Blu-ray Has Won...

If the announcements from CES are indicative of future support for the two dueling HD formats, then it appears that Blu-ray has got it made as far as 2007 goes. HD-DVD, on that other hand, has a lot of catching up to do.

On HD-DVD only: No titles were announced at the show

On Blu-ray only: Alien Vs. Predator, American Psycho, Basic Instinct, Broken Arrow, Bull Durham, Butch Cassidy and the Sundance Kid, Cabin Fever, Cars, Cast Away, Chain Reaction, Commando, Con Air, Crimson Tide, Dirty Dancing, Dodgeball, Dude, Where's My Car?, Edward Scissorhands, Entrapment, A Few Good Men, Dances with Wolves, Finding Neverland, First Blood, A Fistful of Dollars, The Fly, From Hell, G.I. Jane, The Graduate, Hannibal, Hoosiers, Hostel, Ice Age, Independence Day, I Robot, Jerry Maguire, King Arthur, Master and Commander, Me, Myself & Irene, Open Range, Out of Time, Pi, Pirates of the Caribbean 1 & 2, Predator, Requiem for a Dream, Resident Evil: Apocalypse, The Recruit, Reservoir Dogs, The Rock, The Siege, The Silence of the Lambs, The Thomas Crown Affair, To Live & Die in L.A., The Usual Suspects, Vertical Limit, Young Guns.

On both formats: Alexander, Bullitt, Face/Off, The Getaway, Payback, The Matrix trilogy, Harry Potter 1-4, Ocean's 11 & 12.

I Have Seen the Future: iPhone

You can pretty much find out all the information about the iPhone on any tech site, so I won't bore you with details. All I have to say is that Apple has done an amazing job and created a product that will redefine what phones do and how they do them. This is a monumental time in portable communications and nothing from now on is going to be the same. One wonders how long it will take RIM and Palm to "catch up." Honestly, I don't think the iPhone will take that much business away from those companies initially, though, as Apple still doesn't have a cohesive package for delivering the information and applications that business folks need or want. Until that time, the iPhone will be popular but won't take off as dramatically. Regardless, all the smart phone manufacturers have a major uphill battle on their hands as Apple has taken a lot of established ideas and thrown it into a very small package along with just enough innovation. The iPhone is sexy and cool and that's not something that can be said of most, if not all, of the other smart phones out there.



The only major downside I can see is that Apple is apparently not allowing for any subsidizing of the phone's price, regardless of if you sign a two-year Cingular contact or not. This could set a nasty precedence for the future as it allows the phone companies to retain a greater percentage of the sales profit and I'm sure they are a big fan of that. Well, I guess the market does dictate the price, so companies are going to have to have something truly great in order to charge what Apple is charging, which is $500 and $600 for the 4GB and 8GB versions, respectively.

Regardless, I'm going to be there on Day One with my cash in hand because this is the first time where I feel I can take all the things I need and want on a daily basis and put them into one device. Throw in some Office apps and I'm good to go and able to work on the go, as well. Hooray, Apple.

PS3: The Path To Success

I came across this interesting interview, which has some good points and some good news about Sony: The Course Ahead for Sony

Also, here are some interesting thoughts from Anthony Hanses of www.PSU.com on the upcoming three-way battle for the next-generation of gaming:

"When a brand new console is released onto the gaming market, it is typically a very big occasion. People cheer or sneer, lines form, eBay makes a nice profit and the console sells like mad. This was no different with the release of the PS3 this past holiday season.

What occurs afterwards is what will determine the console’s place in history.Will it go on to sell record numbers and entertain million and millions around the world? Will it sell a decent amount only to be forgotten in years gone by and after newer and better systems are released? Will it live up to its promises, surpass them, or wallow in guilt and grief?

Make no mistake, even coming off a record number of sales with the PS2, Sony has a very hard road ahead of it. No company in the history of gaming has won three generations in a row. Usual paths to downfall include pride and arrogance. Nintendo at one point had over 90% market share, only to drop to just 60% the following generation and lose the lead to Sony the next at roughly 30%. The gaming industry is one of the toughest to compete in. What may seem obvious years later could have been a great idea at the time.

For a quick point of reference, let us consider Nintendo’s choice to stick with game cartridges in the N64 instead of using an optical disc media. While most would argue that this is what really killed Nintendo that generation, many will insist to this day that Nintendo should have been able to tell that it was such a bad idea. Yet here we sit just about a decade later and history has repeated itself, but with Nintendo winning. Sony decided to go with UMD optical media for the PSP while Nintendo chose the faster loading, lower power usage cartridge for the DS. At the end of the day, Nintendo chose wisely and has since gone on to release the most successful gaming device in history (or well on its way to that point).

There are never clear answers as to what hardware will eventually win, but one thing is universal: if you fail to sell your game console you will lose. More importantly, if you fail to sell it in the first twelve months after the launch holiday, you will lose. This is even more compounded if you are not out before your primary competition.

When the SNES came out, it was up against two years worth of Genesis sales. Even with its broad library of well known characters and titles, Nintendo had a mountain to climb. Nintendo had to sell enough systems in that first year to prove that it could eventually overtake the Genesis. Failure to do so could have resulted in what exclusives remained on the SNES going away, or worse, going exclusive to the Genesis.

Nintendo had to release the SNES and sell more in its first twelve months than the Genesis sold in its third set of twelve months. This meant selling close to ten million systems in their first year in a generation where the market was only 60% of what it is today. This would prove their ability to overcome the Genesis at some point in its life and thus reassure producers and developers that the SNES was the right platform for their game to release on to maximise sales potential.

Needless to say, the SNES succeeded. Even though, it still took four years for the SNES to pass the Genesis in total sales.

Now back onto the PS3. Sony has just passed through their first holiday. Generally speaking, even bad systems have sold out pretty much all they could produce in the first holiday season. Now Sony needs to prove to publishers and developers that they will once again own the game console market. As they resolve their shortage issues they will have to have a successful launch in Europe followed up by consistent system sales for the first nine months of 2007. Sony’s sales in 2007 have to exceed that of Microsoft’s and Nintendo’s sales for the same twelve months, though the first nine are truly vital. Right now developers and publishers are choosing which system(s) they will release their games on for the 2008 and 2009 years. Failure to reassure the developers now will result in a shortage of exclusives or releases in general during the following years.

In order to pull this off, Sony will have to sell more systems than their competitors during the next twelve months. To determine how many they will have to sell, we will look at a bit of history and make a few educated guesses.

Typically speaking, during a console’s second year on market they have a price drop and an increased quantity of system selling titles resulting in roughly a 30% increase in system sales over the previous twelve months. Thus, you have the start of the bell curve appearance to a console lifetime sales. If we take the Xbox360 and its twelve months worth of sales in 2006 without taking into account the 2005 holiday sales, it sold approximately 8.5 million systems. Increase this by 30% and you end up with about 11 million systems to be sold in the next twelve months. Being that the Xbox360 is expected to sell minimal units in Japan, Sony will have to take that into account and plan for increased sales to make sure that they sustain leadership in the EU and US markets. Since Japan is approximately 28% of the worldwide market, we will increase the sales required to approximately 14 million systems.

So, at the end of the day, Sony will likely have to sell 14+ million systems during 2007. Figuring that 5 million are likely to sell with ease during the holiday rush in 2007 (October, November and December) and one million will sell with ease at the European launch of the PS3 in March, that leaves Sony with 8 million to sell in the remaining nine months. That is approximately 900,000 units per month. Europe is historically slower to pick up new consoles at their launch price, instead preferring to wait for price reductions - thus we will estimate a bit lower for sales each month for 2007 for Europe.

The likely monthly sales differential between the territories that will allow Sony to succeed is

300,000 Japan
300,000 US
200,000 Europe

If Sony can manage these sales levels, they will likely maintain their lead in the market and maintain most of their remaining exclusives. They may even pick up some new exclusives or reduce the exclusives of their competitors by convincing developers to release their titles cross platform. Failure to do so could cost them the market; if not this generation, then during the next one.

How soon will we be able to tell? Realistically, not until early 2008. But, we should start getting an idea shortly. If Japanese weekly sales show less than 50,000 systems sold per week consistently through the first 3 months of 2007, Sony is in trouble. If the US shows less than 200,000 systems sold per month for the first three months of 2007, Sony is in trouble. Europe is all but impossible to track externally, so we unfortunately will be unable to determine results based on Europe at this time.

What does history tell us about Sony’s ability to meet these goals? Historically speaking they should not have any issues. Unfortunately history does not currently take into account Sony’s price point on the PS3. Will consumers be able to afford or choose to afford the high price, or will they opt instead for the Xbox360 and/or Wii. On this point history does provide a limited amount of guidance.

Back in April of 2004 Microsoft dropped the price of the Original Xbox by $50 to $150. This put them at a $30 price advantage to Sony’s $180 for the PS2. In the US, Microsoft capitalised on this by having their first month ever to beat Sony in monthly sales in the US. The following month Microsoft all but equaled Sony’s sales in the US. It wasn’t until the month after that when Sony reduced the PS2 price to $150 that they briefly took back the lead. For the rest of that year they were neck and neck on sales. All of this while it is clear that Sony was leading overall in quantity and quality of game releases on its platform and had not yet hit the saturation point.

If a $30 price difference can even the playing field between the definitive leader and a distant second place, what will a $100 price difference do? What will happen if Microsoft drops the price of the Xbox360 by an additional $50 and Sony is unable to match them?

These are all questions that we cannot answer at this time. Sony has the strongest gaming brand ever in the history of the gaming industry. To underestimate that brand’s potential to sell the PS3 at a higher price point would be foolish at best. But history has shown that even that brand could not entirely protect it from a $30 price difference.

Can Sony sell 800,000 systems a month right now?
Can Sony win with a $100+ price difference with its nearest competitor?
Will history repeat itself?

We are currently living in the best point of competition ever in the gaming industry. Never before have three contenders been all able to make it through an entire generation and all survive to move onto the next. Never before have we ever been looking at the realistic possibility of a statistical three-way tie in market share.

It’s good to be a gamer."