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The Same Boat

Nintendo released their fiscal 2011 financials today, and looking over the sells charts for the 3DS, it became readily apparent the effect last summer’s price drop has had in turning the misfortunes of that system around from the dismal start last spring. The effect is so pronounced even, that 3DS is gaining traction faster than the DS, or the Wii in all three major sells markets: North America, Europe and Japan.

Looking at that charts in fact, not only can you see exactly when the 3DS price change occurred, but how far 3DS adoption has climbed, both in reference to the DS and the Wii, has got me thinking that Sony may seriously want to reconsider the price point of the PlayStation Vita before it launches next month, or they may be looking at a repeat of the 3DS’ initial dismal performance, prior to last summer’s price drop.

Whether they want to admit it or not, both companies are in the same boat, attempting to compete with dedicated portables against a world ruled by iPhones, iPads and Android devices . . . this goes doubly so since you can now play full retail PC and console games on these multi-use devices thanks to all the emerging cloud services like OnLive, Gaikai, and PlayCast (and soon, even juggernauts like GameStop and Google). Doing what Nintendo and Sony are doing, is quickly becoming a really hard market to be in with single use devices that do little other than just play games. Every advantage they can give themselves to retain share in this market is essential. And as Nintendo is proving with last summers 3DS price drop, the market is very price sensitive – not just in the US, but globablly.

Despite being a more powerful system, and having a far better launch library at the ready when it ships next month, at $250, games that cost $50 each, and memory cards that are not only a requisite to play many games, but are also priced very high, Sony faces some problems that Nintendo faced a year ago when they launched the 3DS. And despite a general positive attitude by gamers the world over towards the Vita, reports coming out of Japan about the lack of adoption for the system, are just as deafening as they were a year ago when no one in Japan was buying the 3DS (a system which also had a positive pre-release buzz going for it globally). And while the effect may be less for the Vita due to it’s much stronger launch library, I still feel that the price sensitivity of the markets is going to force a price drop before the fall.

I think the lesson learned a year ago by Nintendo, and we can certainly see it in the chart , is that if you intend to have a dedicated portable game console in the marketplace, unless it is running Android, can connect to the Android Market, and run Android apps, anything over $200 is going to be a nonstarter. And this lesson not only applies to Nintendo, but I feel to anyone else looking to move a single-purpose game machine into the portable space.

I was right on the money a little over year ago, when in the 11th hour I canceled my 3DS pre-order, and made the decision that I would not purchase a 3DS until a price drop under $200 was forthcoming, as well as a second analog stick was added to it, and Nintendo got better games for the system (check my Joystic post history, if you do not believe me). And a year later, looking at the lack of Japanese sells numbers for the Vita, and finding out that Sony MAY have as much as $90 worth of wiggle room, once again I am preparing to cancel yet another pre-order. If the Vita does a repeat performance of the 3DS did following it’s launch, there will be a price drop under the $200 mark (possibly down to the price of the 3DS), by this fall. I think my decision a year ago to forego a 3DS purchase, paid off in spades – by the time I got one, I got both a $80 price drop, and my second analog stick – who say’s patience is no longer a virtue. And after looking at the 3DS sells chart, I’ve got a really good feeling that the same strategy is going to work out for me once again, when it comes to purchasing the PlayStation Vita. There simply really isn’t much room left in the market for a single-use, portable game system over the $200 price point. And like Nintendo, I got a feeling that Sony is about to learn that lesson the hard way. So hold unto your pennies, kiddies. That PlayStation Vita price drop is coming.


ADDENDUM
On further thought, I think there is one other option open to Sony to rescue the PlayStation Vita from suffering it’s current fate; the same fate the 3DS was suffering from following it’s launch last spring. Sony could opt to make the every PlayStation Vita boot Android 4.x (Ice Cream Sandwich, and beyond) as an “Other OS” option, out of the box.

Admittedly, considering all the issues Sony incurred due to the failOverflow hack of the PlayStation 3 in late 2010, and the subsequent, and ongoing attacks against Sony’s online presence since they initially went on attack against George “Geohot” Hotz early last year, I can see where Sony would be extremely timid about including an open source OS as an alternative on each and every PlayStation Vita unit. However, given the design of the Vita’s architecture (a quad-core ARM Cortex-A9 MPCore, married with a quad-core Power VR SGX543MP4+), and the basic nature of the portable marketplace in 2012, where single-use, portable devices over the $200 price point, are pretty much shunned universally by everyone the world over, Sony could easily overcome this limiting factor to market share gain, by including Android as a dual-boot option, effectively making the PlayStation Vita into an ultra-portable tablet PC. And after all, isn’t something similar what Sony Ericsson is already doing successfully with the Xperia Play smartphones? It’s not dual-boot, but because of the PlayStation Suite, does have some limited access directly into the PlayStation ecosystem. And gamers everywhere are loving it, as the Xperia Play serves both their smartphone, and portable gaming needs. A PlayStation Vita with Android as an Other OS boot option, would essentially take the success with the Xperia Play to the next level.

Of course like I said before, even though it makes a lot of sense, too much sense even, there is a less likely possibility of it ever coming to pass. But it is a legitimate option; one that Sony would not have to eat an expensive price drop on the retail price of the PlayStation Vita to insure the success of the system in an increasingly hostile marketplace to single-use, portable devices.

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3 responses

  1. mendicant

    I read your post on joystiq; great stuff. You make a very convincing all around argument, and I’d have to agree with you.

    February 14, 2012 at 5:18 pm

  2. Thanks. I know it is a pretty unpopular POV that I am espousing, but if I honestly could punch large enough holes into the logic behind it to derail the concept, I never would have posted it anywhere, much less my personal blog.

    But such is the way of the world, no one likes bad news, especially bad news about something close to their hearts and/or wallets. Maybe I’m completely off base; I’ll admit to that if someone could legitimately punch holes in the logic – I’ve never been against changing my mind on just about any subject matter, so long as someone could legitimately reason an alternative to me.

    The irony here being, that despite my post here and at Joystiq, I actually want the PlayStation Vita to succeed – moreso than I wanted the 3DS to be a success. Truthfully, I really wanted an Xbox portable, and talked about that quite a bit a few years back on another forum I used to regular. But the more I looked at Microsoft’s larger picture, some pretty interesting things were popping up, which suggested that a portable Xbox would never come to pass . . . and to this day, it has not. So when Sony announced the Vita, I personally placed all my hopes there; it did everything I wanted an Xbox portable to do, except for connect to Xbox LIVE.

    Even so, the larger trend of the consumer electronics biz, is towards mutli-use devices, both in the settop space, but most certainly in the portable space. And pricing more than anything has been the key towards that migration. We’ve always wanted multi-use devices, but pricing prevented it as the processors powerful enough for truly multi-purpose devices, have traditionally been very expensive. So by the late 1990s, you start seeing more and more single-use devices taking over the scene: you want to make a phone call, you get a cellphone; you want to listen to music, you get a personal media player; you want to watch video media, you get a TIVO or DVD player; you want to play games, you buy a portable game system, etc. Yes, you could always get a multi-use device, both until somewhere around the release of the iPhone, multi-use devices usually fell into one of two camps: either they worked relatively well and cost too much at retail, or they were affordable and did not work well at anything they were supposed to do.

    But then ARM came along and changed the pricing model. For the very first time, multi-purpose CPUs existed, that were pennies on the dollar compared to their x86 and PowerPC counterparts. And not only that, they were substantially more energy efficient to boot. The gains were enormous, but you still needed a multi-purpose OS and UI to finally set the wheels into motion away from single-purpose devices. By the time the iPhone launched in 2007, that was pretty much the beginning of the end of the single-purpose device. Five years later, multi-purpose devices are everywhere. And each year the amount of things these devices can do, for less and less money continues to grow by leaps and bounds. This is part of the reason why everyone is predicting the end of the desktop PC as we know it within another decade.

    Up until now the home PC has been the world’s multi-use device of choice, but now you are starting to get everything from portable devices, settop devices, and even televisions, which can do everything the home PC can do, either in a better formfactor, or for less money . . . or both. A great example were a handful of quad-core Android tablets running Ice Cream Sandwich that were on display at CES last month, which are expected to hit the market this year in the $250 neighborhood without a subsidy. Which brings us full circle, as that is the exact price of the PlayStation Vita, which does not do half the stuff these Android tablets do. And that is before get into realtime Windows desktop remoting that iOS and Android devices can now accomplish with services like OnLive Desktop (also announced and launched at CES last month). I think when you put that in front of the average Joe: $250 for a single-use portable game system, or $250 for a multi-use tablet . . . do I have to even spell out how the majority of people are going to spend their money given that choice? Well apparently looking at how my post on the subject at Joystiq has been grayed-out, I guess I do.

    February 14, 2012 at 8:49 pm

  3. Pingback: . . . Without a Paddle « What the Hell am I Doing?

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