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January 6, 2009

A Little Bit of Sony in Every Xbox, and Thoughts on Blu-Ray

Recent news is that Microsoft's XBox is outselling Sony's Playstation 3 by over 8 million units worldwide.  That's a whole lot of XBoxes.  What makes this competition ironic is an article in Ars Technica about the development of the chip that powers both consoles.  Sony apparently paid about $400 million to IBM to develop the Cell processor that powers the Playstation 3.  IBM then made design changes to the chip suiting Microsoft but keeping the the essential core (or in this case, multiple cores) intact for the XBox.  IBM, Toshiba, and Microsoft were committed to commercializing the chip and IBM did.  One has to wonder if lawyers think about these things when they work up these contracts.

Speaking of Sony, one of the "compelling" reasons to buy a Playstation 3 (from a marketing perspective, at least) is that it doubles as a Blu-Ray player.  Sony used the game system as a trojan to get the hi-def player into the home and win the battle of formats with Toshiba.  Full speed ahead then?  Not quite.  The end of the format war helped get more standalone players into homes, but widespread adoption hasn't happened.  Standard DVDs played on upscaling players sold for as low as $40 seem to be good enough for most people.  The least expensive Blu-Ray player is about $200 and doesn't sport the Internet capabilities Sony is counting on to spur adoption.  Movie watching could be a social experience where people comment to each other in real time about what's happening on screen.  Blu-Ray discs could also link to the web for exclusive content not on the disc such as another trailer.  These features may appeal to some, but I suspect that most people simply want to watch a movie.

LG is doing one better by putting Internet capabilities directly into its TV sets where consumers can download hi-def films from Netflix without any additional equipment.  This plays into the more likely market where renting a film is cheaper than buying it.  One marketing ploy is to ask how many times will someone actually watch that DVD?  When Blu-Ray discs are premium priced over standard discs, that question becomes more significant.  More competition for hi-def programming will come when television broadcasts go all digital.  There will be a point when cable, satellite, and broadcast will offer alternatives.  Sony and the studios need to lower prices on this format.  It's going to be a niche otherwise.

January 6, 2009 | Permalink

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