Why The PS3 Will Fail

Sony's strategy entering this console generation has been fundamentally flawed from the start. As Nintendo has demonstrated, customer good-will from previous console generations can only extend so far. If your console is basically flawed, it will be relegated to a distant thirdplace in the ongoing battle for market-share. In the case of Nintendo, where the Nintendo 64 and the Gamecube were both highly flawed but still profitable, that was an acceptable situation. With the PS3 though, Sony is incurring a huge loss with every console sale. Banking on the widespread success of the PS3, Sony expects to recoup those losses in software sales, so ending up in the third place position would be a death knell for Sony. Sony has to know everything's on the line here right? So why are they handling the PS3 the way they are?

The PS3's future is in question

Format Wars

I can see exactly what Sony is shooting for with Blu-Ray. Sony has claimed that the PS2 was instrumental to the success of the DVD format, with some degree of truth. The PS2's release was perfectly positioned during a period when more and more movies were seeing DVD releases but stand-alone DVD players were still $100-$200. The PS2, at $300, offered DVD player capabilities and the additional perk of gaming, clearly a great value. Being able to play DVDs obviously drove up PS2 sales.

But Blu-Ray isn't the DVD format. There are very few movies currently out in Blu-Ray formats, and Blu-Ray does not offer a user experience that is vastly different from DVD in the way that DVD introduced commentary, separate language tracks, and various other advanced features that VHS lacked. Further, there are currently no stand-alone Blu-Ray players available for less than $900. Even then, only some of the exorbitantly priced players offer proper support for full 1080p at this point, and the initial wave of players only supported MPEG2 compression. Implementation of the Blu-Ray standard has been inconsistent, and where DVD was the clear successor to the VHS format, Blu-Ray is in competition with another format, HD-DVD, which has already received the backing of Microsoft, Universal Studios, and other prominent movie studios. Whether or not Blu-Ray will take off the way DVD did is very much up in the air. It doesn't help that a cheaper alternative is already widely available. The demand for Blu-Ray that Sony imagines will position the PS3 as a great value to home entertainment enthusiasts does not exist.

Unfortunately for Sony, every single other facet of the PS3 has been compromised to maintain Blu-Ray support. The cost of the console itself is vastly increased by the implementation of this new technology. Likewise, actual console production has been drastically reduced due to manufacturing issues with the new technology. In a bid to save money, the PS3 architecture has been hamstrung, and the PS3 is left going into the new console generation with only 256MB of RAM. Where Sony has been trying to market the PS3 as a sort of cut-rate computing experience, including support for USB keyboards and mice, the system is clearly deficit. My PC from 2002 had more than 256MB of RAM.

Sony's Inferiority Complex

Besides Blu-Ray, the PS3 also possesses one other completely new technology. That is the Cell processor that Sony has claimed is on-par with a supercomputer. This technology proved decent for generating buzz early on, with articles claiming use of the processors by scientists for mass computing problems, but now you don't hear much about it. Why is that? Because CPUs don't sell consoles. The buying public doesn't actually care that much. The PS2 was the weakest of all the previous generation systems, and yet it was far and away the most successful.

Perhaps criticism of the PS2 has given Sony something of a complex, resulting in Kutaragi risking it all to compete in the hardware specs pissing match. Either way, the PS3 is now saddled with yet another piece of new technology for which the manufacturing process has not yet been perfected. The PS3 ends up being that much harder to produce and that much more expensive.

A Playstation 10th Year Anniversary ad that was pulled following protest by the Vatican

Advertising Woes?

Finally, you have Sony PR which has been one disaster after another. However, Sony PR has arguably always been a mixed bag. From the original Playstation on, Sony has pushed ads that are edgy, running the gamut from disturbing, to potentially racist, to outright confusing. The secret code in some print ads for the PS3 recalls to mind the original cryptic Playstation ads, which left to the reader the task of decoding messages such as "you are not ready."

The so-called racist ad

I remember feeling that the buzz surrounding the release of the original Playstation was palpable. This time around, Sony is doing roughly the same things it did before, advertising-wise. The feeling is much more negative this time around, but even negative buzz works in Sony's favor. However, it remains to be seen whether or not Sony, mired in manufacturing woes, will be able to actually provide the consoles to match the interest they have generated, which brings me to my final point.

Solid Alternatives

Parents and other consumers are going to go shopping this christmas, and they are going to go in wanting a PS3 and leave with an Xbox 360 or a Nintendo Wii. There are already claims that the PS3 is on-par with the 360 in terms of processing power, which I am very skeptical of. However, it is unarguable that Wii and the 360 are both much cheaper (no matter how you try to spin it) and much more widely available than the PS3. It is unclear when Sony will ever be able to get it's manufacturing act together, but the 360 has been out for a long time and faces no production shortages. Similarly, Wii production outstrips PS3 production by an entire order of magnitude.

Consumers simply will not have the option of getting the PS3 when it counts. With the Xbox 360 aimed at the same target audience as the PS3, and already being widely available and popular with developers, and the Wii attempting to create it's own complementary market, Sony's prospects for success appear grim. Perhaps it will be sustained through this period by the Japanese market, which has relatively little interest in the 360 and thus represents an entire hard-core gamer segment that is ripe for the taking, but the decline of the videogame market in Japan has been ongoing for years. Cheaper, more accessible, and innovative experiences, such as that offered by the Nintendo DS, have been dramatically more successful than traditional hardware upgrade iterations such as the PSP. Sony's future remains very much in question.