The Sony (SNE) PS3 Hits The Wall

Print Email

Sir Howard Stringer, the CEO of Sony (SNE), tried to convince himself and his company’s stockholders that the PS3 game platform would be a key component to turning the consumer electronics and entertainment firm around.

Over the last month, things have not worked out well for Stringer. He has sacked his No.2, admitted that Sony will take a loss, and froze the salaries of many employees.

But, that is not the end of the bad news. PS3 sales are still stunningly low. The product is overpriced and under-featured. The less expensive and, in the eyes of most consumers, more fun, Nintendo Wii still leads sales in the game system world. The Xbox from Microsoft (MSFT) has kept its second place rank.

For Sony, PS3 sales rates are not improving even though the company has cut prices on some of the models and added new games. According to Bloomberg, “Nintendo Co.’s U.S. sales of its Wii video-game consoles rose 74 percent in February, extending the company’s lead over Microsoft Corp. and Sony Corp. ” During the same period, Xbox sales rose 53% to 391,000 and PS3 sales were off almost 2% to 276,000.

Most of the divisions at Sony are doing poorly now. It TV screen business has been hurt as its products have become commodities in the world of consumer electronics. It digital cameras face the same fate. Its movie studio revenue goes up and down based on how well its releases do.

The PS3 is the most visible sign of Sony’s desperate situation. It has no product on the horizon to pull it out of the dumpster, so it faces years of being on the fringes of businesses that it dominated with the Walk-Man and PS2.

Douglas A. McIntyre

RSS Facebook Twitter