| senortaco said: Sorry, I didn't see your reply before the link. Your reply explain some of what I just asked about. Thanks. |
About your comparison of MS and Sony to UPS and postal service:
UPS and postal service ignored the higher tier market. The expensive overnight delivery. They ignored people who were willing to pay premium for a really great service.
Sony and MS are more like US steel compared to Japanese minimills. Minimills produced slag at a very low tier market for a very cheap price. US steel was made in large foundries and minimills used electric ovens to melt low quality scraps. They used these scraps in the concrete market as reinforcing agents. US steel made very little money on this market because the cost of their foundries was very expensive and creating this low quality steel wasn't profitable, so they just let minimills take over.
The difference begins here. Minimills quality, techniques, and economis of scale got better, driving the price down. Soon they were able to make beams and sheet metal using these very cheap ovens at a cheaper price than the foundries. The foundries, more suited to make super high quality and large applications moved up toward that market and kept letting these minimills take over more and more low margin.
Sony and MS are using different strategies to take on Nintendo.
MS is using a bottom-up "disruptive" product. It is very low end and is very limited. However, MS doesn't seem to understand that a disruptive product also requires a low price, so I don't understand their strategy right now. A bottom-up disruptive product is often identified by its low margin low quality that established brands are afraid of promoting. For example, Nintendo makes a lot of money on peripherals. Kinect is peripheral free. Nintendo wants to keep this kind of tech from becoming popular because it reduces their profit margin.
Similarly, Sony dominated the music market for a long time until the Ipod. iPod was capable of playing large amounts of downloaded music, which Sony is heavily invested in. Sony, of course, owns several labels, so promoting piracy reduces their margin. However, keep in mind that Apple's iPod was a top-down disruption. It sold at a premium price but offered new opportunities. Similarly, kinect sells at a premium and offers new opportunities. However, contrastingly, Apple marketed to the discerning customer, the one who is willing to pay more for a BETTER product. I don't think Kinect is a BETTER product, but MS pricing strategy seems to indicate that it is a top-down disruption. Perhaps they don't know what they are doing, or perhaps they believe that the less a customer has to hold, the BETTER it is.
Sony's Move is most certainly top-down disruption. It targets a more discerning customer, like someone who is interested in motion control but also wants a game that they think is cutting edge graphically, or has a lot of substance. For example, my one problem with wii and DS games is that I feel they are lacking in content. A lot of them seem short, or reuse art and other assets. I think DS is the greatest system of all time, but it infuriates me when I buy a game and it ends early, or has many variations of the same thing. For example, when I got Nintendogs, I thought it was a lot of fun, but it felt like it was missing so many things. The competitions never changed, and there were only 3. The walking of the dog took gameplay and had twists to keep me interested, but the actual things that happened were, "meet another dog" and "find a present". That's it.
Sony's Move seems to cater to the people who expect more, and in that, it is an ignored market. There are no wii games that can match ps3 in graphical ability and amount of content. There are many games that can compete on a gameplay level, and some wii games are untouchable in the gameplay aspect, like NSMBWii, wiifit, Smash Brothers Brawl, MKWii. What Nintendo ignored, was the high-end gamer. It was a smart decision though because bottom-up disruption requires a cheaper product that more successfully matches the mainstream expectation without doing much more.
Now, I'm not saying Kinect and Move are going to destroy Nintendo. They are simply taking over new markets and expanding. They are not succumbing to nintendo's disruption. Top-down disruption is very rarely fatal compared to bottom-up disruption. But like I said, MS and Sony are still here, surviving, and innovating using cunning strategy.
So you can see how earlier I said that it was an advantage that both are taking different strategies of response, because each way removes potential avenues for Nintendo to continue disruption. If both had gone with a Kinect style, Nintendo could have simply drowned out the competition with their core lineups shown at e3. Users would say "I just feel like Nintendo's motion games have more substance and higher quality." Sony Move is preventing that, and if both had gone with a wand, Nintendo could have just released kinect, (a technology of which they were definitely working on) and taken that market. Consumers would have said, "Nintendo just continues to innovate". It would have strengthened the brand and strengthened the consumer loyalty. MS canceled that out with Kinect.
The silver lining here for Nintendo is the vitality sensor. I think the vitality sensor has a major foothold in establishing a new market for the "self-helpers". However, it was shown more than a year ago. It would be silly to think that MS, Sony, or even Ubisoft, are not working on a version for a different platform.
