by a big factor when PS3 will be available.

what do you think that the PS2 buyers would choose instead of PS3 ? for most of them they don't buy console they buy playstations.

i think PS2 sales will be logically reported to PS3. as you say the PS3 is expensive, maybe some will wait for the first price cut to happen, but they'll translate sooner or later to PS3. i don't think we'll see a big surge of xbox360 sales because of PS2 owners transiting to xbox360. maybe if the xbox360 had PS2 backward compatibility...

subsidiary question: if PS3 was out before xbox360, do you think xbox would have outsold PS3 ? I don't think we have many examples of consoles outsold by previous gen consoles, the only one i can figure is dreamcast.

 

[Titanio]

but by the time the PS3 will be released PS2 will really be at the end of its lifecylcle

Doubtful, if the experience with the original Playstation is anything to go by. The original Playstation kept up well with both GC and Xbox after PS2 was released

and the amount of releases for PS2 will trickle

Well, there's a lot of big titles coming out for PS2 around and after the PS3 launch. Okami and Final Fantasy XII are due by the end of the year, or early 07 in Europe. God of War 2 is due in 07. New content continued to be made available for the original Playstation, and Sony seems even more commited to that with PS2.

as we can see with the xbox which isn't selling much since xbox360 release, the PS2 sales will be reduced by a big factor when PS3 will be available.

I don't think Xbox is a good comparison to make. It dropped dead because MS let it drop dead. That's not a good guide for what'll happen to PS2, at all. The original Playstation is a better guide, only things seem even better for PS2.

subsidiary question: if PS3 was out before xbox360, do you think xbox would have outsold PS3 ? I don't think we have many examples of consoles outsold by previous gen consoles, the only one i can figure is dreamcast.

Sony shipped more Playstation1s in Q4 2000 than they did Playstation2s. I would not be surprised at all if PS2 outsells PS3 this holiday.

 

[TheChefO]

Then why are you trying to give the impression that people feel like waiting till GT is released to buy a PS3 than buy a PS3 instead with another game and wait until GT is released?

That is not the impression I am trying to give. The formula for purchase is simple:

Desire > Price

When the price goes up, so must desire. The titles they are launching with could be the greatest games since, well ... GTA. But as it is right now, if they are indeed that impactful, they are not hyped appropriately to match the experience. In other words (in the eyes of gamers) with that kind of price tag, good luck with those games.

 

[goonergaz]

Magnum PI - you can't really compare like that - PS1 to PS2 and XB to X360 or even PS2 to X360are completely different...Titanio is 100% right on the button (IMO), PS2 will have a strong holiday and the only thing that will dent it is sales going to X360 (IMHO). And that's unlikely as most sales now are for little Johnnys bedroom.

sonyPS35 - I can't believe you'd rather have lots of messy wires everywhere and pay the same price rather than have an 'all-in-one' PS3 solution? Also WRT read speeds, I suspect that was also considering the lack of HDD - which of course is standard on PS3 and therefore read speed isn't as important (I would ass-u-me).

TheChefO - as you say desire>price and desire is fulled by many factors (of which one is price). Simply Sony will sell out for around the first 6 mths, by then the choice of software will be greater and thefore demand will be higher...esp. if they add a price-drop (if sales are showning to be slow)...but everyone seems to have forgotten about BC - with very high BC most will be happy with just a couple of good launch titles and their old faves...they'll wait for the cream, I know I will.

 

[TheChefO]

TheChefO - as you say desire>price and desire is fulled by many factors (of which one is price). Simply Sony will sell out for around the first 6 mths, by then the choice of software will be greater and thefore demand will be higher...esp. if they add a price-drop (if sales are showning to be slow)...but everyone seems to have forgotten about BC - with very high BC most will be happy with just a couple of good launch titles and their old faves...they'll wait for the cream, I know I will.

Price = desire? I can see to a certain degree those that would use ps3 as a kind of status symbol (as sad as that is). but aside from that I would say it is a "hump" to get over for the consumer to alleviate their desire. (if you want this you must do (pay) this to get it)

Price drop - I'm not sure what the numbers are for Sony internally but from all accounts I've seen they are losing money at these price points so to announce a price drop 6months out would just increase this loss which Sony is not in a position to accept at this time.

BC - look, bc is great for most people as a "ok I can wait a bit for X game to come out, in the meanwhile, San Andreas." But If I'm dropping $600 on a console I want Next Gen in a big way and bc doesn't sell me that. It is merely a parent-seller/ small time-buyer.


On a side note - As others have pointed out WRT Sony being a trend setter, I find this more expensive console trend a disturbing one. We'll see where it takes us.