Via mainstreetstocks.com:
The press has been reporting today that Sony is focusing on becoming a market leader in the emerging video download platform. This is another Me-Too development from Sony which has struggled for years to develop any relevant products outside of Playstation. Now the plan is to beat the dying Playstation to death by trying to make it into an internet portal - game station - movie player - super machine.
The strategy coming out of Sony is really pretty simple. Essentially the want to copy Apple’s iTunes success with video format. Instead of the iPod they have the PS3 and TVs, instead of music they will provide movies. They also have the advantage of owning Sony Pictures so their own movies can fill the product lineup.
Here is where Sony is making some extremely questionable assumptions, each of which I will debunk one by one.
Assumption 1: Users want to use their PS3 for downloading movies. This is where Sony goes terribly wrong. The only people buying the PS3 right now are hardcore gamers who want the power the XBox and Wii don’t provide. Both Sony and Microsoft are also under the assumption that people want to use their gaming consoles for more than gaming. This just isn’t a logical jump for consumers. Making your laptop do more is a more logical jump. If Sony is going to get this right they need to follow in Apple’s footsteps and start with a product that gains widespread acceptance. This would have been possible when PS2 dominated the gaming market but Sony isn’t in that position anymore.
Assumption 2: Sony still has a powerful brand name. Sony used to be a name to be respected. When they had the Walkman they were known as innovators and respected in electronics. This gave them the flexibility to charge more for their products and leverage that popularity into adjacent markets. But Sony never gained traction in TVs or computers in their popular days. When they fell behind Apple’s iPod Sony became outdated and downright irrelevant. Their only prize product was the Playstation which was essentially it’s own brand. In the last ten years Sony has been known for nothing more than having the most expensive products on the market, not the best. This degrades the brand name.
Assumption 3: Sony’s movie studio is enough to get the platform off the ground and bring in other studios. Movie studios are in the business for one thing, money. But a close second is control of content. This is why Apple drives music companies nuts. They take all control away from the studio and standardize pricing, something music companies hate. Sony is counting on their own movies to bring the platform popularity which will in turn force other studios to join in or lose millions in sales. Same idea as the start of iTunes. But to gain that kind of popularity Sony has to overcome Assumption 1 and 2.
With little to no buzz around Sony’s products why would a customer move to their products to download movies. And furthermore why would another movie studio sell their movies there when iTunes has proven sales. Apple’s success has been built slowly over time leveraging product after product. The iPod became popular which drove the acceptance of iTunes. In turn Macs got more publicity and increased sales. With the perfect storm in motion the iPhone was introduced and my belief is AppleTV will follow the successful product lines in time.
Sony is the only company that has a realistic shot at competing with Apple and with some innovation and smart planning it’s possible. The problem is you can’t introduce a download platform before you begin to gain market acceptance. Sony has to pick where to start before they get to the finish line.
$49.51 (09/05/07)
