In a weird sort of convergence, lots of what I have read in the last few days has been about former consumer electronics superstar Sony Electronics. Capping it off, I was in the local CompUSA this morning buying some new gizmos and had a chat with one of their sales managers about the much lauded Sony Playstation 3. His comments were not good.
I asked how they were selling and he said “terribly. We have six just sitting on the shelves”, a stark contrast to the crushing first-day demand that the PS3 saw on release. The problem? Games. It’s the NeXT Computer problem all over again: it’s the software, stupid. It doesn’t really matter that the PS3 is an extraordinarily powerful IBM Cell-processor, Blu-ray enabled computer, if there aren’t cool games for the device, no-one’s going to buy it.
“How about the Nintendo Wii?” I asked. “Oh man, we can’t keep them in stock. I could sell 100 of ’em this morning if we could just get enough!” So, while the Nintendo might be less technologically capable, it’s a splendid example of how Nintendo nonetheless knows that the software’s critical, and the Wii [pronounced “wee”] has lots of great games, hence its great sales.
Okay, so the big video game system from Sony isn’t doing well. The problem that’s got me thinking is that the smaller unit, the Sony Playstation Portable (aka Sony PSP) is doing terribly too.
The amusing and entertaining PSP Fanboy blog reports that that PSP sales are way down, saying:
“Newly released figures today revealed that the PSP shipped 1.76 million units the holiday period from October to December. While that’s certainly not a small amount, it’s dwarfed by the incredible performance of the PSP the year before, where the system shipped 6.22 million units… Sony CFO, Nobuyuki Oneda commented on the surprising plummet in PSP sales by stating that Sony will not give up on the platform. He noted that Sony is still implementing new ideas for the constantly evolving system.”
Ouch. It’s gotta hurt when your CFO has to say that they won’t give up on a platform, rather than that they were pleased with the sales figures or looking forward to the new hardware release or, really, anything that explained crummy sales figures.
Back to the PS3 for a minute too. Asian-based Business Times reports in Sony’s Q3 profit down on PS3 sales that:
“The profit fall was expected as Sony had said losses at its game unit would balloon to about 200 billion yen for the business year to March due to costs related to its new PlayStation 3 game console and slow sales of PlayStation Portable handheld players.”
[Update: The story is being reported more widely, with a smart analysis in The New York Times and geeky Ars Technica] To be fair, video games are a classic example of “give away the razor, sell the blades” because it’s the license fee on games that are really the profit center for these gaming devices (and why even modest games cost $50 or more), but still, what happened to Sony Corporation in the last decade?
And I won’t even give more than a passing mention of how Sony completely fumbled the portable music player market when it froze into complete inactivity over digital rights management anxiety and let Apple Computer move into a position of complete world dominance with its blockbuster iPod players. I write about gadgets for a living, but nonetheless will admit that we have six iPods and zero Sony audio players. Heck, I even have a [discontinued] Dell DJ and an RCA Lyra, but nothing from Sony in this area. And where’s Sony in the blossoming market of portable media players or PMPs? Surely they can do better than Creative Labs or even Microsoft??
I really believe that we’re seeing the slow burn of Sony Corporation, a gradual shift in the consumer electronics marketplace where nimble Korean companies like LG are eating Japan’s proverbial lunch in the critical billion-dollar market of consumer electronics.
This trend was demonstrated at the Consumer Electronics Show at the beginning of the month too: everything that Sony prides itself on is now a commodity offered by fifty companies or more. Sony is no longer a leader and their fabled Trinitron technology no longer powers TVs or makes people yearn for a bigger budget.
My prediction of the future: Sony corporation is a harbinger of the evolution of the consumer electronics marketplace. We started out where American firms like RCA and Zenith created all the technology worth buying, then it migrated to Japan in a terrifying economic shift (for those of you old enough to remember the xenophobic fears created by Japan stealing all our manufacturing), and now it’s leaving the shores of Japan and moving further east, to Korea and other Pacific Rim nations.
Within a few years, the Japanese aisles at CES will be the least interesting in the show, and it’ll be the small, nimble manufacturers and researchers in China and Korea that will be giving us a glimpse of the future of consumer electronics.