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Analyze This: Is There Anything Wrong with the Sony PSP?
General thoughts about the PSP: The only way in which the PSP can be perceived as anything other than a success is by comparison with the Nintendo DS. Screen Digest believes that there is more difference between the platforms than is often acknowledged in mainstream coverage. The DS is wholly focused on handheld gaming, while the PSP is designed as a portable digital media platform which includes gaming. Additionally, the respective userbases are markedly distinct demographics. We forecast that the global installed base of PSP users will be around 29 million at the end of 2007, generating $1.9 billion in software sales. Lifetime software sales at the end of 2007 will be around $4.5 billion. If this is "failing," then failure just got a huge brand makeover. On generating more excitement for the PSP platform: The PSP should focus on games which are distinct from what is available on Nintendo DS and the PS2. These are two very competitive platforms to take on. Sports titles and FPS's are two genres which I feel have never really taken off on handheld platforms, and the PSP has proven it can execute in these genres. Also the PSP offers strong connectivity technology. Perhaps game designers can use this to tie the PSP into SCEI's "Game 3.0" vision of offering users ways to create and share gaming content. Again, this is an area in which the PSP's capabilities should offer distinctive experiences unavailable elsewhere in the market. As a gamer I have been less than delighted seeing so many top PSP games -- e.g., Grand Theft Auto: Liberty City Stories and Vice City Stories -- being ported to the PS2. Exclusive titles define a platform, and there is less impetus for PSP owners to purchase such titles at full price if they see a PS2 release a few months down the line.
Forecast for the PSP this year: I anticipate integration between the PSP and PS3, perhaps something involving Home. I am positive the PSP will fit into Sony's strategy to position itself at the heart of the broadband-enabled home: The PlayStation 3 streaming, downloading, storing content, which can be used on the move by the PSP. We are only just starting to see the potential. Also 2007 to 2008 may be a good time for a new hardware iteration: more onboard memory and longer battery life would make the PSP a more capable device for non-gaming media storage and playback. Given that the media player capabilities of the PSP is an area in which Sony can distinguish the platform, this would appear to be a sound strategic direction. Introducing more premium content download services, wirelessly and via PS3, would address potential which has remained largely unfulfilled.
General thoughts about the PSP: I believe the device's perceived "failure" by some is due to the device struggling to live up to Sony's own marketing of the product, much like what the PS3 is going through today. Sony tends to feature a certain swagger and bravado to its marketing campaigns that says "we are the one to beat and the others are not to be taken seriously." With many things Sony does, there are elements of brilliance and vision, but also some obvious shortcomings. The good things about the PSP are processing power and screen size, which make for a great gaming. The Warriors, Sid Meier's Pirates!, and many others look great on the PSP. As for shortcomings: Most begin with Sony's own proprietary technologies. Putting so much emphasis on the UMD format was a terrible idea, just as other portable devices were moving heavily towards digital distribution. UMD works fine for games, but the company put so much emphasis on the format for movies and that has proven to be a disaster. A second big mistake was relying exclusively on Memory Sticks. It would have cost a lot more, but if this device had a hard drive or a significant amount of flash [memory] in it, the PSP would have been much more successful. On generating more excitement for the PSP platform: Sony should take advantage of the community aspect and look to create links between the device and the PS3. The PS3 community is growing and will continue to significantly over the next year, and game and media distribution between the two will be a differentiator. Putting the Location Free client software on the PSP was a good first step, but Sony needs to go beyond that. Also, allowing the PSP to participate in the new Home online service would help. While I don't think it will happen, I think Sony would be wise to leverage their game and phone expertise and deliver a "PSP Phone." Forecast for the PSP this year: The current generation has seen a price drop, with retailers beginning to lose faith in the device, and we may see some new version of the hardware, possibly a smaller version that features better battery life. As for a "second generation" -- and by this I mean a new processor, I think you will likely see that introduced in 2008 with the product shipping in 2009. Sony's too focused on the PS3 right now to deliver a new handheld in the next 18 months. Got a business-related question concerning the games industry that you would like to suggest for discussion in Analyze This? Are you a professional analyst and would like to take part in this column? Email howardhwen@gmail.com. |
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