Wii: What Happens When the Novelty Wears Off?

[Erik Aston]

The primary reason PCs became ubiquitous is for things like word processing and spreadsheets and other work-related functions. For most PCs sold today, this is probably still a main reason. However, when things like Napster and later Kazaa/Limewire and of course iTunes came along, PCs offered a better, more flexable way to manage personal media than using physical discs, especially combined with iPods. In order for PCs to develop this second primary feature, they needed to offer an improvement over CDs in terms of ease-of-use and user experience. Plus, people already thought PCs were worth the price based on word processing and spreadsheets etc alone. For all the various uses PCs have, the fact that people are willing to pay the price just for Office already (especially considering how quickly the price of a PC has fallen over the last 20 years) and the fact that PCs make many things easier than the old way, means there is not much of a hurdle for PCs to jump to become multi-use devices. Today when people buy PCs, they consider all this different functionality. The primary reason people buy cellphones is to make calls... Again, prices of technology are in a constant freefall, and people already place a high value just in making calls. Companies then add "lateral thinking with withered technology," like for example a really cheap digital camera which is valuable to people based on its usefulness and "cool" factor, but isn't sending that bottom line price way up year-to-year, and so it becomes possible for cell phones to develop multiple purposes that people consider in making purchases. But will it be possible for a company to offer a totally new cost:value proposition, like the iPhone? Do people care about the higher quality camera, the motion and touch sensitivity, the disc space, all the multi-functionality of the OS? Do they place a $500-600 value on all of that? I guess we'll find out. iPod shows us that people value the ease-of-use and "cool factor," but other than that iPhone is a different proposition. PS3 is doing the same thing. Its offering a totally new cost:value relationship. For the tens of millions of people who waited until PS2 cost $130 to buy one, and for the hundreds of millions who never bought a PS2, obviously the $600 proposition of PS3 doesn't make much sense. When game consoles have only established usefulness as game players, and then only at a price of $200 or less to capture the mainstream, having a $600 console, with a lot of that price coming from non-gaming features, is foolish. Wii costs the same amount past successful consoles have cost at launch. The cost:value proposition already makes sense to people just as a games machine, before they find out about the news/weather channels or internet browser or any of the non-gaming functionality. I suspect that some of the Wii's non-gaming features will become standard features in future consoles. Microsoft at least have a chance to get down towards a price where their console makes sense to people only as a gaming machine, and then open the Trojan horse. But instead, they are releasing the Elite. Again, a lot of the non-gaming functionality they are adding increases the price of the machine, and destroys the existing cost:value relationship of systems like PS2. I think people are going to prove more willing to buy both Wii and Apple TV than buying just a PS3 or a 360 Elite. Its approximately the same price on the Wii/ATV combo as on either one of the other machines, and though Wii + ATV doesn't have the huge specs, they are more designed around ease-of-use and user-experience.