The Launch of Sony Playstation 3

THE LAUNCH OF SONY PLAYSTATION 3

CASE ANALYSIS

INTRODUCTION

Sony has gone through more than half a century with the vast experience from the tape recorder to video gaming products. Throughout this period, Sony was the loser in the field because of some of its mistakes, and on the contrary, it was the leader in other areas due to its excellent quality product. This case study analyzes the last product of Sony - PlayStation 3's success and failure factors.

MAIN PROBLEM

Before PS3 launched, Sony forecasted sales of six million PS3 consoles worldwide by March 2007, a level that the PS2 took almost a year to reach. However, Sony's initial euphoria was short-lived. By February 2007, more than a third of PS3 consoles remained unsold, and some retailers reported a higher number of returns than sales. When its launch in Europe in March 2007 the demand for PS3 was not as expected. Even though the PS3 was equipped with the best raw computing power and the Blu-Ray feature, it was falling behind in the race for market share with not only its nearest competitor - Microsoft's Xbox 360, launched a year ago, but also with Nintendo Wii that was released at the same time with PS3.

CAUSES

The central cause was the inability to release a product that was able to compete in the market. Also, it did not deliver to the consumer’s expectations and hence suffered hugely. Customers lamented the PS3's lack of interesting games as it started with only 15 titles, the majority of which were franchise games that had previously been available for the Xbox 360. In addition, Xbox 360 and Nintendo Wii had higher ranking titles than PS3. Even though Sony advertised that the PS3 would be “backward compatible” with virtually all of the "thousands of great games", in reality, only a few titles worked properly on the system. PS3 even could not compete with PS2 in terms of market share. These issues were due to the longer software development cycle as the complexity of the advanced graphics engines and processors utilized in PS3 made the software development stretched to several months. Certain games such as Final Fantasy XI took about six months to port to Xbox 360 but could reuqire up to 3 years and high cost to port to PlayStation 3.  Also, many customers felt let down by Sony's promises for better-looking games. Because the video quality was comparable despite Blu-Ray discs in PS3 had a higher capacity than HD-DVD in Xbox 360.

However, launch delay and the high price could annoy customers but not directly related to the sales decline. Because despite PS2 launch delayed, eventually it dominated the market with 51% share. Also, it is not usual for brand companies to compete for cost leadership strategy, so chaos during the launch in North America and anticipated market demand for 1 million consoles were the solid evidence that consumers wanted to buy this console at whatever cost. Because the public was in the opinion that PS3 would be a very advanced console and totally different from those available in the market. Unfortunately, PS3 even with the latest technology was unable to provide the value that customers really wanted, and people viewed this extra feature as an added expense which made them turn back on Sony. In short, with the production-oriented strategy and focusing more on the long term competition, Sony lost short term profit. Unless it focuses on customer orientation, its marketing and positioning can continue suffering.