Editor’s note: Dean Takahasi covers high tech for Silicon Valley-based VentureBeat. He is covering the E3 show this week in Los Angeles.
LOS ANGELES — Earlier this week I wrote that Sony finally got serious about the console war by cutting its price by $100. Well, it wasn’t true.
To word it that way makes it seem like consumers are getting a great deal. They’re not. Rather, Sony is unloading an expensive albatross it has had around its neck.
To his credit, Jack Tretton, president of Sony’s game division, didn’t call it a price cut. That would be true if Sony cut its price on the 80-gigabyte machine it now sells for $499 down to $399. At first glance, that is what it looks like. But it’s not true. It takes me a while to catch on to these things, but eventually it sinks in once I talk to people who are more observant than I am.
Sony’s bold price cut turns out to be a rather timid re-jiggering of its machines. The company has a couple of different models now. It sells a 40GB version now for $399. That version isn’t compatible with the PlayStation 2 games and it has two universal serial bus (USB) connector ports. It does not have Super Audio CD support and it has no Flash card readers. Sony will keep selling this model at the current price until it’s no longer in inventory.
The current 80GB version sells for $499 and it comes with a free game, four USB ports, Super Audio CD support, Flash card readers, and PS 2 compatibility. Sony is getting rid of this model when the change becomes official in September or so. In September, it will put a large 80GB hard drive into the same machine that it is now selling with the 40GB drive now. That is, a machine without those features mentioned in the $499 model. You see the sleight of hand? It costs Sony more to produce the full-featured 80GB model. Now it can offer a cheaper-to-manufacture 80GB model at $399.
Consumers may see this as a bargain, as those things that Sony cut out weren’t much of a bargain anyway. Sony loaded up the machine with things that gamers didn’t really need. Now it’s cutting them out, lowering its costs and getting real with its prices during the recession.
But Microsoft officials say they’re not playing along with this pseudo price-cut game and see no reason to cut their prices further. Microsoft itself on Sunday did its own timid price change. It is clearing out its 20GB model of the Xbox 360 at a price of $299, down from the $349 it previously sold for. But once those models are gone, Microsoft will only offer a 60GB model at the price of $349. It’s sort of a temporary price cut. John Schappert confirmed to me that they’re not going to change their price.
“I don’t think Microsoft has to do anything with its current prices,” said Billy Pidgeon, an analyst at International Data Corp.
Nintendo, of course, could care less, as it still sells out just about every Wii console it makes for $249. If this is a console war, it feels a lot like World War I. It’s not a fast-moving war of maneuver like World War II. These guys are taking pot shots at each other from a distance, rather than waging head-to-head competition.
Nintendo is off in a territory by itself. It is going after nongamers in an attempt to expand the overall size of the game market. Its titles such as Wii Music and the upcoming Wii Sports Resort appeal to the casual folks who appreciate accessibility and ease of use.
Sony and Microsoft are closer to a slug fest. But as noted above, neither is going for the jugular. They’re both focused on staying or becoming profitable. Each side has good games. They’re trying to win the gamers over, title by title. Meanwhile, Nintendo is trying to convert the nongamers to gaming. Nintendo is far behind in online gaming technology, but it has definitely captured the spirit of socializing in the home with guests. The upcoming Wii Music and Wii Sports Resort are great for playing with friends in the living room.
There are small victories here and there. Microsoft crafted a good alliance against Sony with its partnership with Netflix for video distribution. In doing so, it has stayed focused on its goal of trying to win consumers over by its console by positioning it as a gateway to digital entertainment. Right now, it has thousands of movies available, compared to hundreds on the PS 3. For some consumers, that’s going to matter. Sony should neutralize this deal by signing up Netflix too.
Avatars at war
Microsoft will also have an advantage over Sony as it tries to distill the lessons of social networks through tools such as the Xbox Live avatars. Those avatars can now be integrated into casual game play on Xbox Live. If you play future Uno games, for instance, you can do so using your own avatar. Microsoft didn’t get as much credit for this innovation, since Nintendo already has its less-functional Mii avatars.
Sony’s Home virtual world was supposed to be a leap ahead of Xbox Live. But Sony has scaled that effort back from being a kind of virtual shopping mall experience to a world focused on the interests of gamers. Whether gamers like the idea of Home depends on how much customization and socializing they want to do. They can build their own characters and rooms in Home. With Xbox 360, the gamers can create custom avatars and win things like virtual T-shirts as achievements in games. But they won’t get the full interactive benefits of being in another world. That’s much like the difference between Habbo Hotel and Second Life. As Habbo and some of its rivals have discovered, having a little bit of customization is all that some users want. Microsoft sees the point of Habbo’s strategy, which costs a lot less than doing Second Life.
Microsoft got a good jab in at Sony in getting an exclusive on “Rock Band 2.” But when it said it eliminated Sony’s exclusive on the Final Fantasy series, that’s not exactly true. Microsoft cut a deal with Square Enix to get the Japanese company to port the next big game, “Final Fantasy XIII,” to the Xbox 360. This property is legendary among gamers, particularly in Japan, and it has sold 85 million units. But the deal is not as good as we thought at the Microsoft press conference on Monday.
At the Square Enix press conference, executives revealed that Final Fantasy XIII is already well under way in its development for the PS 3 in Japan. It is not yet going to be made for Japan. The announcement was merely that Square Enix would make Final Fantasy XIII available on the Xbox 360 in Europe and the U.S. at the same time as it is available on the PS 3. But Japan is Microsoft’s weakest market and that is where it needs Final Fantasy XIII the most.
What’s up with Wii?
Nintendo had its own deft spin at its E3 press conference. While it has the cheapest console on the market, the company is coming up with ingenious ways for its fans to empty its pockets. It has a motion-sensitive Wii controller. You can buy a $20 Wii Zapper to play shooter games on it, presumably because Nintendo didn’t design the controller the right way in the first place so that shooting games work well.
It also has the Wii Wheel that you can get for $15. And Wii Fit comes with a Wii Balance Board that you can buy for a combined total of $99. You could say that Nintendo keeps making its console more useful. Or you could say that it didn’t finish designing its console before it shipped it. And now it keeps selling you things that you need to complete the console experience. That’s sort of like Microsoft selling you Windows Vista and then selling you security software separately.
This is most evident with the new Wii Motion Plus accessory, which will ship next year with Wii Sports. Resort. This add-on to the Wii controller allows you to flick your wrist, like turning the throttle on a jet ski or slicing with a sword. It begs the question. Why didn’t Nintendo do this with its original Wii controller? It might have saved us all the trouble of buying the accessory. Of course, Nintendo’s position is that it is making improvements with new innovations and ideas that weren’t available or ready at launch in 2006.