Will Sony Ever Make Playstation 4?

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Includes: MSFT, SNE
by: Bruce Everiss

Possibly not. The costs of developing and marketing a global gaming platform are in the billions of dollars. Playstation 3 looks like it will come a very lowly and unprofitable 3rd in this generation. So they are almost going to need to bet the whole company if they are going to go on to do PS4.

What went wrong? The main thing is that they didn’t have their eye on the ball of entertaining people. Instead they tried to use the PS3 as a Trojan horse to get Blu-ray into people’s homes and as a tool to allow them to escape from American processor manufacturers. And they expected the console buyers to pay for this.

Not only is the PS3 massively too expensive to make and for the market to pay for but it also had another technology-related problem. It was too late. Everyone knew that Microsoft (NASDAQ:MSFT) was after first to market advantage in this generation. Not only did Sony (NYSE:SNE) let them get away with it, they also had long additional delays forced upon them by all the new technology.

Then there is Nintendo. Currently making more profit than any computer game company has ever made before. In the whole of history. Their Wii sales are only limited by how many they can manufacture. If they made 3 million, 4 million a month they would sell them. And they make a profit on every one. So just about every console game developer and publisher in the world is rushing to throw resources at developing for it. And where are those resources coming from? You guessed it, from developing PS3 games.

So we have a virtuous circle with Nintendo, the more it succeeds the more games will be made for it so it will succeed even more. With Sony we have the opposite, the less it succeeds the fewer games will be made for it and so it will succeed even less.

Meanwhile Microsoft is cruising to second again; it has always taken them three generations of a product to win. And they are just about to play their joker. Releasing Halo 3 going into this holiday season is going to create massive demand. By all accounts Bungie has learned the lessons of Halo 2 and have made a blockbuster of game of the year proportions.

With demand so rampant for the Wii and 360, where will the money come from to buy expensive PS3s? It just isn’t going to happen. All that is keeping Sony in the market is the PS2, the PSP is fatally flawed as a platform and will just fade away, even in it’s new slimline form.

So is this just a gross exaggeration or do you detect a germ of truth?