PS3 Strategy/Confidence Retrospective

[TheChefO]

The problem with all of this Chef-O, is that you always talk about what Sony should have done in a way that's absent of any ramifications.

1) A lower price (in fall of '06) was not an option.

2) No BD was not an option.

3) Releasing earlier was not an option.

4) But insofar as the problem is not price per se but games, I agree that God of War 2 - with some guaranteed great reviews - would have been a strong launch title.

1) Why? BR

2) Why? Greed

3) Why? BR/Greed/no games(planning! priorities!)

4) It isn't one thing really and that's my point. Sony screwed up on so many of these things that all point to overconfidence/arrogance/lack of respect for their competition.


PS3 is a clinic on how to lose dominance in the console realm. It was completely unavoidable.

 

[Carl B]

Sony got blindsided by Nintendo. The PS3 became background noise in the wake of the Wii's popularity. We can argue that they don't compete in the same segment etc etc but in the end, they do. They're both trying to get the mass consumer to buy them. Had the Wii bombed the PS3 would have done better. Having poor software and missing features vs their high end competitor didn't win many people over either.

You can add the Wii to the perfect storm. Stealing buzz really does hurt a product.

That's very true as well. After Nintendo announced a Fall '06 launch, I always thought that Sony would do well to delay to Spring '07 - give them an opportunity to work out some kinks as well. To anyone that was at E3 '06, it was obvious that a direct match-up against Wii was a situation you wouldn't want to gamble on. Only one system can emerge as the "it" system on a joint-launch afterall.

...Sony screwed up on so many of these things that all point to overconfidence/arrogance/lack of respect for their competition...

The "so many of these things" you point out all lead back to BD. BD, not BR. And again, the jury is out on whether it was the right or wrong move for Sony... we won't know until the format war dust settles, and the cost/rewards are tallied up. But we can all agree it is why we are here having this thread here today. I'm sure we can also agree that as much of a cost albatross as BD has been for the PS3 up until now, the format itself would be near-buried if it hadn't been included. Like I said earlier, Sony was forced to gamble... but at the time they made their bet, *every* decision was a gamble.

 

[TheChefO]

The install base of PS2 is far larger. More people can buy the game. More people take an interest in the franchise and those people will buy the next one on PS3. Now, if they choose to rush a game on PS3, it would have tarnished the franchise just like the past E3 version of Gran Turismo HD did. This must be a very easy choice for them. GoW2 was not a cheap game to produce even on PS2. Anyway PS2 is still a growing platform that sell profitable hardwares. I'd like to hear what your "peanuts" evaluation is based on in strictly monetary terms.

You're missing the point.

Yes they made a nice profit of the gow2 franchise on ps2.

How many highly anticipated games have come out for ps3 in the near 12 months it has been on the market?

How well do you think a title as strong as gow2 would sell on a system with as few "must-haves" as ps3?

And really, it isn't even about direct sales. It's about stiring up positive press and impressions for your new system and establishing desire.

 

[one]

Sony got blindsided by Nintendo. The PS3 became background noise in the wake of the Wii's popularity. We can argue that they don't compete in the same segment etc etc but in the end, they do. They're both trying to get the mass consumer to buy them. Had the Wii bombed the PS3 would have done better. Having poor software and missing features vs their high end competitor didn't win many people over either.

You can add the Wii to the perfect storm. Stealing buzz really does hurt a product.

As for Sony's arrogance, it wasn't in what they said, it was what they belived. The belief that people are ready for high end products in the name of "HD" and they can shotgun BR with it. They wanted to fight on multiple fronts with the assumption that their name and marketing power would allow them such. That plan has failed miserably to date. Yes, miserably. It's very hard to justify sub 100k sales for 3months in the biggest market.

Do you believe if Wii bombed, suddenly there would been more people who buy a $599 console?

 

[one]

You're missing the point.

Yes they made a nice profit of the gow2 franchise on ps2.

How many highly anticipated games have come out for ps3 in the near 12 months it has been on the market?

How well do you think a title as strong as gow2 on a system with as few "must-haves" as ps3?

And really, it isn't even about direct sales. It's about stiring up positive press and impressions for your new system and establishing desire.

Before writing I'm missing the point, you should state why you believe GoW must be an easy title to realize on PS3 among all franchises. I already wrote about the risk of having a crap game for a famous franchise on PS3.

1) Why? BR

Cell & RSX are both more expensive than what Xbox 360 have. And PS3 had EE+GS too.

 

[DuckThor Evil]

I'm sure we can also agree that as much of a cost albatross as BD has been for the PS3 up until now, the format itself would be near-buried if it hadn't been included. Like I said earlier, Sony was forced to gamble... but at the time they made their bet, *every* decision was a gamble.

Imo they could and should have made a unified format with Toshiba instead of gambling, imagine how much faster the adoption of HD movies would be if that had happened, now you probably now more about that situation as well, but I always got the feeling that instead of making the smart business choice, those two Japanese companies opted out to have a "samurai battle" instead, even though I seem to remember that there were some hope for the unified disc even at the very end.

 

[TheChefO]

The "so many of these things" you point out all lead back to BD.

Actually, no. They don't.

It is the main culprit, but not the only.

-Games
-Price (BR err BD)
-Timing
-Dev tools
-Marketing/PR

They may have been perfectly fine with BD and a $600 price tag in 2006 and a subpar toolset ... If they had a load of killer games.

These are the main components of establishing a console and Sony missed the boat on all of them.

 

[Carl B]

Imo they could and should have made a unified format with Toshiba instead of gambling, imagine how much faster the adoption of HD movies would be if that had happened, now you probably now more about that situation as well, but I always got the feeling that instead of making the smart business choice, those two Japanese companies opted out to have a "samurai battle" instead, even though I seem to remember that there were some hope for the unified disc even at the very end.

Well, I agree they should've combined formats. I'll point out that my man Kutaragi was a big proponent of such, and if he had been CEO I wouldn't be surprised if that would be what happened, especially given his warm relations with Toshiba in general. But Stringer probably didn't want to agitate the engineers telling him BD was a sure thing, and being a studio exec, he may have been convinced that they had enough of an army ready to go. And the truth is, it is HD DVD that has the uphill struggle, and indeed BD was more than Sony to begin with - it may have been viewed as poor form for them to abandon Matsushita and Phillips and go with a Toshiba compromise (it really was about the physical make-up at that point).

But anyway, I'm right there with you is my point.

Cell & RSX are both more expensive than what Xbox 360 have. And PS3 had EE+GS too.

Are they though? Beyond being fabbed at IBM and OTSS originally, the RSX was a straightforward die and the Cell had the yield-increasing SPE hit it could take. I'd be surprised if the XeCPU and the Xenos with daughter-die packaging, both outsourced across three companies, would have been much less expensive.

Actually, no. They don't.

It is the main culprit, but not the only.

-Games
-Price (BR err BD)
-Timing
-Dev tools
-Marketing/PR

They may have been perfectly fine with BD and a $600 price tag in 2006 and a subpar toolset ... If they had a load of killer games.

These are the main components of establishing a console and Sony missed the boat on all of them.

Well, I think "dev kits" and "games" is a problem of your own creation - I simply don't acknowledge them as 'failings.' Price and BD, well... that's BD. Marketing is a different failing, I agree, but it definitely has been a failing.

 

[TheChefO]

Before writing I'm missing the point, you should state why you believe GoW must be an easy title to realize on PS3 among all franchises. I already wrote about the risk of having a crap game for a famous franchise on PS3.

Who said anything about easy or crap port?

Sony has some of the best devs in the world. I'm sure they can figure out how to get quality SW on their machine without cutting corners. And no, it didn't have to be a launch title. If it were on it's way now it would still do wonders for them. By bypassing this route and pushing it off on ps2, they go for the easy money up front while ignoring ps3's impending lack of sw library.

If Sony had a gang of quality sw coming, it wouldn't make a difference. The fact they are in a drought though kinda emphasizes my point.

 

[TheChefO]

Cell & RSX are both more expensive than what Xbox 360 have. And PS3 had EE+GS too.

sure, but if you don't think BD was a significant driver in their costs you'd be mistaken.

 

[patsu]

sure, but if you don't think BD was a significant driver in their costs you'd be mistaken.

BD is essentially "free" now compared to the competition's US$349 price point (with 5 free movies too). Next major stop is the "Arcade" pricepoint (with "free" BD drive). No idea how they can make it.

 

[scooby_dooby]

Imo they could and should have made a unified format with Toshiba instead of gambling, imagine how much faster the adoption of HD movies would be if that had happened, now you probably now more about that situation as well, but I always got the feeling that instead of making the smart business choice, those two Japanese companies opted out to have a "samurai battle" instead, even though I seem to remember that there were some hope for the unified disc even at the very end.

Definately.

They even went so far as to risk the entire success of their Playstation brand on BR.

In hindsight, a very poor decision to not combine formats with Toshiba, and again goes back to Sony's overconfidence as a company.

At the time it looked like a recipe for success, but the strength of HD-DVD sales, delays for BR, and lack of PS3 sales, has rendered the strategy uneffective.

 

[scooby_dooby]

BD is essentially "free" now compared to the competition's US$349 price point (with 5 free movies too). Next major stop is the "Arcade" pricepoint (with "free" BD drive). No idea how they can make it.

It's not free, MS is just making way more profit right now.

And before we twist things too badly, the competition's pricepoint is $280, compared to $400 for the base PS3.

 

[one]

Who said anything about easy or crap port?

Sony has some of the best devs in the world. I'm sure they can figure out how to get quality SW on their machine without cutting corners. And no, it didn't have to be a launch title. If it were on it's way now it would still do wonders for them. By bypassing this route and pushing it off on ps2, they go for the easy money up front while ignoring ps3's impending lack of sw library.

If Sony had a gang of quality sw coming, it wouldn't make a difference. The fact they are in a drought though kinda emphasizes my point.

Wonder? You blame SDK and OS memory footprint at one hand while believing they can do wonders on the other hand... please make a better argument next time. Having COD4 and UT3 on PS3 now is more important than having a rushed port of GoW2 on PS3, if you ask me. You don't mention Ratchet & Clank PS3 which is already showing your selective point of view.

 

[Nesh]

I think a simple question here could put this to rest:

What would Sony have done ANYTHING differently if they had no competition at all?

IMO, it would have been very similar to what we saw with ps3:

high price
poor dev tools
proprietary media
very few games

In fact, I think the only thing that may have been different is an even further delayed launch.

Hmm? I wouldn't go as far as to say "poor dev tools". It is just harder to develop for I think. Shifty already pointed to you Sony's efforts to provide developers with the necessary tools and help

Sony has nothing to do with the release of few games. Sony's studios alone are making many games. They are just too long in development. Third party developers would have filled PS3 with much more games if there was no competition.

Additionally I see nothing wrong with proprietary media if it contributes positively

Also I doubt there is a company in existence that wouldnt have exploited their position if they were alone.

Lastly it is not like Sony was selling PS3 at a profit. They were selling it at their expense. Even at that price

 

[patsu]

It's not free, MS is just making way more profit right now.

And before we twist things too badly, the competition's pricepoint is $280, compared to $400 for the base PS3.

Making less losses, not more profit.

Gah... I forgot about the Arcade pack. Will have to see how well it goes.
Still compared to the $349 one, the BD drive is essentially "free" to the consumers. Kaz said they lose less per unit too.

 

[scooby_dooby]

Wonder? You blame SDK and OS memory footprint at one hand while believing they can do wonders on the other hand... please make a better argument next time. Having COD4 and UT3 on PS3 now is more important than having a rushed port of GoW2 on PS3, if you ask me. You don't mention Ratchet & Clank PS3 which is already showing your selective point of view.

The fundamental issue is that Sony has done a horrible job of getting their big name PS2 franchises to market with the PS3.

We are now 18months after what was supposed to be the initial launch date, and how many big franchises has Sony brought over? ZERO.

R&C is the first title.

There's no denying that Sony could've done better in this regard. Whether it would've really made any difference is impossible to say...but it is an area where they've dropped the ball somewhat.

Look at PS2's lineup at the same timeframe. And all arguments about PS2's strong install base now, could've been made avout PS1 in 2000/2001.

In 2001 Sony PS2 had the following blockbuster titles:
1. GTA 3
2. Metal Gear Solid 2
3. Grand Turismo 3
4. FFX
5. Devil May Cry
6. Tony Hawk 3
7. Jak & Daxter
8. Twisted Metal: Black


That's literally night and day compared to where they find themselves now.

 

[TheChefO]

Well, I think "dev kits" and "games" is a problem of your own creation - I simply don't acknowledge them as 'failings.' Price and BD, well... that's BD. Marketing is a different failing, I agree, but it definitely has been a failing.

I think I'm misunderstood here.

I don't mean "the games suck!" and "the sdk sucks!". I mean they aren't good enough to overcome the systems other liabilities in the context of the systems current market situation.

If they put their full dev effort behind ps3 in 2004 and signed a few key exclusives, they may have got away with the price, timing, BD, etc. as they would currently be releasing a flood of killer software.

 

[TrungGap]

Not really. MS also has DirectX games for PC right ? In addition, it does not need to create software for an exotic architecture like Cell. Sony relies on third party to provide the SDKs (Too few game developers compared to general application developers to make it worthwhile).

The embedded system world generally has minimalist OS and SDK due to hardware and business model limitations.

Eh, you're talking about MS and Windows here... DirectX on a PC vs Sony with experience on Nintendo's console, PS1 and PS2. Who would know more about minimalist OS? Definitely not MS. Who should feel more at home? It think it's obvious...but it didn't turned out that way.

I don't think Sony is following. It takes time to create the hardware and software. It looks like independent effort by all 3 vendors to me.

Sony management is decisive and swift when it comes down to the crunches (Look at the IPO, semicon adjustment, the Kutaragi saga). The problem is with their unified marketing (or lack thereof). In my view, part of it has to do with the software delay, so marketing can't plan properly.

I think we both in agreement that Sony's software left the hardware team hanging. So marketing did what it can with the cards it dealt with. Unfortunately, I think marketing instead of making the proper alignment, such as asking the hardware team to adjust the hardware initially, told world that they're should be happy to work overtime to get a PS3.

Marketing should have realized that $600 console without software isn't going to sell like hotcakes, and push back on the hardware.

Of course, we can say whatever we want, with 20/20 hindsight. I'm sure Sony execs don't have that luxury knowing that software won't be there. Or that it won't be there even after launch window.

MS may have to charge more for Vista because it took them 7 years to do it. They have to make money right ?

No they don't. They're too rich already. Kidding...

A lot of time, you have to smart and cut your loses. If a project is over budget and over schedule, you should really start analyzing whether you're going to make money on what you think the market will bare. If you don't think so, you'll cancel the project, because if you don't you might dig a deeper hole for your grave.

Now, I'm not saying Vista will be that, but I wonder how long it'll take MS to recover their investment....of even if.

 

[Nesh]

If they put their full dev effort behind ps3 in 2004 and signed a few key exclusives, they may have got away with the price, timing, BD, etc. as they would currently be releasing a flood of killer software.

Why do that when PS2 was very alive and kicking? They would have hurt their PS2 business and then the PS3 business when MS would have come up with a console that raped the PS3 technologically and Nintendo would have came up with Wii would have sold like hotcakes and visually more competitive with the PS3 than it is now.

Or are you saying that that Sony should have started work on the PS3 from 2004?