Sony, Blu-Ray, and Technology’s “S” curve
22 May 06
Sony’s new
Playstation 3 comes with a high definition DVD player that uses a
proprietary standard called Blu-Ray. DVDs using the Blu-Ray standard
can hold more than five times the data of conventional DVDs, enabling
viewers to watch high definition films and video. Colors are richer,
and contrasts are sharper.
Sony’s decision
to include the Blu-Ray player in the PS3 was strongly influenced by the
success of its Playstation 2. When it launched in 2000, the PS2’s
ability to play conventional DVDs as well as games was an important
contributor to the console’s success.
At one level,
Sony’s logic makes sense: the next generation Playstation should come
with the next generation DVD. The problem is, Blu-Ray technology is
brand-new -- there are no DVD players using it on the market today.
Putting this
kind of cutting-edge technology into a mass market product like the PS3
is creating all sorts of problems for Sony. Blu-Ray isn’t going quite
as Sony planned.
Blu-Ray vs. The S-Curve
The usual path
for adoption of new technologies like Blu-Ray involves a gradual ramp-up
to mass market acceptance. We’d expect it to start out in a few
high-priced or specialized models, at low volume. As volume builds,
prices come down and reliability rises, enabling a larger number of
customers to buy with confidence.
Authors and
researchers from Everett Rogers in the 1970s to Geoffrey Moore and
Clayton Christensen in the 1990s have documented this “S-Curve” pattern
of adoption across a wide range of technologies. When Sony’s PS2
launched in 2000, the DVD was already well-established as a standard.
Sony is
attempting to leapfrog the “S” curve with its PS3 -- it wants to
introduce an advanced technology into a high volume, low priced device
at the same time that this same technology is launching as a high-priced
standalone player.
This approach
has handicapped the PS3 in numerous ways in its competition with
Microsoft’s XBox 360.
By the time the
PS3 launches in November, Microsoft’s XBox 360 will have been available
for a year. Microsoft plans to have sold almost 10 million units by
that time, making the XBox 360 a very attractive platform for developers
of new videogames.
Sony maintains
that the Blu-Ray technology is “future-proofing” the PS3 console. Jack
Tretton, the co-chief operating office of Sony Computer Entertainment of
America, recently told the Wall Street Journal:
"One of the things you can run into if you're so caught up in being
first is you can make the mistake of delivering technology that's not
'future-proof.’ … If [customers] want future technology, they'll get
that out of the box from PS3 and they won't from our competition.”
Sony’s Jack Tretton, in The Wall Street Journal, 9 May 2006
The trouble is,
it’s not yet clear that Blu-Ray is the future. The format is
competing with an alternative standard, HD-DVD, to become dominant in
the next generation. Blu-Ray is sponsored by Sony and supported by a
wide range of companies, from Philips to Apple Computer. HD-DVD has
been developed by Toshiba, and is supported by NEC, Intel, and
Microsoft. According to the Wikipedia, the two formats are
neck-and-neck.
Sony’s bet on
Blu-Ray is a big one. If it’s successful, consumers will see the PS3 as
a great value – it can serve as both an inexpensive high definition DVD
player and a next generation game console. Sony then wins on two major
fronts: its new PS3 dominates the game console market, and its Blu-Ray
DVD format becomes the standard for the next generation of high
definition DVD players and recorders.
There are
several ways that Sony can lose its bet, however. First, it may not
succeed in broadening the appeal of its PS3 beyond its current customer
base of young gamers. Many of these customers may become impatient with
Sony’s delays, or unwilling to pay the extra price imposed by Blu-Ray.
Second, it may
run into technical problems with the technology, resulting in product
recalls and limited availability. If these occur, the perceived
problems with Blu-Ray may turn this feature into a liability rather than
an asset for the PS3.
Microsoft’s new
XBox, on the other hand, does not face these issues. The company will
sell a next generation DVD player as an accessory that plugs into the
Xbox 360. This gives Microsoft the flexibility to offer both new DVD
formats and let customers choose. Customers get flexibility too. They
don’t have to buy an integrated Blu-Ray player, but can add it later.
Sony is a
veteran of many format wars. Back in the early 1980s, for example,
Sony’s Betamax videotape format lost out to the VHS format pioneered by
JVC. Perhaps the company believes that by aggressively pushing the
Blu-Ray standard in a mass market product, it can knock out the
competing HD-DVD approach.
History is not
on Sony’s side, however. The problems that Sony has had with the PS3
thus far provide a cautionary tale of the risks that come when a company
attempts to leapfrog the “S” curve.
More
Information:
-
The Wall
Street Journal’s
Robert Guth
wrote an article on the
Sony vs Microsoft console competition on 9 May 2006.
-
The New York
Times
explained the
different DVD formats in an article on 16 March 06.
-
A March 2006
ICE Update on
the emerging console wars.
-
Seth
Schiesel of The New York Times provides a
video discussion of the console wars. He reviews his top picks
for new videogames
here. None of them were for the PS3.
-
The
Wikipedia article on
Blu-Ray.
-
Thanks to
Vik Prabhu at DuPont for pointing me in the direction of Blu-Ray.
