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May 10, 2006

Sony goes high, Nintendo goes low, Microsoft goes first

Posted by David Hunter at 8:03 AM ET.

Today’s the start of the E3 gaming conference and as long planned, the three big game console vendors held their pre-show press events earlier in the week.

Sony led off the festivities on Monday to less than stellar reviews. Troy Wolverton at TheStreet.com:

I should have sensed trouble when Kaz Hirai, president of Sony’s PlayStation division in the U.S., waited nearly two hours into the company’s Monday night presentation to give the details that everyone wanted to know — when the PlayStation 3 will be launched, how much it will cost and how many Sony will ship. Let me tell you, two hours has rarely passed so slowly in my life.

It wasn’t just that Hirai waited until the end to get to the point of the press event. It was that everything in between wasn’t terribly compelling. Most of the game footage Sony showed was from demos at best. Few of the games generated much excitement. And the company had little to show off in the way of certain blockbuster titles.

Well, at least Sony can claim the prize for most expensive:

The PS3 will come in two configurations: one version with a 60GB hard drive that will cost $599, and a second with a 20GB hard drive that will come in at $499, SCE President Kaz Hirai said.

Those prices are significantly higher than Microsoft’s Xbox 360, which has two versions, one with a 20GB hard drive that costs $399 and another with no hard drive that retails for $299.

In an interview with CNET News.com on Friday, SCE Executive Vice President and co-Chief Operating Officer Jack Tretton said, effectively, that the company believes consumers will pay whatever the next-generation console costs.

“People are going to perceive enough value” with the PS3, Tretton said, “that they’re not going to consider the price to be a barrier to entry.”

In addition to announcing pricing, Sony also said the PS3 will hit store shelves in North America on Nov. 17, six days after its Japanese launch on Nov. 11.

Hirai noted that Sony is committed to shipping 4 million PS3s by Dec. 31 and another 2 million by March 31, 2007. That means–if customers are not put off by the console’s high price–Sony could be in position to avoid the criticism Microsoft took for not being able to meet initial customer demand for the Xbox 360.

Trying for an apples to apples comparison pits the $499 PS3 against the $399 Xbox 360 and while the pricing is completely arbitrary, part of the difference is the Blu-ray high definition DVD drive included in the PS3:

More important, the Sony console comes with a high-definition Blu-ray DVD drive for playing movies. Standalone Blu-ray players are likely to cost close to $1,000 when they arrive later this year.

“The PlayStation 3 will look very inexpensive (compared) to the Blu-ray player,” said Van Baker, an analyst at research firm Gartner. “You’re paying 100 bucks for the privilege of having a Blu-ray player. It is a very aggressively priced movie player.”

But that raises another question: Will consumers consider the movie question when buying the consoles?

“It’s cheap for a Blu-ray drive and expensive for a game machine,” said Stephen Baker, an analyst at NPD Group.

As the rest of the article delineates, and we have discussed previously, the advisability of frying other other Sony fish while delivering a game console remains to be seen. One more point – the difference between the two PS3 variants isn’t just 40 GB of disk space – the cheaper $499 PS3 version is crippled in significant ways including no ability to watch those Blu-ray movies in high definition.

In a refreshing counterpoint, Nintendo, as expected, stuck entirely to the game business in their Wii game console press event:

Asked why Nintendo didn’t release pricing and availability information for the Wii (the company said only that the product will be available in the fourth quarter of 2006), Reggie Fils-Aime, Nintendo executive vice president for sales and marketing, told CNET News.com that the company isn’t interested in diverting attention from the roster of 27 Wii games and the controller system it’s showing at the Electronic Entertainment Expo this week.

“We want (E3) to be about the gaming experience,” Fils-Aime said. “Price and availability information becomes a distraction from the playing experience.”

I sympathize with the point of view, but the lack of clarity about what is expected to be a lowball price left a lot of folks unimpressed and what they did show didn’t help that much. Troy Wolverton again:

Oh, sure, Nintendo announced there will be a new Zelda game that will be available at the launch of its Wii console. And unlike Sony, Nintendo showed off several real, playable games and promised that visitors to its booth at E3 would find 27 different games available to play on the Wii.

But as with Sony, even those highlights weren’t all that bright. Nintendo’s been promising — and failing to deliver — a new Zelda for several years now, so gamers will likely believe it only when they see it. And Fils-Aime declined to say how many of the games playable at E3 will actually be available on store shelves when the Wii launches sometime this fall.

Frankly expectations for the Wii are beginning to match the expected low price.

Lastly, Microsoft and Bill Gates got to revel in being considerably ahead of the competitors with the Xbox 360:

Surprise appearance by Microsoft company founder wows gamers with unified platform vision and first look at “Halo 3.”

Microsoft Corp. Chairman and Chief Software Architect Bill Gates today staked the claim that the Xbox 360™ system will have a 10 million-unit head start by the time the competition enters the market and more than 160 games by the end of the year. Gates went on to outline the company’s bold new vision to connect millions of Xbox 360 gamers with hundreds of millions of Microsoft® Windows®-based PC and mobile gamers from around the world through the Xbox Live® online entertainment network. Gates made the announcements at a press conference to open the Electronic Entertainment Expo (E3), the largest annual confab for the interactive entertainment industry.

Dubbed “Live Anywhere,” the initiative puts gamers at the center of a ubiquitous always-on world where their digital identities, games, friends and digital entertainment are always accessible through the familiar Xbox Live interface, regardless of location or device. The plan also clears the way for groundbreaking cross-platform gameplay scenarios, with participants using Windows-based PCs, mobile phones and Xbox 360 consoles to play together simultaneously.

By this time next year, Microsoft expects more than 6 million gamers to be connected to the Xbox Live network. In addition, more than 25 million casual gamers are currently playing games on MSN® Messenger and MSN Games.

More on the cross platform gaming by following the link and here; and more on the Xbox 360 lineup here including the planned day one availability of Grand Theft Auto IV. Also Microsoft announced that they would have their own HD DVD high definition DVD player (price unspecified) available as an Xbox 360 add-on before Christmas and it likely won’t offer high definition movie playback either.

It’s too early to say how this will all fall out, but it looks to me like Microsoft has a fighting chance to make significant gains in the game console market. As for Sony and Microsoft both trying to have their game consoles gain widespread acceptance as home entertainment centers, I’m suspicious that neither will come to pass and that their gaming success will come in spite of those attempts.



Filed under Blu-ray, Coopetition, HD DVD, Hardware, Live Anywhere, Microsoft, Mobile Gaming, Nintendo, PC Games, Sony, Technologies, Windows Mobile, Xbox

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6 Responses to “Sony goes high, Nintendo goes low, Microsoft goes first”

  1. Wall Street upbeat about Xbox 360 after E3 -- Microsoft News Tracker Says:

    [...] Dean Takahashi has a roundup of analyst reactions to the E3 gaming conference, but the most startling is: Rick Sherlund, an analyst at Goldman Sachs, wrote this morning that he raised his unit shipment estimates for the Xbox 360 and for revenues in the 2007 fiscal year which ends June 30, 2007. Among his big statements is, “We believe Xbox may outsell Sony’s PS 3 outside of Japan. We have also model an assumed $100 price cut on Xbox 360 by E3 next year to further drive market share.” Sherlund says he believes Microsoft could become profitable in the current calendar year on the Xbox 360 business. That commentary is more positive on Microsoft than any other analyst so far. After Sony’s dismal E3 performance ([1], [2]), I’ll believe anything. There’s more in this Bloomberg report. Filed under Coopetition, Xbox, Sony, Microsoft Listen to this article   [Permalink] [...]

  2. Microsoft execs trash Sony’s Blu-ray PS3 -- Microsoft News Tracker Says:

    [...] Speaking of which, last week Nintendo announced pricing for their next generation game console, and as expected. it was low compared to Sony and Microsoft: Nintendo has revealed its next-generation console, the Wii, will retail in the US for $250 or less, and no more than ¥25,000 ($220) in Japan. It also expects to have shipped more than 6m of the machines by March 2007, the company said today. [...]

  3. Microsoft plans Vista online gaming service called Panorama? -- Microsoft News Tracker Says:

    [...] Chris Remo at Shacknews has the buzz: Shacknews has learned from reputable sources who wish to remain nameless that Microsoft plans to introduce what seems to be a Windows gaming service called “Panorama.” Apparently, Panorama will be a part of Windows Vista and will act essentially as Xbox Live Arcade for Windows. PC gamers will be able to not only play Live Arcade games, but will also be able to engage in multiplayer gaming versus gamers playing on the Xbox 360 version of the service. There’s more by following the link including Microsoft merely confirming that something called Panorama exists (with no further details) and speculation that Microsoft might announce it next week at Gamefest. There’s also a pointer to the blog of Microsoft’s Andre Vrignaud where he says that Panorama is just a codename for the first stage of Microsoft’s Live Anywhere initiative which was introduced back in May and which is supposed to be more or less what is described. Filed under OS – Client, Windows Vista, Technologies, PC Games, General Business, Online Services, Microsoft, Live Anywhere   [Permalink] [...]

  4. Xbox 360 HD DVD player to retail for $200? -- Microsoft News Tracker Says:

    [...] Last week, Microsoft showed off the external HD DVD drive add-on for the Xbox 360 that they are planning to release before Christmas this year. There wasn’t that much new there other than we got to see the beast and its user interface. [...]

  5. Not much happening in Gates’ CES07 keynote -- Microsoft News Tracker Says:

    [...] Exactly as leaked, the Xbox 360 made its 10 million ship target and will in future provide Microsoft TV IPTV set top box functionality. This feature plus the video download service announced in November (Lionsgate was announced as a new content provider) seem to me to be more selling points for the Xbox 360 than any real encroachment on the consumer electronics market. Also, the first fruits of Live Anywhere were demonstrated where Vista PC users can play online versus Xbox 360 users. [...]

  6. Xbox Live comes to Windows (Vista) -- Microsoft News Tracker Says:

    [...] Microsoft today said that the promised Live Anywhere is nearly here as they formally announced Games for Windows — LIVE: Microsoft Corp. today announced the extension of the Xbox LIVE® games and entertainment network to the Windows® platform, bringing together the most popular online console game service with the most popular games platform in the world. Debuting on May 8, 2007, with the launch of the Windows Vista™ version of the Xbox® blockbuster “Halo® 2,” Games for Windows — LIVE will connect Windows gamers to over six million gamers already in the Xbox LIVE community. Then, launching in June, “Shadowrun™” will for the first time connect Windows gamers with Xbox 360™ players in cross-platform matches using a single service. “UNO®,” releasing later in 2007, will also support cross-platform play between Windows and Xbox 360. [...]

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