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Last few months, the markets had been rife with rumours that Sony would reduce the price of its PlayStation 3 from $399 to $299 and will launch a new trimmer model called PlayStation 3 Slim, which will hit the market on September 1, 2009. Finally, at the opening ceremony of the Gamescom Expo held in Cologne, Germany, Sony Computer Entertainment CEO Kaz Hirai took the wraps off the new console and announced that ‘Slim’ has the same features and functions as the old PS3, but it’s 33% smaller, 36% lighter, and comes with a 120GB hard drive. Losses from TV and video game businesses have already been a headache for its Chairman and CEO, Howard Stringer for the last four years. The PS3 is not doing as well as Sony had hoped while landing into this business. Since the day Sony and Nintendo released their consoles in November 2006, PS3 cumulative sales (23.8 million) have been less than half of the sales of Nintendo Wii (52.6 million). So the launch of PS3 Slim is not a no-brainer. The PS3 slim’s lower price tag and upgrades are an attempt to reclaim the ground lost to Nintendo Wii and Xbox 360. But analysts do not foresee a bright future of PS3 Slim, as it will cost to the company to market the product. Rob Enderle, President and technology analyst, Enderle Group says, “It is an improvement but it would cost them the market, so it has a very high risk”. He further says, “Games systems are all about games and the PS3 has lagged the Wii and the Xbox, PS3 Slim does not fix that”. In the coming months, Microsoft and Nintendo might lower their console prices making the PS3 Slim the most expensive for recession-hit shoppers. Secondly, while the ordinary high-definition Blue-ray DVD players cost little, who would prefer Sony? However, “Only if it is marketed right, it could provide a fourth quarter pop,” says Rob. So, it will be better if Sony jumps into the business of selling in-house games effectively (Sony profits mainly from selling games it develops in-house), otherwise it will sting Stringer again.
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Source : IIPM Editorial, 2010.
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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