It isn’t that surprising that Sony has officially announced the Playstation 4 (PS4). The PS3 and competing Xbox 360 are getting a little old and Nintendo has the new Wii U out already.
What makes this a potential game changer for Sony is that they have racked up substantial losses in their other businesses such as TVs. Back in the picture tube days everyone wanted a Sony Trinitron. Now Sony seems to be out of the loop, having lost a lot of its TV marketshare to Samsung, LG, Vizio and Panasonic. If someone mentions “high end” HDTV these days it seems that Sharp or Samsung get mentioned before Sony.
With the PS3 having ushered in Blu-ray, potentially winning the format war against Toshiba and HD DVD for the sucessor to DVD, however not everyone has upgraded (I’ll admit my friend just bought his first Blu-ray player two weeks ago) and DVDs are still on the market. This leaves Blu-ray as still something of a niche product.
The once ubiquitous Walkman is all but gone. CDs and cassettes have been replaced by the iPod.
The reader market has been split amongst multiple vendors and multifuction tablets, from the iPad to Kindle to Samsung Galaxy to imported low end tablets from companies no one has heard of (often time at a fraction of the price of a Sony Reader).
Audio equipment is also a crowded market, so are computers as well as Blu-ray and DVD players.
Perhaps videogame consoles is the least crowded market segment Sony can potentially still dominate. The Vita seems to have been met with less than stellar demand. While Nintendo’s Wii U still hasn’t hit it’s stride, they can fall back on their portable markets for the time being as despite cell phones with increasing capability the DS remains quite popular.
The potential for pitfalls is great, if they release too far ahead of Microsoft (who can fall back on other software products), they could wind up with a console that doesn’t meet the expectations of the next generation of games. While initial specs look good (as they did with Sega’s Dreamcast back in the day) they can instantly look that much worse if someone releases something concretely better, even worse if the PS4 is already on the market by then. Then there are deadlines, if they promise to make a deadline for release but miss it, it can be detrimental to the console’s future, particularly if Microsoft were to in turn beat them to the punch.
With losses (albiet not as large in some recent quarters) throughout the company as a whole it could stifle R&D through future costcutting if they fail with the PS4, as a lot of money is needed to launch such a product. Consequently a successful release could funnel money into the company and shore up its other businesses until new technology such as OLED takes hold.
This could potentially go one of two ways, a successful launch could mean the return of Sony the focus of home entertainment in the livingroom, it could also cost them enough that they might exit the hardware business (at least in terms of game consoles) as they might not have enough cash to go another round if it fails and other parts of their business continue to lose money.
While it is too early to tell what things will go like, this will be a more interesting launch scenario to watch than usual. Will people line up at the local Wal-Mart and Best Buy for the release of the PS4, or will it be a ho hum release like the Vita sitting in the lockup case with not too many interested people. The latter could play an interesting part in determining Sony’s future.