What happened to the Sony PS3

As a lot of people who follow the gaming console industry know, a couple of years ago, there was a duet between 2 of the major contenders - the Sony PS3 and Microsoft's XboX 360 (during their development, the entire discussion was about which of these would be the winner). And then there was a sudden winner, Nintendo was the surprise leader, with its Wii gaming platform selling much higher than the other platforms. Both the PS3 and the XboX are much more powerful in terms of processing speed and raw power, but the incredible user-interactivity built into the Wii made it much more attractive to people, and it started out-selling the others within a short time. And no matter what Sony and Microsoft are trying, they are not able to compete with Nintendo, even with price cuts and a lot more marketing.
The latest selling season further amplifies this trend, with the Wii pulling ahead of its competitors, way ahead:

Sony's PS3 is dying on the shelves. Alone among the three major videogame consoles, sales of the PS3 are down about 19% from November 2007, according to the latest stats from the NPD Group. Sony was only able to sell 378,000 PS3s this November, compared to 466,000 last year.
And the problem for Sony isn't the recession, it's the PS3. Microsoft (MSFT) put up respectable numbers with its Xbox 360, selling 836,000 units vs 777,000 in November 2007. And Nintendo's (NTDOY) Wii continues to dominate the market, more than doubling sales from 981,000 to 2.04 million.

Sony is stuck with its initial plan to build a powerhouse, since that (along with a Blu-Ray drive) makes the PS3 much more expensive; in addition, since the Wii is much ahead, there aren't enough developers making quality games for the PS3 - causing further problems.

Nintendo keeps on leading

The Nintendo Wii seems like magic. Good user design and usability considerations along with a great word of mouth publicity has done what no amount of marketing push and technical specifications could have done; for the past considerable period of time, it has kept on pushing both the PlayStation 3 and the Xbox360 by the side, and kept on generating a huge amount of buzz for itself. If you look at these figures, you can see why both Microsoft and Sony are despairing:

Nintendo DS topped the selling hardware chart with 783,000 units sold, followed by Wii (666,700 units), PlayStation3 (405,000 units), PlayStation Portable (337,400 units), Xbox 360 (219,000 units) and PlayStation 2 (188,000 units). Nintendo maintained strong top 10 positions in terms of software sales, for DS and Wii: Guitar Hero On Tour at number 2, Wii Fit with Board at number 4 (372,700 units), Wii Play with Remote at number 5 (359,000 units), Mario Kart Wii with Wheel at number 7 (322,400 units), Lego Indiana Jones: The Original Adventures for Wii (294,000 units) and DS (267,800 units) at number 8 and 9.

Both Microsoft and Sony are trying every trick in the trade, whether that means reducing the price of the unit (Microsoft) or releasing upgraded versions for the same prize (Sony). Both of them are more or less clueless right now as to how to catch up with Nintendo; the Wii is way ahead in terms of customer perception.

Sony changes plan to charge for removing 'bloatware'

When you buy a new OEM machine, it comes with a lot of programs that are on trial, such as anti-virus software trial versions, and numerous other software. There are 2 advantages for the makers of these software as well as for the computer manufacturers. The software makers depend on a proportion of consumers becoming attracted enough towards these applications that they are willing to pay for buying these programs. Getting these softwares pre-installed on the machine helps expose them to a much higher number of consumers and increases the chances of conversion. For this advantage, these trial software makers pay computer manufacturers for the chance of placing their software on these machines. It is estimated that xomputer manufacturers can make more than $50 per machine from such software.
For a vast majority of the final consumers / buyers of the machine, these software consume hard disk space, as well as run all the time slowing the machine down. Most consumers will not know how to remove such software, and suffer. For an advanced user, the options include removing the programs one by one, or by doing a fresh install on the machine that will remove these software, called 'bloatware'. So, imagine the pleasure of consumers when Sony declared that it will give a machine that does not come pre-loaded with such software; then this pleasure turned to shock when they found out that Sony will charge them $49.99 for removing this bloatware. There was a strong reaction to such a move; imagine paying extra to have the manufacturer not loading extra stuff on the machine:

"Bloatware" is a term that is familiar to many new computer buyers. Most new computers come saddled with HDD and memory-robbing applications like trial versions of antivirus programs, various desktop search and chat applications, or perennial offenders like Adobe Acrobat. Computer makers rely on these add-on programs to generate additional revenue in the age of decreasing computer prices -- bloatware can add as much as $60 in additional revenue for each computer sold.
Sony, however, made the unwise decision to charge customers a $49.99 fee for the bloatware removal. Whether the charge was intended to somewhat makeup for the estimated $60 windfall from the application publishers or just an effort to squeeze more money from its customers remains to be seen. News of the $49.99 Fresh Start fee quickly spread around the Internet Saturday with sites taking Sony to task over the blunder. Sony quickly recoiled and removed the Fresh Start fee.

This quick reaction by consumers and Sony's quick acceptance of this customer outrage shows that corporations are quickly cottoning onto the fact that customers, especially in this age of quick communications can turn reactions against a company very fast. Sony last suffered such a bad reaction over their Rootkit fiasco, and the prolonged bad press at that time would have made them much nimbler this time.

The porn industry and the Blu-Ray and HD DVD format wars

The last time there was a major battle for the next generation of video formats, Sony was on the losing side, and the porn industry had a major role in deciding the winner. Sony, being unwilling to have any association with the porn industry, made it difficult for the porn industry to employ the Betamax format, and this played an important role in the loss of the Betamax against VHS.
And now there is a new format war, with Sony on one side with its Blu-Ray and Toshiba with its HD DVD format. However, this time, the porn industry is not that much of a factor. There are many other players, such as the major studios, players such as Microsoft (with its gaming console having a video drive), and so on. And there are pros and cons for each. Blu-Ray is seen to be more expensive, and more complex to use, but then Warner Bros last week decided to move over to Blu-Ray giving it a major shot in the arm.

The adult film industry is still taking a wait-and-see approach to the Blu-ray /HD DVD wars. But while Blu-ray's perceived costs have pushed some companies into the arms of the HD DVD camp, Warner Bros.' decision last week to exclusively support Blu-ray has some thinking that the end of HD DVD is nigh.
The Blu-ray camp, led by Sony, has been fighting Toshiba and its HD DVD format for years in a battle reminiscent of the VHS versus Betamax battle. In that fight, Betamax maker Sony's refusal to work with the porn industry helped usher in a VHS victory when the adult industry capitalized on the burgeoning popularity of VCRs and video rentals.

Right now most industry players are straddling the fence, keeping both options open. The porn industry has been playing both formats, and has not really taken a firm stand. A good probability is that they will watch the way things trend and then take a decision.

Sony admits defeat to iTunes

Sony had been trying for 3 years now to defeat iTunes in the market for digital music sales. And Sony is not a small player, after it is a conglomerate with a big studio, builds a variety of electronic devices and fast selling mobile phones, but it does not have an iPod. But Sony has also been scoring self-goals in its fight with the emergence of the Apple-iTunes combination. It was slow to adopt MP3 (doing so only in 2004), but its music players have remained locked to Sony's online music store (the same as Apple with iTunes), but this constraint did not work for most people. For the iPod after all, it was the much appreciated design that got people buying iPod's and then getting locked onto the iTunes store. In addition, Sony has been lagging behind the iPod in terms of features, with video incorporation happening only this year.

Sony Corp.'s three-year effort to beat Apple Inc.'s iTunes Music Store is over. The company, which is one of the largest movie, music and consumer electronics companies in the world, said Thursday that it will be closing down its Connect Music Store in Europe and the U.S. In its place, Sony is adding Microsoft Corp.'s Windows Media technology to its music players and allowing consumers to download copy-protected content from numerous Windows Media-compatible music stores on the Internet, including those from Napster, Audible.com and WalMart.
Its first players weren't compatible with the fast-growing MP3 format and would only play Sony's proprietary ATRAC format -- something that didn't find favor with consumers. MP3 was eventually added in late 2004 but the players have remained locked to Sony's online music store for music purchases -- until this week's adoption of Windows Media. On the hardware front Sony has also had trouble keeping up with Apple. A video version of the iPod was launched in late 2005, but the same features weren't added to a Walkman player until April this year when devices went on sale in Europe. Walkman players with video still aren't available in the U.S. but will go on sale from September, Sony said Thursday.

This would be a big shock to Sony, it is not often that Sony has admitted defeat, but in the current case, it must not have been able to see any projections that would have enabled it to at some future point of time take on iTunes and win. But better to cut your losses and run.

Microsoft drops price of HD DVD add-on for Xbox 360

The battle for the next generation of DVD players is getting hotter, although it is a long way from decided right now. Sony's Blu-Ray seems to be ahead in the race with the HD DVD, with increasing adoption by the retailers and media industry. However, these are such early days that things can change a lot in the next few months, eventually leading to a decision on the winner. The ones who lose out are the early customers, who end up choosing Blu-Ray or HD DVD players and discs, and then it turns out that the format they choose is the loser and not supported later, or that they buy a player and do not get movies for the player later.
Microsoft is doing its bit in the fight against Blu-Ray and for the HD DVD player, by reducing the price of the HD DVD add-on to the Xbox360 by $20 to $179. In addition, Toshiba extended the offer of 5 free HD DVD movies to people buying this add-on:

"With the price reduction to $179, the Xbox 360 HD DVD Player continues to be the most affordable way to enjoy high definition," said Jeff Bell, corporate vice president of the global marketing, interactive entertainment business, entertainment and devices division at Microsoft.
This price drop and movie giveaway may entice some buyers who already own an Xbox 360, but Sony and Blu-ray's recent victories in retail and rental outlets may prove to be a more powerful weapon. $179 HD DVD players won't be too attractive if consumers can't easily find HD DVD content in their favorite stores. Conversely, if Microsoft's price drop results in sales of large numbers of HD DVD players, retailers may change their tune.

Still a long way to go, and the fight to attract people to these respective platforms will keep on happening for some time more. It would seem like that Blu-Ray is currently leading the fight, and Sony will keep on pushing for more alliances and adoption.