Sony Has Already Lost The Console Wars

There is no doubt that Sony dominated the second generation of the console wars. Their PS2 platform had an early jump on the Xbox and Sony never looked back. Since it’s launch, the console has sold over 105 million units and has made Sony a video game powerhouse.

Given their footprint, Sony should have had an easy time convincing their customer base to upgrade, but as the latest generation of consoles have launched, Sony has lost their control over the market, after trying to force users to buy a Blu-Ray drive, along with the console. The inclusion of the drive has resulted in high prices, product delays, and limited supply during the launch. Even after Sony has agreed to sell the console at a loss, they still have not been able to get the device down to an acceptable price level for consumers.

As the latest generation of consoles have been hitting the market, Sony’s PS3 sales reflect some pretty troubling numbers. They may have recently celebrated their 1 millionth sale in Japan, but overall they’ve actually performed pretty miserably. According to the latest data from the NPD group, Sony sold a pitiful 98,500 PS3 consoles for the month of June.

Sony is quick to point out that these figures represent a 21% increase over their May sales, but even with the gain, if they continue at this pace, it will take them 83 years to hit 100 million console sales. If Sony was hoping to sell 100 million consoles over the next 5 and a half years, they would need to increase their sales from 98,000 units a month to 1.625 million.

Now to be fair, Sony’s latest price cut on the PS3, has improved sales. The company reports that they’ve seen a jump of 135% since lowering the price by $100. The problem is though, that the price cut is really only temporary and perhaps even worse, it may have prompted Microsoft to consider slashing $50 off of the price of their own consoles.

With the Wii taking half of the market and Sony and Microsoft fighting for the rest, Nintendo has put themselves in an enviable position in the console wars. They’ve not only been able to draw in non-core gamers without sacrificing profits, but they’ve also been able to convince consumers that the Wii can compliment an existing console system. With their innovative game play and their low price margins, they’ve been able to turn single platform households into dual console living rooms.

The addition of the Wii as a 2nd option creates big problems for Microsoft and Sony, because it eats into the profit centers of the video game industry. Because so much of the money on gaming is made on the software, having another competitor in the living room, can have a significant impact on the profit margins for that customer. Nintendo’s ability to not only capture market share, but to also siphon off video game sales from the incumbents, will change the dynamics of the third stage in this battle.

Given Sony’s prices, it’s a lot harder for them to convince a Wii family to compliment their console by adding on a PS3 system. While the graphics are much nicer than what the Wii offers, the extra entertainment benefit isn’t worth the additional cost attached to their super computer.

When Sony could control the video game market, they were able to negotiate gaming exclusives, but now it’s Nintendo that has the pipeline of exclusive titles. There will be those who argue that less price sensitive customers would buy a PS3 over a Wii in a heartbeat, but if you look at the most recent Nielsen’s survey, high end households are actually more likely to choose Nintendo over the PS3.

If Sony is failing to sell their Blu-Ray infested video game console to the least price sensitive customers, it doesn’t make me very optimistic that price cuts will be a very good long term solution for competing against the Wii and the Xbox. While there is still plenty of time for Sony to retake their lead in this latest incarnation of the console wars, I believe that their missteps at the starting blocks have all but assured, that they’ll never be able to outsell their PS2 console.

Davis Freeberg is a technology enthusiast living in the Bay Area. He enjoys writing about movies, music, and the impact that digital technology has on traditional media. Read more of his musings at

35 thoughts on “Sony Has Already Lost The Console Wars”

  1. I would disagree… I’ve been neutral on all the systems until this year’s E3, when it seemed like Sony was the only console with anything to show. Now I really want a PS3 and the 360 looks like a desktop PC clone and the Wii looks like a one hit wonder.

    But who knows, it could all change by the next E3.

  2. There’s probably room for all three.

    The price drop combined with integrated Blu-ray could be enough to get the ball rolling for Sony. I think the 360 kicks butt with their online and media offerings – Sony could easily improve their service and add more via software updates. I’ve just never gotten used to the PS2/3 controller and it’s not comfortable (similar issue with the PSP). I’ll be picking up a Wii this fall when some more interesting titles launch.

    Davis, was that 98,500 units US only or worldwide?

  3. I think its pretty hilarious every time I see people writing this sort of gear, as if the PS2 audience has suddenly disappeared. Fact is, PS2 is still selling better than the X360, and just slightly less than the Wii. Software sales wise, the PS2 sells _far_ more than Wii.. hardly something Sony could be openly unhappy about?

    How can you ignore a sizable audience of 100+ million gamers? How can you compare a paultry next-gen market of maybe 15 million.. and claim that somehow its all over? Just imagine.. for once.. that Sony manage to transfer even half of the current PS2 audience to PS3 (even over 3-4 yrs).. you think 50 million gamers on PS3 would somehow lag behind Wii users and X360 in 3-4 yrs time? Hehe see how silly you look?

  4. LOL

    Some people think it’s okay to pay for a laggy online gaming service for a console with 30% failure rate. Every 360 owner I know has already spent more than $600 on their unit from repairs and accessories.

    I have my own PS3 and 14 games. I have more games than the average 360 gamer… funny how they have spent as much if not more than I have for my next-gen experience. I also own a PSP and make use of my PS3 & PSP all the time. I get an average of 20+ gaming hours in a week on my PS3 and would not have it any other way.

    There’s just something nice about having a free online community and lag-free gaming (compared to XBL, its practically lag free).

    Don’t even get me started on the Wii and lack of online gaming.

    Typical fanboy calling a ‘win’ when we’re still in the top of the 2nd inning with only 1 outs.

  5. Nintendo has just passed the 10 million Wii mark in less than nine months, and their sales and demand are only increasing. There is no doubt Nintendo will come out on top this generation. Halo 3 can’t save 360 over the long haul, and Blu-Ray is a dud.

    (HD-DVD ftw.)

  6. gamer, now you know someone who hasn’t spent $600 on a 360. I got my unit half off (Micro Center) and it hasn’t failed yet – knock on wood. The only accessory I have is the remote. I briefly had the camera, but couldn’t find a reason to keep it. I’ve never noticed any online lag issues, but maybe I’ve just been lucky.

  7. *Their earnings report showed 9.27 million sales by the end of June, and we are almost four weeks into July. Nintendo passed 10 million almost a week ago.

  8. No console is worth more than $300. I may get a 360 once the price drops and the heating issues are resolved and proven. If I’m going to spend more than $600 for gaming I’ll drop the money into my PC.

    Lol Funny, I really hope you meant to spell “idiot??? incorrectly… At least offer a counter argument if you disagree. Apparently Dave’s blog does mean something – you read it.

  9. I too am waiting for the prices to drop – I just got my 360 back from being repaired so I am looking at a 2nd system. I will wait til the Fall and probably for the Wii due to the $$$. I dont think the PS3 is worth 2x the Wii…. certainly its on par with the 360 but again not THAT much better.

  10. I think you’re missing the main point of failure for the PS3 which is lack of games. Sony has made a ton of mistakes (including an online system that was and is still no where near as complete as Microsoft’s offering) but when the games start coming out the sales will spike. There are many games coming out in the coming months that will drive people to buy the console and we’ll see what happens then.

    Of course, the Wii is attracting non-gamers which is something the PS3 doesn’t even really aspire to do so it will never become truly mass market.

  11. I just got a Wii Monday. I’ve never bought a console before. My old Amiga’s were the closest thing to a video game machine, but I’d rather program them than play them.

    The Wii is just plain fun. This is what a game machine should be. I can see having a ball with this at a party.

    Tara, I disagree with the PS3 not aspiring to attract non-gamers. The PS3 wants to be a media center. That’s part of the problem. The Bluray drive drives up the cost. The home theater hard core wouldn’t be caught dead using a gaming machine to play their movies. The gamers just want to play games. And the price is too high for everyone else. It’s kinda stuck because it doesn’t really fit in anywhere.


  12. Grover hit on my main point – the PS2 utterly, totally dominated the industry and continues to sell better than the 360 or PS3 – or both combined. Sony still dominates the industry with the combination of the PS2 and PS3.

    Is the PS3 trailing the 360 and Wii? Yes, of course. But Sony can afford to, because they have the strong engine of the PS2 to keep them rolling in the market. Over time the component costs of the PS3 will come down and the price will continue to drop, and eventually it’ll pick up the sales from the PS2. And Sony has the largest installed base of gamers – and the PS3 is backwards compatible.

    Sony designed the PS3 for the long haul – it will remain quite capable for longer than other consoles. Most likely the 360 will be out dated and require a refresh well before the PS3.

    Microsoft couldn’t wait to get the 360 out because the original Xbox bombed. Sony could wait and can play a longer game. Nintendo didn’t do well with the GameCube, so they needed a hit with the Wii and they went after a different market. But the Wii is limited compared to Sony and MS, and the’ll probably suffer as both of the other players increasingly introduce online services that use the drive.

    MS has marketplace today – but Sony will bring movies, music, etc, to the PS3 as well.

    You can’t say Sony has lost the console wars – if you take the industry as a whole, Sony is still the leader. In the next generation consoles only, Sony is the trailer – but they have plenty of time to pick up steam as the PS3 prices drop.

    As for the ‘temporary’ price cut – no way. It is permanent, and will probably drop more. When the 60GB consoles sell out, the 80GB price will be dropped to $499 – or lower for the holidays. There is no way Sony is going to *raise* the effective price on the console.

    And sure, MS is probably going to cut the 360 price – that’s expected. It has been out long enough now that it was a bit surprising they didn’t cut it before E3.

  13. I’d like to know if blu-ray winning the format war will affect the strength of MS WMV-DRM in the download world.

    If there were a shift in console market share, could another format dominate and lead to a shift in the download mix?

  14. Already claiming that the console wars are over is foolish. Frankly, I’m tired of the amount of fanboys out there allowed to publish such BS.

    The PS3 and Wii have been here for only 8 months and people are already declaring everything to be over? Cool, knockout the PS4, the Mii, and the Next Box. Because he’s right, everything is established, the 360 won and the other two companies were in this for only 8 months.

    You’re analysis is accurate and all, but right now it’s like watching everything at a snails pace, not to mention the 360 has had an 18 month advantage.

    What is the real basis for this reading anyways? Oh I see, you have no real information to give us on the consoles, but trying to be the bandwagoneer that you are you’re only hope to get poeple to come to the website is to base a title on your biased opinion. Give me break.

  15. Okay they say the PS3is backwards Compatible? well that won’t be the case anymore after the 60GB models go out the door. The new 80GB model won’t be totally backwards compatible only some PS2 games will play while others won’t and the 60GB can be upgraded but the newer 80GB will be lockewd down so Upgrades won’t be possible unless you start MODDING. Now I have a PS2 but the PS3 has been disappointing, I think it’s safe to say as people get older you have less time to play so that leaves hardcore gamers stuck in some dark room playing 20hrs straight and with out a life. So I can see see how the Wii is kicking butt. There philosophy since the N64 was for people to come together and have fun! So that’s why it appeals to many non-gamers! i would like the PS3 but not for $600. I ahve a computer for that. If i wanted a blu-ray player I’d wait till the goes down so I could installe it in my computer. I just might buy X-Box once they resolve the whole heating up issue. Just food for thought you can only push out so much life out of the PS2 until it gets outdated. Hopefully the same thaing that happend to Sega doesn’t happen to SONY.

  16. You’re an idiot, Davis. We’ll see you change your tune this time next year. You’ll see the results of that $1.5 billion loss that Microsoft just reported on producing a “flawed” product. The PS3 is undoubtedly the best entertainment system on the market today and it is by far the most reliable!

    And by the way, Sony, a multibillion dollar corporation, will not let their console, the PS3, fail like Sega did with Dreamcast and others. The Sony company is far more lucrative and popular than Sega was at that time and most of the people who own a PS3 and the other consoles KNOW how much more superior it is.

    The PS3, in fact, is the ONLY next generation console!!! The other companies won’t be making theirs until about 3 or 4 more years.

  17. why don’t Sony make more games for ps/2 and add more features & similar controls like the wii? If you can’t beat them. Join them!

  18. It is really amusing how sites like this mean nothing to the hardcore gamer. The facts that he is touting are no more than propaganda. Sony has far from lost this console “war”. I predict that Sony will take this holiday season and they will come out with a controller that surpasses the Wii controller.

  19. 9 months…people have given a console 9 months(4 for EUR) at a 600 price to capture the top spot?
    1 year behind MS and $400 more the Nin. and you guys expect so much, lol.

    Did anyone see the onlien sales on Amazon, Target, Walmart this last month for the PS3?

    Give the PS3 time and ability to develope a full Online and game library..

    Its amazing watching people that havent followed gaming for the last 15 years make assumptions. The Hardware is amazing, and the upcomming games starting to roll out in Aug. will blow your minds.

    08 is Sony’s year, by then it will have a year in the NA market and a more comprehensive Online program.

    Stop the FUD, and pls dont count the Wii into the arent true gamers.

  20. This guy is obviously on drugs. Sony has lost the console war? LOL. First of all, M$ lost $4 billion with the Xbox, and they are still losing money with the 360. That console is a joke, M$ admitted that all 360 units are flawed. Who would buy that piece of crap? Even PS2 is outselling 360 in many parts of the world and PS3 has been outselling the it every week since the pricecut. PS3 has sold 5.5m units worldwide (some claim it’s 6m but even I know it’s too much), but when you look at the games coming out this fall, early next year and beyond, you’ll only see quality AAA franchises that can pull this system back on its rightful throne. Don’t forget Playstation Home, that thing will revolutionise online gaming community. Then there is blu-ray that is outselling HD-DVD almost up to 5-to-1 in some regions, more and more stores are opting for blu-ray only. When blu-ray becomes the sole next-gen format, it’s all over for 360 and Wii just like it was when people chose the PS2 for having the cheapest DVD player.

    Don’t underestimate Sony, they have several aces up theirs sleeves. There are huge games and services they haven’t announced yet. Just wait till you see Leipzig and TGS, Sony will reveal everything.

    Sony has finally got its act back together. It can only get better from here because the hardest part is gone, now it’s all games and big announcements.

    So stop spreading your fracking propaganda. Sony isn’t losing any war. They are here to stay and in 2 years the PS3 will be on top, I guarantee you that.

  21. WOW so Sony has lost, Gee I guess we should just all throw away our Playstation stuff and just switch over to the 360. Why I love nothing more then to have a Game system that can be used as a furnace. And what fun waiting weeks for my replacement system to come back after it bricks. Woot!
    THe PS3 has been the most versatile piece of hardware I have purchased in the last 5 years. Not only for games, but the ability to Play blu-ray movies, upscale Standard DVD to 1080p, the media abilities of the system. Our family finds time to use it to show Pictures we have taken with our cameras, like the old family slid shows, but much better quality.
    THe PS3 is just now hitting its stride, Sony said from the get go that it was planning for 08 to be the year it really takes off. Some folks just have no patience.

  22. I can’t believe people don’t realise the simplicity of the issue. It really is quite basic.

    1) Consumers don’t care about HD to the extent that sellers believe. You can try and push the technology as much as you like, but people just really aren’t that interested in it. Trying to tell people they must pay x amount more for a blue ray drive they’re not certain they want is just poor selling technique. Don’t tell people want they want, give them what they want!

    2) The Wii is pretty novel, but it won’t stand the test of time. By that, I mean more than 2 years. Wii Sports is fantastic. Madden NFL 07 for the Wii is tiresome. I can’t be bothered to learn the new ways to use the Wiimote, and the people Nintendo are targetting are the non-hardcore gamers like myself. The Wii will be huge in the short-term, but will falter when the novelty wears off.

    3) If the PS3 comes down DRAMATICALLY in price, and has a key game (i.e. GTA4) it will attract customers. Drop the Blue-ray, no one other than the niche cares, just give us a good console.

    4) Get better business men, Sony. Seriously, your marketting staff are the worst imaginable. How you can’t see the basics, I don’t know. Incredible.

  23. I love my Playstation 3 and wouldn’t trade it for anything in the world. The fact that Blu-ray has won the format war is a big boost for PS3. I hope you enjoy your 360 which could fail any moment now, or your Wii which will loose it’s novelty in another year or two. Sony’s in this for the long haul, and I for one am sorry that Sony dumped Ken Kutaragi, the father of the Playstation. Sony should have more respect for his genius. They will be sorry next time. Remember the PS1 and PS2 weren’t instant hits, it took a year or more for them to catch on around the world. History often repeats itself. Have a good day!

  24. Sony has a lot of catching up to do, sadly, the PS3 fanboys are hoping that their beloved system is around for the long haul. PS2 had the world at it’s knees, with exclusives such as Grand Theft Auto 3, Devil May Cry, etc. Once the gaming publishers, such as Rockstar, decided to make their games multiplatform, people aren’t buying the games for one essential system. Add in the fact that games are running $59.99 for a new game (which publishers blame on production costs), parents aren’t rushing to buy their kids new systems. A Blu-Ray player costs $499, a PS3 costs $499. If the PS3 was to drop to $299, there would be no question Sony would win hands down. Console makers lose money regardless. They make up for the difference with controllers, memory cards, video games, etc. I would even go as far as allowing Sony to throw ads onto my machine, as long as the cost was a lot less (hence the $299).

  25. Nintendo has survived. It has come back from near death. Regardless of anything else, Microsoft and Sony had a chance to knock out Nintendo once and for all and didn’t come through. This means the three way wars go on for some years.

    Sony is not done, but they are in big danger of losing this round. The only thing that can save them now is the games. Blu-Ray is not going to save them because they gotta drop Blu-Ray prices anyway, they can’t drop the price on the console to nothing…so they better come up with some kick-butt online and a host of exclusives to give someone a reason to have a PS3 instead of a 360 plus Wii. It’s not lost, but they better have a big concerted strategy in the works.

    Microsoft better get the bugs out. Good first steps with warranty and such and they will probably be okay, but it does give Nintendo more of a breathing space for a while till they get everything back on track.

  26. HAHAHAHA, you obviously have no idea how the gaming industry operates, this has to be the most ridiculous article i’ve read in a looong time. Sony is actually in a very good place with the ps3 right now, It may not seem that way from the outside, but looking at more and more idustry support for the ps3, sales increases and the buissness model sony has for the ps3, sony will have no trouble staying in this generation, possibly even “winning” it.

  27. The only people defending the PS3 are the ones who are in denial about the fact that they wasted $600 on buying it. Everyone else who isn’t a Sony slave can plainly see who will win out. All those morons that are backing their arguments by saying the PS3 will win because it is technologically better needs a lesson in marketing and trends. I bet you are the same people who bought BetaMax over VHS and then cried when no one sold the tapes. Better DOESN’T equal popular.

    People are sheep, all your friends have Wii’s, and you want one too. Nintendo have out played everyone on a marketing level. They are targeting the younger audience, because they are the future. McDonald’s does the same thing. Its called brand association. Nintendo had this in the 80’s and now will have it again. 10 years time all the adults will be saying “When I was a kid, Nintendo was the bomb!” Nintendo has too many things going for it for parents not to by it. What does PS3 offer? Better graphics? If you played games for the graphics, then maybe you should play the best console of all, its called “reality” and I bet a lot of you have never heard of it.

  28. I think many gamers felt betrayed by Sony’s move to win the next-gen format war with the PS3. Thats something you would expect from Evilsoft not the darling of the gaming world. We will have to wait and see how this plays out in the long run but so far it looks like a huge blunder on Sony’s part. Not only is the PS3 sale performance disappointing, judging by blue-ray dvd sales few people are interested in the PS3’s hd playing capabilities.

  29. Well said, and this is exactly why I, a loyal customer to Sony and owner of the PSX and PS2, now owns both a Wii and a 360 and not a PS3! I got sick of waiting for Sony to come up with some worthwhile games to play. Also, Microsoft has got the online thing down perfectly, Live and Marketplace rule. Nintendo needs to step up that part of their console, and I have no idea what Sony’s is like.

  30. All of these kids are f*cking douchebags. They no absolutely nothing about games. Someone commented that halo 3 would not save the 360. Xbox 360 doesn’t need saving, they have the best lineup of exclusive games this season. PS3 can’t compete with anything xbox has and a year has gone by with one good exclusive game. Blu-ray killed the PS3 in my opinion because no one wanted it and they put it in anyway.

    There are so many dumbasses on this forum that don’t know sh*t except for the fact that they have to blindly follow PS3 straight down to hell. And when their flesh is peeling from their bones they will still plead that PS3 is better than any console when the fact is that it sucks a lot of dick right now.

  31. Actually when I was playing cod2 I had my xbox 360 on nearly 24 hours at a time and it is still functional, so I can’t see what you are all blabbering on about.

  32. Sony experienced more than just a couple “misteps.” One must wonder how much corporate arrogance played into their debacle. They obvisouly greatly over-estimated the loyalty of the PS2 fanbase, believing we’d wait forever for release, would take an expensive product, with no games, and minimum compatability.

    Beyond the forcing of Blu-Ray on their customers, which as noted, significantly increased price and delayed market entrance, they managed to mistep in a number of other areas.

    The PS3 is not HD compatable with 1st and 2nd gen HDTVs that use 1080i, unlike XBOX360 which will down/upconvert. Prior accesories such as the Guitar Hero guitar and Dance Dance Revolution dance mat, do not work properly with the PS3. Worse, the game selection remains miniscule, taking up half a shelf in stores. The games that are available are not so far above PS2 in quality that they would compel one to invest in the hefty pricetag. Here’s a bad sign, I noticed a poster in a gamestop for the new Simpsons game. It will be available for Wii, XBOX360 and, get this, the PS2 (i.e. NOT the PS3)!

    At the moment, the PS3 is a $600 door stop.

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