Sony's tightrope, and it's implications for future console generations.

[HappySqurriel]

Bodhesatva said:

DonWii said:
No. Strategy is key, and that strategy paid off. The only difference is that Sony had a 1 year head start to establish itself, which paid off in the end. The price drop came sooner, and the support from 3rd parties was growing. The same thing is happening with the 360. I think it was a good move from Microsoft, who is a newcomer in the industry, to have followed Sony's last gen strategy. Expect a price drop and good 3rd party support and exclusives to drive 360 sales for a long time. While I do not support Microsoft, I do believe their strategy this time around will pay off.

Right, I absolutely agree that the strategy can pay off, and has in the past. No argument here. The question I'm asking is: what happens when the strategy doesn't pay off? What happens when you sell the system at a loss and you're still just in 3rd place, with 15 percent of the market share? If this were a 1-shot thing -- where you entered the market and stayed with the same machine -- I'd say it might be worth it, but this cycle repeats itself every 6 years or so when a new generation begins. I totally agree that the strategy is worth it when you win, but everyone is going to lose sooner or later, and when you lose with this strategy, you lose really hard. That is my point.

When this strategy doesn't pay off you lose $5 Billion (or more) like the XBox did in the previous generation ... The loss of money wouldn't be the worst part of it for Sony, the loss of market share and brand recognition would be far more damaging.