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Sony hasn't changed its stripes

February 8, 2005

Regular readers will remember by feelings about Sony that I expressed in “The Sony tax,” and my hope that the company was changing for the benefit of the consumer in “Is Sony changing its stripes?.” Whether it’s Memory Sticks that cost far more than CompactFlash or SD Cards, or their insistence on setting their own DVD standards, the company has become obsessed with making an extra buck any way it can. With the upcoming release of the PSP (PlayStation Portable), the company is taking the practice to a new level. Early customers won’t be allowed to buy just the handheld game machine. Instead you must buy a bundle that includes a minimum of three games and an accessory of your choice.

My teenage son has saved money from birthdays and Holidays, and has been eagerly awaiting the PSP. Last weekend, the local Game Crazy store began taking preorders. But when we went to put a deposit on the machine, we were told about the bundle purchase requirement. The game machine, along with headphones, battery, AC adaptor and other accessories, costs $250. But to preorder and assure that we could buy the device on the March 24 North American release date, we’d also have to commit to at least an additional $150 in purchases. We’d have to buy three games at $39 to $49. Accessories start at $30, but go up to $150. For example a $129 1-Gbyte Memory Stick would qualify. So the actual price could go to more than $500.

I was convinced that Game Crazy was simply trying to boost their own profits with the bundle strategy, but the clerks assured us that it was a Sony-managed scheme. I haven’t been able to verify that Sony is mandating the bundle sales. Their recent PSP press releases don’t mention the bundle. But all sources that I’ve found accepting preorders are telling the same story. For example, online sources such as EB Games and GameStop are also requiring a bundle purchase.

I guess Sony decided it didn’t want to wait to make profits on the PSP. Generally game console and handheld makers loose money on each product that they sell early on. But the deal becomes profitable when the consumer buys their third or fourth game.

Meanwhile I’ve got an uncomfortable situation at home. My son saved his money and should be able to buy what he wants. I’m trying to convince him that he shouldn’t cave into this program just to get a unit on opening day. I’m hoping the bundle boondoggle backfires, and Sony’s left holding a chunk of the 1 million units that they promise by the end of March in inventory. I’d like to make it a buyers market.

Posted by Maury Wright on February 8, 2005 | Comments (16)

February 20, 2006
In response to: Sony hasn't changed its stripes
Bob commented:

OK the PSP was already sold at a loss. Its one of the most widely known things about it, they had to make the loss back somehow and if its by making it so people have to buy enough games to make up for the loss wheres the problem? If you go for good games then you would have bought them later anyway.


February 20, 2006
In response to: Sony hasn't changed its stripes
Bob commented:

OK the PSP was already sold at a loss. Its one of the most widely known things about it, they had to make the loss back somehow and if its by making it so people have to buy enough games to make up for the loss wheres the problem? If you go for good games then you would have bought them later anyway.


February 22, 2005
In response to: Sony hasn't changed its stripes
djg commented:

in response to kht Thanks for your response. I agree with you that Sony is dropping the ball on some things - and they are in danger of diluting the brand. But as a platform Memory Stick is very well thought out. Consider that it is the smallest form factor (Duo), and that it is available on larger screen TVs; I can even buy a mouse with a built-in reader. Although the need for it has diminished, with the advent of micro hard-drives and high-density Flash memory, Minidisc was revolutionary when first introduced. Keep in mind that at the time, Sony had a large part of the blank casette tape market, yet they still went ahead and marketed a technology designed to replace it. What I am getting at is that the company has shown courage and brilliance in pushing the edge - even though they do not consistently do so.


February 22, 2005
In response to: Sony hasn't changed its stripes
djg commented:

in response to kht Thanks for your response. I agree with you that Sony is dropping the ball on some things - and they are in danger of diluting the brand. But as a platform Memory Stick is very well thought out. Consider that it is the smallest form factor (Duo), and that it is available on larger screen TVs; I can even buy a mouse with a built-in reader. Although the need for it has diminished, with the advent of micro hard-drives and high-density Flash memory, Minidisc was revolutionary when first introduced. Keep in mind that at the time, Sony had a large part of the blank casette tape market, yet they still went ahead and marketed a technology designed to replace it. What I am getting at is that the company has shown courage and brilliance in pushing the edge - even though they do not consistently do so.


February 20, 2005
In response to: Sony hasn't changed its stripes
kht commented:

In response to djg: Now, when it comes to the PS2 and PSP, I agree that Sony has a unique product that customers may well want to pay a premium for. Sony's biggest problem is that this does not apply to all their other products. MemoryStick? How is this superior to other memory formats? MiniDisc? Sony had the opportunity to make this both a music standard and a computer standard, but failed. Now MP3 players and USB Flash devices are winning this market, and Sony is still in denial. Sony TVs? Years ago, Sony had the best CRTs available with Trinitron. Now who cares about CRTs? Sony is buying LCD panels from the same fab as Samsung, and I have no indications that the Samsung TVs and monitors are not every bit as good as their Sony counterparts. I think Sony is losing it in all other areas than gaming, and the gloss of the Sony brand name is starting to come off. I bought Sony consumer goods almost exclusivly a few years ago, now I look elsewhere.


February 20, 2005
In response to: Sony hasn't changed its stripes
kht commented:

In response to djg: Now, when it comes to the PS2 and PSP, I agree that Sony has a unique product that customers may well want to pay a premium for. Sony's biggest problem is that this does not apply to all their other products. MemoryStick? How is this superior to other memory formats? MiniDisc? Sony had the opportunity to make this both a music standard and a computer standard, but failed. Now MP3 players and USB Flash devices are winning this market, and Sony is still in denial. Sony TVs? Years ago, Sony had the best CRTs available with Trinitron. Now who cares about CRTs? Sony is buying LCD panels from the same fab as Samsung, and I have no indications that the Samsung TVs and monitors are not every bit as good as their Sony counterparts. I think Sony is losing it in all other areas than gaming, and the gloss of the Sony brand name is starting to come off. I bought Sony consumer goods almost exclusivly a few years ago, now I look elsewhere.


February 16, 2005
In response to: Sony hasn't changed its stripes
djg commented:

(in response to the original article) I wonder if you have taken the time to consider that if you do get your wish, and Sony takes a bath on the PSP, that this will have the effect of chilling the market, delaying the arrival of the next generation or even causing the current product to be prematurely discontinued. I am prepared to pay a premium for Sony memory sticks because they are better than the competition, and because I prefer Sony products in general when it comes to consumer electronics. It comes down to design, and brand image. Your argument is about as useful as a complaint about the price of designer silk ties. The PSP is not for everyone, thid is just another way to regulate demand. I'll be curious to see how long your son holds out, before giving in to his first inclination. Please keep us posted.


February 16, 2005
In response to: Sony hasn't changed its stripes
djg commented:

(in response to the original article) I wonder if you have taken the time to consider that if you do get your wish, and Sony takes a bath on the PSP, that this will have the effect of chilling the market, delaying the arrival of the next generation or even causing the current product to be prematurely discontinued. I am prepared to pay a premium for Sony memory sticks because they are better than the competition, and because I prefer Sony products in general when it comes to consumer electronics. It comes down to design, and brand image. Your argument is about as useful as a complaint about the price of designer silk ties. The PSP is not for everyone, thid is just another way to regulate demand. I'll be curious to see how long your son holds out, before giving in to his first inclination. Please keep us posted.


February 16, 2005
In response to: Sony hasn't changed its stripes
djg commented:

I strongly feel that another reason for the bundling may be to forestall the use of PSP in non-game markets. When you look at the hardware, there are probably more than a few niche applications where you could use the PSP in ways unintended by the designers. Although this would not be on the scale of what we saw with that barcode unit a few years back (the "Kat", if memory serves), it wouldn't be insubstantial and might make a difference on the bottom line, at the end of the day.


February 16, 2005
In response to: Sony hasn't changed its stripes
djg commented:

I strongly feel that another reason for the bundling may be to forestall the use of PSP in non-game markets. When you look at the hardware, there are probably more than a few niche applications where you could use the PSP in ways unintended by the designers. Although this would not be on the scale of what we saw with that barcode unit a few years back (the "Kat", if memory serves), it wouldn't be insubstantial and might make a difference on the bottom line, at the end of the day.


February 16, 2005
In response to: Sony hasn't changed its stripes
dle commented:

If the 'fair market value' is greater than the market will pay, your product fails. The PSP is a beautiful product, maybe, but this isn't art, it's business. The tone of the market has been set by the GameBoy DS, a pretty cool product at 150 bucks. I'm not sure how great a product occupying similar space would have to be for me to go along with coercive bundling. Fair market value be danged. (I work in R and D, and get reminded a lot that it's expensive...)


February 16, 2005
In response to: Sony hasn't changed its stripes
dle commented:

If the 'fair market value' is greater than the market will pay, your product fails. The PSP is a beautiful product, maybe, but this isn't art, it's business. The tone of the market has been set by the GameBoy DS, a pretty cool product at 150 bucks. I'm not sure how great a product occupying similar space would have to be for me to go along with coercive bundling. Fair market value be danged. (I work in R and D, and get reminded a lot that it's expensive...)


February 16, 2005
In response to: Sony hasn't changed its stripes
dle commented:

If the 'fair market value' is greater than the market will pay, your product fails. The PSP is a beautiful product, maybe, but this isn't art, it's business. The tone of the market has been set by the GameBoy DS, a pretty cool product at 150 bucks. I'm not sure how great a product occupying similar space would have to be for me to go along with coercive bundling. Fair market value be danged. (I work in R and D, and get reminded a lot that it's expensive...)


February 16, 2005
In response to: Sony hasn't changed its stripes
dle commented:

If the 'fair market value' is greater than the market will pay, your product fails. The PSP is a beautiful product, maybe, but this isn't art, it's business. The tone of the market has been set by the GameBoy DS, a pretty cool product at 150 bucks. I'm not sure how great a product occupying similar space would have to be for me to go along with coercive bundling. Fair market value be danged. (I work in R and D, and get reminded a lot that it's expensive...)


February 16, 2005
In response to: Sony hasn't changed its stripes
djg commented:

I think you're being unnecessarily tough on Sony. R & D is very expensive, and costs need to be recouped somehow. If the PSP had been priced closer to it's fair market value of $350-400, with no bundling req't, would you have been a happier consumer? Marketing leading edge technology in the sub-$500 space is difficult enough to begin with - be thankful that they at least are giving it a shot, and have IMHO produced something of beauty and value which is unique.


February 16, 2005
In response to: Sony hasn't changed its stripes
djg commented:

I think you're being unnecessarily tough on Sony. R & D is very expensive, and costs need to be recouped somehow. If the PSP had been priced closer to it's fair market value of $350-400, with no bundling req't, would you have been a happier consumer? Marketing leading edge technology in the sub-$500 space is difficult enough to begin with - be thankful that they at least are giving it a shot, and have IMHO produced something of beauty and value which is unique.

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