Relative Launch Date

Returning to the list of factors that determine a console's success, let's consider the launch date issue. Sony clearly has a bit of a problem in Europe, because it will have one less Christmas season than both the Xbox 360 and the Wii. Some analysts think Sony will lose no more than a few hundred thousand console sales to substitutions. If that's true, lost revenue might be in the hundreds of millions rather than the billions.

Three Separate Markets

The U.S., Japan, and Europe are really three very different markets. It's quite possible you could have a console that is very successful in one market and yet unable to get any real momentum in another.

Before this delay, I felt strongly that Europe was the market where the PS3 could come closest to duplicating the performance of the PS2 in terms of market share. There's a long-term danger that Microsoft will gain market share in the U.S. and Nintendo will gain market share in both the U.S. and Japan.

Obviously, Europe isn't as well defined a market as either the U.S. or Japan. So, it's much harder to predict how a certain type of console or a certain type of game will go over there. The U.S. and Japan are very clearly defined game markets, largely because they have very clearly defined consumer cultures in general and entertainment cultures in particular.

So, what does the PS3 delay mean for Sony's future in Europe? It's hard to say. I'm more interested in seeing what the installed base of each next generation console will look like in the American and Japanese markets after Christmas 2007, when we'll have the first real chance to predict how this round of the console wars will play out.

Although I do think Sony is doing serious harm to its PlayStation line by insisting upon including Blu-ray and charging a ridiculous price, I don't think any amount of managerial ineptitude is likely to cause the catastrophic failure of a successor to such a dominant console as the PS2.

Price

If price isn't the elephant in the room, it should be. Most of the articles I read about the recently announced PS3 delay / production scale-down didn't say much about the pricing of the PS3. That's a mistake – especially, because several articles mentioned the laptop battery recall, which has nothing to do with the PS3 and very little to do with Sony (it has everything to do with lithium-ion batteries irrespective of their manufacturer).

The PS3's price is a big problem. One that might have manifested itself in poor Christmas sales, if the number of units available for sale had approached the expected demand. For now, Sony is planning on having so few units available in the U.S. by Christmas that the launch will go well even if the PS3 is ultimately a failure. Sony claims it will have 6 million units by the end of its fiscal year. A few analysts are skeptical, but Sony is sticking to that line.

In the weeks ahead, expect Sony to make a big deal about the fact that it will actually make more PS3 units available by the end of December than the number of Xbox 360s Microsoft had made available by the same time the year before. It's a valid point. But, it omits two key facts. The PS3 is launching after the Xbox 360 and there are more PS2 owners out there who will want to trade up for the new system.

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