While the entire internet (at least the gaming part) continues to reel from Sony's $600 price announcement, we have to consider just how it came to be that the video game console leader decided to create such an expensive piece of machinery. There's no confusing this: Sony has known for some time that the PlayStation 3 would cost more than any game system before it (two jobs, remember?). But what corporate machinations influenced that decision?
Last week, Next Generation ran a fascinating article written by David Cole, of strategic market research firm DFC Intelligence, following the circumstance that resulted in the unpopular price tag. With the growing homogenization of consumer technology, and increased competition, Sony -- under the direction of Ken Kutaragi as head of Sony's semiconductor operations -- looked to custom-built technology like the Cell processor and Blu-ray to distinguish their product from the others (compare this to Microsoft's more nimble strategy of outsourcing the 360's chip-design to IBM).
Kutaragi was demoted after being passed over for the role of CEO and, when former Sony Pictures head Howard Stringer assumed the position, the relationship between the content and technology divisions of Sony became even more intimate. Stringer "quickly dubbed the PlayStation 3 as one of the company's 'champion' products." Kutaragi's desire to stratify the console market with Cell technology in effect wed Sony to the unpalatable prospect of charging an unprecedented price. Coupled with Sony's desire to not only push their own content on HD discs, but to control that medium with their proprietary Blu-ray format, the final price was escalated by two very advanced (and very expensive) pieces of Sony technology.
Continue reading for some thoughts on why the price may not matter ...