Who Cries For the PS3? Thee? Not Me

My general lack of enthusiasm for Sony's people and their products is pretty well documented at this point, so the subject line of this editorial shouldn't be terribly surprising to all of you. I've been consistently critical of the PlayStation 3 over the past few years, and I confess to feeling a certain amount of told-you-so smugness as I read through the overwhelmingly negative bang-for-buck reviews that are now rolling in (I should say up front that my comments are based exclusively on nine months' worth of archived anecdotal information; I don't have a PS3 in-house). Check out, for example, two recent writeups; Ars Technica's 'incomplete' critique, and the scathing evaluation delivered by the New York Times.

The PS3's crippling flaws are a revealing case study in the inherent complexity of the new product definition process, especially when it's distorted by overriding corporate dictates, and therefore a potential valuable lesson to all of you in the engineering world. Architect a product that doesn't adequately advance the state-of-the-art beyond your current offering, and not only will your potential customers feel cheated and resist the upgrade, your competition will have the opportunity to alternatively snag their business. Conversely, however, attempt a too-aggressive leap and you'll not only price yourself out of the market, you'll be subject to the inherent risks of leading-edge technology. It's this latter extreme of the product definition spectrum that's currently got Sony in a quagmire.

Why's the PS3 stumbling? Some of what I'm about to write is a restatement of comments first (and more subtly) delivered in last December's cover story, and of more strident statements made in subsequent blog posts. And my comments apply not only to the PS3 but also, by extrapolation, to the entire Blu-ray market, since the high-priced PS3 is still the lowest-cost Blu-ray player available, and because Sony's snagged such a high percentage of the Blu-ray consortium's allocation of precious blue-laser diodes.

• Sony engendered ill will with its potential PS3 customer base, specifically the highly influential and tech-savvy early-adopter crowd, via high-profile recent stumbles such as rootkit debacles, racist advertisements and exploding-battery recalls. It compounded its woes with numerous arrogant comments made by PS3 corporate executives such as the infamous "The HD era really only starts when we are on the market" and "The next generation doesn't start until we say it does."
• Corporate dictates driven by the movie studio division, which wanted to migrate consumers off easily-ripped DVD-Video discs, and the optical storage division, who wanted to migrate them the Sony patent-rich follow-on option, compelled the inclusion of a Blu-ray drive in the PS3. This strategy had worked well with the PS2, which was one of the first sub-$500 DVD playback platforms. But back then, consumers were already convinced of DVD's benefits (versus Beta and VHS); they were just looking for a reasonably cost-effective "pull" way to get on the bandwagon (and, it should be noted, there also wasn't a optical format war in progress). This time around, the situation's the exact opposite; Sony's attempting to use the PS3 to push a format that consumers aren't already sold on. Conversely, Microsoft and Toshiba have partnered to offer a low incremental-cost optional HD DVD add-on for the Xbox 360. And to keep costs (and therefore prices) down, Nintendo's $249 Wii doesn't even currently play red-laser DVDs.
• Blu-ray inclusion has led to high costs, high prices, and scant supply. Other leading-edge risky technologies Sony embraced included the Cell processor (which has greatly complicated developers' lives, schedule- and cost-burdening potential titles ) and latest-generation Rambus DRAM. In last December's writeup, I published a comparative cost analysis of the Xbox 360 and PS3 that many Sony fanboys immediately disputed. More recent studies confirm the earlier PS3 cost-burden data, along with predicting two other notable datapoints: the Xbox 360 is likely to meet Microsoft's earlier-stated "10 million units shipped by end of 2006" divination, and the Xbox 360 hardware is already profitable, making the traditional razor/razorblade economic model irrelevant.

Continued with 'The PS3: Where's The Units?'….