PS3 is not literally going to die. It has too much brand equity for that to happen.
But it is going to suffer one of the largest market share losses ever for a single product over a single generation. That is certain.
Here's some facts to chew on on why the PS2 was successful:
1. Huge PS1 install base - check for this generation
2. 1 Year lead - oops, not this generattion
3. 20 million to zero lead before either competitor launched - oops, not this generation
4. Significant games base before competitors launched - oops, not this generation
5. Other than a few notable exceptions (Halo), PS2 had a great lineup available in the key Christmas period that Xbox and GC both launched in....so PS2 had a 20 million lead.....and better games in the first 6 months of the other two platforms lives - oops, not this generation
6. PS2 launched in N America with a $299 price tag - yikes, double ooops, not in this generation
7. PS2 had 30 million sales 18 months after launching in N America - not too likely...only 25 million to go in the next 8 months
8. 18 months after launching in N America, and 6 months after both GC and XBox launched, PS2 dropped their price to $199.....reaching that magic cheap mass market price relatively quickly - ahhhh, how many years will that take this generation?
9. After dropping their price to $199, having 30 million units sold, and a 25 million unit lead, with the largest and best game inventory on hand, and the best prospects for more games, PS2 really took off - notice what things were combined to make that happen
10. PS2 sold something like 115 -120 million units. The competitors sold 45 million combined.
So I ask you, what are the odds that Wii will sell close to 20 million units by year end or early 08? Virtually certain.
And Xbox will sell at least what $15-16 million by then?
Meaning the two combined will sell 35 million units by early 08...and 45 million units by mid-08.
Meaning by mid-08 every Wii/360 sold will be at the expense of PS3 market share relative to PS2 market share.
Now with two healthy competitors, one with momentum, innovation, public perception and a cheap mass market price, and one with equally good capabilities to the PS3, better current library, equally good library for at least the next 6 months to a year (assuming it can get beyond the RROD debacle), and a better price....
I ask you WTF can Sony do? They cannot compete on price. They cannot and will not have a big library/games coming lead before mid-08 at best.
PS3 is a total disaster for Sony. They can and will stay in the game because of their Brand and install base, but they have essentially pissed that away this generation. A complete debacle regardless of the final numbers because they have already lost significant market share and will be lucky to even sell the most units in a 3 way dog fight, and even that seems very unlikely given the Wii's total market dominance right now.
Mark my words...the business schools will be teaching this mess for years to come - PS3: Losing Market Share Fast - How not to bring an updated product to the market.
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