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Gameboy Wars Heat Up 27 September 04
"Christmas matters here. It will be a very easy thing for a parent to purchase a DS for an older teenager, and give the Game Boy Advance to a younger sibling in the family.” Financial analyst Michael Pachter, of Wedbush Morgan Securities, in The New York Times
One of the biggest new product battles of 2005 will be in the multibillion dollar market for handheld game consoles. Over the next six months, both Nintendo and Sony will be launching innovative new handheld gaming devices. Nintendo’s is called the DS, for “dual-screen,” while Sony’s is called the PSP, for PlayStation Portable.
When two new products are competing against each other, there are a variety of tactics each of the companies can use to gain an advantage. Nintendo provided a demonstration of these last week. First, the company announced that it was accelerating the launch date for the DS, so that the product would be available in time for the Christmas selling season. For the first time in Nintendo’s history, it will launch its new system in the US first, on 21 November. About two weeks later, on 3 December, it will launch the DS in Japan.
Nintendo’s DS Console – Coming to the US in November
Second, Nintendo announced that it would be selling the DS console for $150 in the US. This price is at the low end of analyst estimates. Based on this pricing and launch schedule, Nintendo expects to sell 4 million DS systems between November 2004 and May 2005.
Nintendo’s announcement came an hour before a major press conference conducted by Ken Kutaragi, President of Sony Computer Entertainment. At the press conference, Mr Kutaragi provided no new information on the timing of Sony’s PSP. Mr. Kutaragi did announce the launch of a re-designed PS2, with a smaller footprint, to be in stores in time for Christmas this year.
Sony’s official position is that it is not competing with Nintendo’s DS. Mr. Kutaragi noted at his press conference:
“Direct competition is unlikely as PSP and the DS will probably have different roles in the market."
Sony sees its PSP as a multi-functional media player, with the ability to play music and videos as well as games. Nintendo’s DS is solely a game console. The PSP’s price of $300 is double that of the DS.
Sony PSP – Launching when?
According to the few who have seen it, Sony’s PSP is impressive, “a really hot piece of hardware,” according to one game industry executive quoted in The New York Times.
But for a product that will be launching in Japan by the end of the year, it’s surprising that there’s so little information available on it. Nintendo has a whole section of its website devoted to the DS. I couldn’t find any mention of the PSP on Sony’s site.
Perhaps Sony is right, and the Nintendo DS won’t compete directly with its PSP. In other new product battles, such as the Mac/PC wars of the early 1990s, customers had to choose between the two products – it didn’t make sense for them to buy both. In the gameboy wars, it’s conceivable that many customers will end up owning both systems, in the same way that people own different kinds of sporting equipment – tennis racquets don’t compete directly with golf clubs.
On the other hand, Sony’s position could be wishful thinking. “We compete in a different market” is a familiar statement. It’s often made by companies with high priced products when they are faced with low-priced competition.
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