Sony's Clever PlayStation 3 Marketing (SNE)

| About: Sony Corporation (SNE)
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By Carl Howe

Business Week took a whack at Sony (NYSE:SNE) with its article speculating that Sony may have bitten off more than it can chew with its PlayStation 3 (PS3) system. The piece notes that Sony PlayStation architect Ken Kutaragi has had launch failures before, most notably the $800 PSX launched in Japan only in 2003. The various claims that the PS3 will include Blu-ray high-definition DVD playback, online gaming, and TV show recording further fuel the concern. EHomeUpgrade even speculates that the PlayStation 3 could kill Sony because of losses associated with console sales approaching $2 billion, according to Merrill Lynch Japan.

I think these articles are much ado about nothing. Why? Because that's pretty much what Sony has said about the console since last year -- nothing. Even at CES, I took pictures of the PlayStation 3 as shown above, and the placard in front of the consoles noted they were conceptual designs only. And this is for a console that is going to launch in less than six months! In my view, that's a pretty good marketing strategy.

Don't believe it? Look at Apple. Few companies say so little about upcoming products, yet get so much press about them. They want prospects and customers to wonder what they are up to. And when they actually do launch a new product or category, they want customers to be surprised. The result: Steve Jobs' MacWorld keynotes garner world-wide coverage.

Contrast this with Microsoft's approach of providing announcements of intentions to make announcements. In the case I linked to, Microsoft announced that it intends to offer a security service called Microsoft Onecare in June for $50 a year. How much excitement do you think there'll be about that product when it launches? My view: Onecare's launch will have all the sex appeal of a visit with your accountant. Oh, the press will cover it, but it will have no heat. And that's after spending a lot of time and money promoting it.

Sony is smart. It has the lead in gaming. Everyone knows that it is next up with its console launch. It doesn't have to preannounce a thing for the PS3 to be successful. In fact, despite speculation that Sony will have 20 booths with playable PS3s at next week's Taipei Game Show, I'd encourage them to show up with movies and maybe some prototype games, but no real hardware. Not knowing what Sony is actually going to deliver is marketing that would cost millions to replace. And with financial analysts predicting a PS3 launch in Japan in two to four months, that's money better spent after the product launches.

Full disclosure: I own no shares of Sony, Microsoft, or Nintendo, nor any gaming companies, nor do I work or consult for any of these firms.