Sony says the Xbox could accelerate the industry
11-15-01 | 01:35 AM
#1
Thread Starter
DVD Talk Special Edition
Joined: May 2000
Posts: 1,279
Likes: 0
Received 0 Likes
on
0 Posts
Sony says the Xbox could accelerate the industry
Sony says the Xbox could accelerate the industry
Sony's president feels that the Xbox could force the company's hand in releasing its PS3 console earlier than intended.
In a recent interview with The Financial Times, Kunitake Ando, president and CEO of Sony, said that the Microsoft Xbox, which comes with a hard drive and Ethernet adapter out of the box, could force the company to transition to the PS3 earlier than intended. "The biggest threat to the PlayStation 2 is that the Xbox changes the industry's life cycle," said Ando, who feels that it is unclear whether the current PS2 business model is sustainable and that its console life cycle could be reduced to three years as a result. Although sales of the PlayStation 2 console remain strong, Ando said that the company is still in the process of recuperating its high front-end chip manufacturing costs.
Given his comments, it is not surprising that Ando feels that Microsoft has replaced Nintendo as the biggest competitor for his company's games division. "Nintendo's GameCube has been a disappointment in Japan, they have sold only a third of what they had hoped," he said. "The PlayStation 2 is viewed by gamers as the games console to own." Ando further stated that although there was interest within Sony to enter the handheld business to compete directly with Nintendo's Game Boy Advance, Ken Kutaragi, president of Sony Computer Entertainment, requested that the company remain out of that market in order to focus its efforts exclusively on the PlayStation 2.
Despite Ando's comments, a majority of industry analysts feel that the PlayStation 2 has strong sustainable potential to become the market leader among the current generation of consoles. A recent report by the International Development Group forecasted that the PlayStation 2 installed base would grow to 34 million by 2004 in North America, from its current base of 7.2 million units. IDG further projected that the Microsoft Xbox would reach an installed base of about 20 million units in North America by 2004, while the Nintendo GameCube would reach a base of 18 million units in that same period.
Research for and development of the PlayStation 3 is already under way. Sony has partnered with Toshiba and IBM, as part of a combined $400 million, five-year investment, to develop the technology for the PS3. Production of the chip, at last report, was slated to begin in 2004. According to Sony, the new chip design will be fundamentally different from what the company has used in the past and will have a greater focus on delivering communication and broadband services.
By Shahed Ahmed, GameSpot VG [POSTED: 11/14/01]
Sony's president feels that the Xbox could force the company's hand in releasing its PS3 console earlier than intended.
In a recent interview with The Financial Times, Kunitake Ando, president and CEO of Sony, said that the Microsoft Xbox, which comes with a hard drive and Ethernet adapter out of the box, could force the company to transition to the PS3 earlier than intended. "The biggest threat to the PlayStation 2 is that the Xbox changes the industry's life cycle," said Ando, who feels that it is unclear whether the current PS2 business model is sustainable and that its console life cycle could be reduced to three years as a result. Although sales of the PlayStation 2 console remain strong, Ando said that the company is still in the process of recuperating its high front-end chip manufacturing costs.
Given his comments, it is not surprising that Ando feels that Microsoft has replaced Nintendo as the biggest competitor for his company's games division. "Nintendo's GameCube has been a disappointment in Japan, they have sold only a third of what they had hoped," he said. "The PlayStation 2 is viewed by gamers as the games console to own." Ando further stated that although there was interest within Sony to enter the handheld business to compete directly with Nintendo's Game Boy Advance, Ken Kutaragi, president of Sony Computer Entertainment, requested that the company remain out of that market in order to focus its efforts exclusively on the PlayStation 2.
Despite Ando's comments, a majority of industry analysts feel that the PlayStation 2 has strong sustainable potential to become the market leader among the current generation of consoles. A recent report by the International Development Group forecasted that the PlayStation 2 installed base would grow to 34 million by 2004 in North America, from its current base of 7.2 million units. IDG further projected that the Microsoft Xbox would reach an installed base of about 20 million units in North America by 2004, while the Nintendo GameCube would reach a base of 18 million units in that same period.
Research for and development of the PlayStation 3 is already under way. Sony has partnered with Toshiba and IBM, as part of a combined $400 million, five-year investment, to develop the technology for the PS3. Production of the chip, at last report, was slated to begin in 2004. According to Sony, the new chip design will be fundamentally different from what the company has used in the past and will have a greater focus on delivering communication and broadband services.
By Shahed Ahmed, GameSpot VG [POSTED: 11/14/01]
11-15-01 | 03:16 AM
#2
DVD Talk Gold Edition
Joined: Feb 1999
Posts: 2,600
Likes: 0
Received 0 Likes
on
0 Posts
From: HB, CA
drexel posted this link to the original article in the other thread that got closed:
http://news.ft.com/ft/gx.cgi/ftc?pag...id=ZZZT22LCC0C
I don't know that I'd take Mr. Ando's comments as an indication that Sony is moving up the schedule for PS3. I think he's voicing concerns about what impact MS may have on the market. If you look at their actions lately, or inaction rather, I think it's clear that Sony is waiting to see how their competitors' launches go before they respond.
And I wouldn't necessarily assume that the market would accept such a shortened product cycle for console games. While the hardcore segment will buy every new console on launch day, it's the mainstream segment that makes the whole business profitable and it's not clear if they'd be happy replacing their console, accessories, and game library every 3 years.
The overall profitability of the console business would have to improve substantially in order to accomodate a 3 year product cycle. So either the market needs to expand tremendously, or they need to get their current market to pay even more $$$'s, probably in the form of a monthly fee.
http://news.ft.com/ft/gx.cgi/ftc?pag...id=ZZZT22LCC0C
I don't know that I'd take Mr. Ando's comments as an indication that Sony is moving up the schedule for PS3. I think he's voicing concerns about what impact MS may have on the market. If you look at their actions lately, or inaction rather, I think it's clear that Sony is waiting to see how their competitors' launches go before they respond.
And I wouldn't necessarily assume that the market would accept such a shortened product cycle for console games. While the hardcore segment will buy every new console on launch day, it's the mainstream segment that makes the whole business profitable and it's not clear if they'd be happy replacing their console, accessories, and game library every 3 years.
The overall profitability of the console business would have to improve substantially in order to accomodate a 3 year product cycle. So either the market needs to expand tremendously, or they need to get their current market to pay even more $$$'s, probably in the form of a monthly fee.
11-15-01 | 08:24 AM
#3
DVD Talk Ultimate Edition
I hate when increased competition in the video game industry ends up with companies releasing new hardware as their solution. They need to compete more with better and different games.
11-15-01 | 10:01 AM
#4
DVD Talk Gold Edition
Joined: Feb 2001
Posts: 2,208
Likes: 0
Received 0 Likes
on
0 Posts
From: New York, NY
That's not really going to happen. The PS2 audience wouldn't be ready to upgrade that soon. If Sony released the PS3 that quickly, it would probably fail. It would lose a lot of the PS2 audience, and it would not pick up any of the X-Box or GC owners.
This is an empty threat to Microsoft, because the X-Box has a 5 year plan to be profitable. Sony is saying to Microsoft, "We can make this decision and it could cost you a billion dollars."
This is an empty threat to Microsoft, because the X-Box has a 5 year plan to be profitable. Sony is saying to Microsoft, "We can make this decision and it could cost you a billion dollars."
