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Apple vs. Sony: Why a $600 phone soars and a $600 console tanks
Jeff Nolan writes on the Sony’s PS3 debacle. IMHO, the best part of the post is Jeff’s comparison between the PS3 and the iPhone:
What I do find interesting to consider about the price point is that more than a million people shelled out $500-600 for an iPhone (plus $80-100 a month). What does that tell me? Not sure because the Apple reality distortion field makes people do things they would otherwise consider irrational (me included), but perhaps it’s that communication capabilities outweigh all others in terms of the perceived value of a device. Let’s also not forget that the iPhone is fashion, the PS3 simply isn’t. [Jeff Nolan]
Jeff identifies two good reasons for the success of the iPhone and the failure of the PS3 - value from communication, and value from fashion. I’d like to add a few other reasons as to why one $600 spend is justifiable and another isn’t:
- Marginal Benefit: the marginal benefit of a PS3 over a PS2, for the average person, is comparatively low. A bump in graphics quality (which incurs secondary costs, see below), combined with an unresolved format-battle tie-in (Blu-ray) creates a murky “pro” list with which to justify a purchase, vs. a very clear “con” in the form of $600 for a living room entertainment device.
- Secondary Costs: Realizing the full benefit of the PS3 requires (for many) upgrading a TV, receiver and speakers, and cabling - potentially thousands of dollars to be spent. Secondary costs quickly erode the already shaky core proposition of slightly better graphics (see Marginal Benefit above).
- Usage Credibility: Justifying a major purchase requires some credible utility that you’ll get out of it. As Jeff pointed out for the iPhone, “communication” is perceived as such; unfortunately for Sony, living room game-playing is not.
- Usage Frequency: Your iPhone is going to be in your pocket all day, every day, and used repeatedly in a variety of ways through-out each day. A PS3 will spend 97% of its existence in an idle state gathering dust between playing sessions while owners eat, sleep, and otherwise lead their lives.
What it all adds up to for Sony is a lesson in marketing super-premium products. Premium prices require a clear, credible value proposition that can be realized regularly.
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7 Responses to “Apple vs. Sony: Why a $600 phone soars and a $600 console tanks”
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This is spot on. I expecially agree with the “secondary costs” point - if I don’t have an HDTV, then the PS3 is really like $600 + $2000 for the TV I would want.
That being said, $600 is still way too much for a phone, I’m holding out on my old tactic of getting other people to buy my technology for me (so far it’s worked with computers and ipod, now maybe a phone, but I don’t think I could convince anyone to buy me a console).
Yet again, another fool dials in the PS3 as a failure long before it has hit its stride. Yes, the iPhone had explosive first-day sales - what can you say, there are an awful lot of fashion slaves and idiots out there who believe that Steve Jobs craps rainbows. It’s cute, but it’ll be obsolete in a year or so. The PS3 will have games coming out for it, getting better as the developers figure out its limits, for at least five years down the road (ten if you buy into the Sony PR, which no one really does).
As far as the four points listed above, let me point out their fallacies:
1) Marginal Benefit: Again, the PS3 has some incredible games coming out in the fall and beyond, and the PS2 has pretty much used up all their headline games that they had left. The choice becomes more compelling as Sony shelves the PS2 for good (besides sports ports, which they may keep for a year or two yet). Also, anyone who doesn’t believe that the competition for the iPhone is just going to roll over and admit defeat is crazy; between LG, Motorola, Samsung, and the others, it’s a matter of time (I give it three or four months) before the “iPhone-killer” comes out. At best, this is a push.
2) Secondary Costs: This secondary cost expects that any player with a PS3 will go out and buy all the high-end hardware for their system as soon as they get them home. Let’s face it…if you have the kind of disposable income to pass right by the Tracfones and head to the iPhones, odds are your home entertainment situation is pretty well under control. Again, this is a push.
3) Usage Credibility: Ummm, does anyone know what the sales figures on home gaming comes to each year? Because while communication is fine and dandy, there are an awful lot of gamers out there plunking down their Benjamins to keep up with the Joneses and get their gaming fix. And when you realize the PS3 also handles Blu-Ray (which has several good indicators that it may pull out the lead on the HD war vs. the HD-DVD) and has an emerging community resource coming out soon, this argument holds less and less water also.
4) Usage Frequency: I’ll give them this one. No, seriously, the hardcore gamers aside, anyone owning a PS3 probably does spend more time talking to other folks on their cell phone. Granted, you’d better use it an awful lot, because when Apple comes out with the iPhone II or whatever the Next Big Thing is, you’ll have to scoop that up, which will pretty much end your usage frequency. Of course, that PS3 will still be in use….
The sad thing is, this is a silly argument altogether. The iPhone is a craze, a fad. The market is too tight, and the consumption of cell phones is so rabid that your turnover rate is pretty incredible. The PS3 is a multifunction high-end piece of the home entertainment picture, allowing (eventually) great visuals and personal engagement to go hand-in-hand with home theater HD movie-watching. It really is like apples and oranges, but this was just another of the oh-so-fashionable cheap shots at Sony.
This is a ridiculous comparison. The problem you have here is that people who play video games aren’t necassarily the people who want the latest and greatest mobile phone.
The PS3’s price tag is designed to be purchased by “hardcore” gamers who always buy the latest console whenever it is released, regardless of the price. All consoles in the last 15-20 years have had massive price tags for up to the first year of sale. The problem for the PS3 is that there isn’t a killer app (a very good game) for hardcore gamers to consider buying the console for.
I know nothing about mobile/cell-phones, but what I do know is that idiot office “fashion” freaks tend to go out and buy every new phone that is released and seems like it may be mildly popular, and these are exactly the type of people who purchase I-pods as if there were never any other MP3 players on the market. We all know why the Iphone is gonna sell like hot cakes, and that’s because there are millions upon millions of group-think idiots out there who have more money than sense who couldn’t bare to go into work tomorrow knowing that all the other popular kids in the office might have one and they wont.
The Playstation 3 on the other hand isn’t nearly as powerful a device as Sony lay claim, and it has NO GOOD GAMES, and therefore “hardcore” gamers who can actually tell the difference wont shell out the cash.
Why anyone would compare the two devices as if they appeal to the same demographic is beyond me.
@shigeru - good points, thanks for taking the time to share them.
>marginal benefit: if the marginal benefit of the ps3 is driven by the removal of its predecessor - that’s a pretty lame value equation, especially in comparison to the iphone.
>secondary costs: I see what you’re saying here; not sure what percentage of purchasing decisions this would be a factor for.
>usage credibility: I hear your point here. I’d argue though that there’s a psychological credibility threshold: i.e.: spending $250 on a Wii for gaming is OK; spending $400 on an Xbox is pushing it, spending $600 on a PS3 is out of bounds. Maybe. Credibility is relative based on price; the decline-point of “marginal credibility gained vs. dollar spent” is hard to pin down though.
Apples to oranges: yes, to be sure. But even apples and oranges are both fruit, and both sold in the produce section for similar prices; if you don’t think there’s something to be learned from a reasoned comparative analysis of the two, you’ve been drinking the koolaid.
Heading to bed… to be continued!