April 24, 2014

Sony’s PS4 Just Crushed Microsoft’s Xbox One

Talk about brilliant business strategy.  This was so well executed, so perfectly timed, so flatly delivered that I believe Sony just won the next generation console wars with one fell swoop.  There is a Harvard case study in here somewhere.

If you haven’t been following what is going on, Microsoft’s upcoming console, the Xbox One, basically destroys the concept of game ownership.  According to IGN, the restrictions in place are:

  • You can only give an Xbox One game to someone who has been your friend list for 30 days or longer
  • Games can only be given away one time before they can’t be transferred again
  • You can’t borrow games from or lend games to your friends.
  • Publishers can setup “transfer” fees so you have to pay them if you want to sell or give your game away.
  • You must be connected to the Internet to authenticate your games.
  • You must periodically check in online to let your console continue working.
  • The price is $499

That means no more going to Game Stop or other retailers and going through the bargain bin to find old games; trading with your friends or family members; recapturing some of the money by selling your old titles without giving more cash out of your wallet.  It’s been 30 years and you can still turn on an original NES to enjoy the titles; something that will never happen with a game you buy on Xbox One.  There is an inherent shelf life.  What happens when Microsoft shuts down the servers?  It will come to pass one day.

Following the huge backlash from gamers online, Sony gave a presentation on it’s next generation console, the PS4, and calmly, ruthlessly, and with a smile, announced that you own your game.  That means:

  • You can trade it in at a store.
  • You can sell it to another person.
  • You can lend it to a friend.
  • You can keep it forever.
  • You don’t need to be connected to the Internet.
  • You don’t need to authenticate your copy online.
  • You don’t have to periodically check in to Sony’s servers.
  • The price is $399

This was an assassination.  As a stockholder of a small position in Microsoft (through the KRIP), I’m livid that Steve Ballmer had yet one more epic screwup.  As a gamer, I am thrilled at what Sony just did.  Not only did they listen to their customers, and not only do they understand the market, they did it in a way that was like a dagger to the heart.

It also doesn’t help that the Xbox One will have an always-on connection that can see and hear you, and that we now know the NSA can monitor Microsoft, causing serious concern for a significant group of people despite assurances to the contrary from the tech giant.  It’s hard to take them seriously when they behave differently.  The Internet took notice of Microsoft’s Xbox live terms of use today.  It reads, in part:

You should not expect any level of privacy concerning your use of the live communication features (for example, voice chat, video and communications in live-hosted gameplay sessions) offered through the Xbox LIVE/Games for Windows-LIVE service. We may monitor these communications to the extent permitted by law.

The only thing that could really screw this up for Sony is the Xbox releases one month earlier.  There is a big advantage to being first to market.  With that caveat, I think Sony won.  It’s not even close.

You can preorder the PS4 now and have it on launch day.  Out of principle alone, I am going to buy at least one for my household.  

  • Dylantherabbit

    Sony PS4 FTW !

  • joe pierson

    Companies with great leaders always seem to have lousy successors. Perhaps those great leaders cannot stand to be questioned so they only pick subordinates who are uninspired yes men, one of which eventually becomes the successor.

    • Richard

      Perhaps they become great because of the influence of a brilliant leader who can’t be copied, and without that original leader the company never would have been noticed in the first place :)

      (also known as reversion to the mean)

  • http://www.joshuakennon.com/ Joshua Kennon

    Thanks for pointing that out! It convinces me even more that I have to support the PS4 console as a matter of principle.

  • Nirav

    As warren buffett said, you want to own business that even an idiot could run, coz sooner or later he’ll be running it. Once balmer leaves, MSFT has nowhere to go but up!

  • http://ianhfrancis.blogspot.com/ Ian Francis

    My only concern is that Sony has seemed to be falling by the wayside. They are currently losing the console wars, they got blown away in the portable media market even though they were leading with the Walkman for 20 years prior, they came so incredibly late out of the gate into smartphones that they won’t even make a dent, and their tvs are fine, but they lack imagination. I used to try to get all my electronics to be Sony, but I gave up a few years ago. I don’t know what is going on at that company.

    So while Microsoft is losing badly in the PR campaign right now, I am going to hold off my judgement until they actually come out. The PS3 seemed so superior to the Xbox 360 on paper, but it was the little things Xbox did that won them the day. (well that and the Xbox 360 being released a year earlier than the PS3) The PS3 network is free versus Xbox live’s $60 a year, yet I still prefer Xbox live because of the interface. It will be user experience that will win out, not any one or two features. If people feel like the Xbox has a lower learning curve, and provides more features they will actually use, Xbox wins. I wouldn’t rush to judgement just yet.

    • http://www.joshuakennon.com/ Joshua Kennon

      Sony has been so horribly mismanaged that it has been a bloodbath for investors over the past 20 years. The company manages to survive almost entirely because of its life insurance profits. In actuality, it is a life insurance company in drag. The electronics are legacy at this point, which is tragic. The brand equity is still huge. If I were them, I’d try to launch on the same day as the Xbox and run relentless commercials about the differences.

  • http://www.joshuakennon.com/ Joshua Kennon

    NO! I DIDN’T SEE THAT?! That explains why they just remastered the first three games all on Playstation, which can be preordered now here. You know, I don’t know if I can even handle this. It’s happening!

  • http://www.joshuakennon.com/ Joshua Kennon

    Update: Kingdom Hearts III is available for preorder at Amazon!

    Now I not only get to enjoy it as a gamer, bringing back a bunch of awesome nostalgia from ten years ago, but I get to do it as a Disney stockholders. Hahahaha!!!

  • Guest

    Playstation forever.