I feel this article is a good read:
http://ds.advancedmn.com/article.php?artid=1249
October 29, 2004
by: Casey Ayers
Disclaimer: Note that the views expressed in this article are solely the opinions of the author, and in no way reflect the official positions of DSAdvanced or the Advanced Media Network.
Why The DS Will Win
"We’re a little less than a month out from the launch of the Nintendo Dual-Screen. The launch of the Playstation Portable in the United States remains at least four months away. I’m going to make the projection already that the DS will win- not by a few market share points, not even sizably. It will be a crushing defeat, and here I shall do my best to explain why. Some reasons you may have heard before elsewhere, others I like to think are newer or more original to myself in past editorials. All of these, however, are integral points as to why the PSP will lose direly.
PRICE
I’ve got to say, this may be the single most important reason why the PSP will fail where the DS will succeed. I was personally confused after the Nintendo Gamers’ Summit at which the DS’s price was unveiled- I thought it was $179. I thought this price was incredibly low, accounting for the fact that two software titles are included. I was astounded when I found out that I had overpriced the system by another thirty dollars. $149 is a trivial price for the overall package- merely the launch price of the Game Boy Advance. Think about this- you get the ARM7 and one of the screens, essentially the GBA hardware, for $75. You only get another screen and the graphical power of an N64 included for the other $75. Really, if you think about the sheer amount of hardware included, the price is a steal- substitute in whatever other variables for those numbers you like, perhaps $50/$99, and it may seem like an even better deal to you. Why does it seem to me that even at this low price point, Nintendo has found a way to make money on the system right out of the gate, or they plan to lose a trivial amount offset by one or two game sales?
The PSP, however, finds itself in a very tight spot on this issue. I have been told that Sony had a press conference scheduled for the same day as Nintendo’s Gamers’ Summit regarding the PSP, and possibly a price point. This conference was allegedly cancelled shortly after the initial batch of data- including price point, the bonus software, and release date of the DS- was announced from Redmond. Like I say, I don’t personally have hard proof of this, but it wouldn’t surprise me in the least if this were the case. Why would Sony do this? They’re running away from their impending financial train-wreck, the PSP. This is even more true following the release of their price information. At the price of $185, Sony is frankly out of their damn minds.
For the purposes of calculation, I’ll figure that the PSP costs Sony $320 per unit to manufacture- a conservative estimate. Now, figure in the costs for deployment and then what the wholesale cost is to retailers- we’ll say it’s fairly high, around $165. So, Sony recoups $165 per console. This is a $155 dollar loss per unit. Think about it this way: if Sony comes even close to their sales projections- say three million units are sold within the first year, Sony will have lost almost half a BILLION dollars. Frankly, this is financial suicide the likes of which have NEVER been seen in the industry. Not even Microsoft went this far- they only lost at most $100 per system near launch, and that number has gone down over time. The most expensive parts in the PSP, the screen and battery, will not go down in price over time as more are produced (for Microsoft, the processor and graphics chip costs, as well as the hard drive cost, went down over time.) In fact, there’s evidence that the price of the LCD may even go up, as there’s a shortage of the materials needed to make them right now.
All of this leaves Sony in a constant tailspin financially- a loss they can’t afford to make up through other product lines. If you take a close look at Sony’s financials, they’ve been hemorrhaging money on their Trinitron and Wega TV lines for some time now, and recently had to discontinue their Clié line of PDAs due to lack of profitability. The new Walkman is being trounced by the iPod. Their music store is sagging in the face of iTunes, due mainly to very restrictive rights and Sony’s asinine insistence on converting all MP3s to their standard format (to be fair, it seems this may change for future iterations). You know what’s sustained Sony financially for the past two or three years? The Playstation 2. As that console ages and the market simply gets saturated, Sony’s profitable standby is beginning to fade. The PS3 won’t hit the market for another two years at least, leaving the PSP to bring in much needed cash. Losing five hundred million dollars by your own projections in the first year worldwide doesn’t exactly accomplish this.
Shareholders simply won’t stand for financial indiscretion of this magnitude. As the analyst reports come out, favoring Nintendo if only for their stranglehold of this Christmas, they will begin to criticize Sony’s outlook on sales. To combat this, Sony needs to woo the analysts quickly- today’s launch lineup, though numerous, only has two or three big-hitting titles. They need to fix this for the US release; table-top and puzzler games won’t suffice. Assuming negative analysis begins to emerge, combined with the prospect of losing money, it will be made to seem they’ve lost the war before it began. This is not a winning strategy. Either Sony’s accountants know of arithmetic magic far past my level of comprehension, or they think they’ve got one hell of an Investor’s Relations team. Of course, I’ve not even accounted for the money involved in marketing the product- add a couple tens of million of dollars to the overall launch/sustain costs there.
This type of money crunch is clearly unacceptable to all involved. So, Sony is only left with one option- coercing developers. Expect the royalty and manufacturing fees to be astronomical on the PSP. Sony will most likely force PS2 developers to release games for the PSP in order to continue releasing PS2 games- much like Nintendo did to Square-Enix with Final Fantasy: Crystal Chronicles, except in reversse. At its new $185 price point, Sony will undoubtedly sell a sizable number of PSPs at launch, giving them the chance to poke the developers in the eye. ”My way or the highway, buddy…” will be the mantra. And in this decision, I think that you may see developers choose the highway; remember that this kind of strategy is what lost Nintendo its home-console crown. Clearly from the simple business standpoint, Sony is grasping for straws that don’t exist, preferring to weave themselves in a web of financial deception than cede the day to Nintendo."
"SYSTEM
I’ve seen the videos of the DS in action, side by side with videos of the PSP. The PSP is admittedly very impressive in its graphical prowess- but that’s its downfall. This is crazy, you say- let me clarify: the graphics won’t kill the system, but the side effects will. Three major side effects will plague the PSP:
1) Battery Life
First and foremost, the battery life of the PSP is despicable. There, I said it. It’s not Sony’s fault, understand- there isn’t battery technology with the capacity, stamina, voltage output, size, and right price point for the PSP anywhere in the world, and it won’t be another ten years until there is. The best hope for Sony are the new supercapacitors being developed by Honeywell- essentially batteries that can fully charge in seconds, rather than hours or at best minutes. Next to that, some sort of photovoltaic solar cells that could be used as the PSP’s casing would be preferred. It’d be nice to use fuel cells, but they’re too expensive, big, and have the tendency to explode. Now I know this all sounds funny to you, but I’m serious (relatively)- a portable system isn’t portable if its battery lasts two hours. I can hear some of you now: “Sony claims it’ll have up to three to six hours of on-time, though!”. Sure, maybe if the system’s on standby, with the screen off, and no disc in, the wireless disabled, and you don’t hit any buttons.
The battery-use of keeping the UMDs spinning, in addition to the high-power, high-range WiFi, added to keeping that really awesome screen going is incredible. If a developer does a bang-up job with dumping disc information into memory and letting the discs spin down, you can probably add an hour or two- but it’s still not even close to enough.
I don’t know how Nintendo managed to keep the battery life so high with the DS, considering the fact that it’s running two backlit screens- I believe this is truly telling of just how damaging disc-use is to battery life. Even from Nintendo, however, I’m slightly skeptical of these numbers- I’m almost positive the 8-10 hours predicted refer to using the system without wireless use. However, even here Nintendo has an advantage- their proprietary wireless system for short-range linkups is very similar to Bluetooth, in data speeds, frequency, and low-power consumption. So yes, WiFi will tend to cannibalize your battery life, but you’ll be using the proprietary wireless far more with the DS, methinks.
2) Development Issues
Developer interest is another big issue where the DS edges out the PSP. The DS, Nintendo claims, stands for “Developer’s System” as much as it stands for “Dual-Screen”. Well, we’ll see if that’s the case, but already we’re seeing promising signs. For one, if you ask developers about the DS, almost all of the quality studios seem genuinely excited to see what they can do with the system. Nintendo has truly provided developers with a funbox of tools- touch screen, two screens, wireless, dual cartridge use, 3D/2D graphics, etc. Not many developers will utilize all of these tools, but almost all of them will utilize at least one. Frankly, they’re all grand gimmicks- but people love gimmicks, and if the gimmicks make the games more fun, I’m all for it. After all, the analog stick, rumble pak, and transfer pak were all gimmicks in their day, were they not?
However, Nintendo faces a double-edged sword in that developers will never be able to merely make a port of a PSP game for the DS- any ports would have to be so heavily reworked that they’d basically be new games. Assuming the DS grabs the lion’s share of the market, this is great news, as it will serve to further choke off the PSP. However, if the PSP somehow makes a sizable impact, this could come back to haunt Nintendo. Of course, I’ve not touched on perhaps the most important element- portable developers have used Nintendo’s development kits for years. I assume that Nintendo has made sure development tools are similar to the GBA’s in many ways, and this will make it much easier for developers to adapt to the new system.
Sony has made the argument that the PSP is easy to develop for, as well. From what I can tell, their idea of easy is making PSP development as similar to the PS2 as possible. Don’t get me wrong- this definitely has advantages. Developers have been pumping out games for the PS2 for years now. This doesn’t mean that it’s easy, though- the PS2 is the most difficult of the current systems to develop for, especially now that Microsoft has developed XNA. What Sony really means is that development will be easier for those with experience on the PS2. Where does this leave developers? Well, they have two choices- they can take their portable-system developers and waste valuable time training them on PS2 intricacies, or they can take their PS2 teams and shift their focus to PSP. This has multiple repercussions. If they choose to retrain their portable teams, this wastes both time and money. If they shift their PS2 teams to the PSP, either the amount of PS2 titles will decrease, or the systems will forever be caught in a synergetic deadlock of simultaneous releases of the same title. Sony has already said this won’t be acceptable, leaving developers in a financial sticky spot.
In addition to this simple case for developer interest is developer cost. Did you know that it costs less for developers to manufacture DS titles than GBA titles now? This is including a recent drop in Nintendo’s GBA surcharges, too. Nintendo’s cutting Sony’s legs out from under them on this issue- they’re realizing (for once) that they may lose a buck here to pick up five or ten later on. Sony’s UMD format could potentially pose a threat in this area, as discs are much cheaper to manufacture. However, Nintendo claims that the new “Game Cards” are much cheaper to manufacture than traditional cartridges. This remains to be seen. Nintendo’s best bet is to keep their manufacturing royalties low enough to make the cost difference negligible- and make sure it stays that way, lest risk losing developer confidence, which will be unimaginably important in this race. "
This goes on with a third page click the link to read his third page please......
Link:
http://ds.advancedmn.com/article.php?artid=1249
Very interesting..
http://ds.advancedmn.com/article.php?artid=1249
October 29, 2004
by: Casey Ayers
Disclaimer: Note that the views expressed in this article are solely the opinions of the author, and in no way reflect the official positions of DSAdvanced or the Advanced Media Network.
Why The DS Will Win
"We’re a little less than a month out from the launch of the Nintendo Dual-Screen. The launch of the Playstation Portable in the United States remains at least four months away. I’m going to make the projection already that the DS will win- not by a few market share points, not even sizably. It will be a crushing defeat, and here I shall do my best to explain why. Some reasons you may have heard before elsewhere, others I like to think are newer or more original to myself in past editorials. All of these, however, are integral points as to why the PSP will lose direly.
PRICE
I’ve got to say, this may be the single most important reason why the PSP will fail where the DS will succeed. I was personally confused after the Nintendo Gamers’ Summit at which the DS’s price was unveiled- I thought it was $179. I thought this price was incredibly low, accounting for the fact that two software titles are included. I was astounded when I found out that I had overpriced the system by another thirty dollars. $149 is a trivial price for the overall package- merely the launch price of the Game Boy Advance. Think about this- you get the ARM7 and one of the screens, essentially the GBA hardware, for $75. You only get another screen and the graphical power of an N64 included for the other $75. Really, if you think about the sheer amount of hardware included, the price is a steal- substitute in whatever other variables for those numbers you like, perhaps $50/$99, and it may seem like an even better deal to you. Why does it seem to me that even at this low price point, Nintendo has found a way to make money on the system right out of the gate, or they plan to lose a trivial amount offset by one or two game sales?
The PSP, however, finds itself in a very tight spot on this issue. I have been told that Sony had a press conference scheduled for the same day as Nintendo’s Gamers’ Summit regarding the PSP, and possibly a price point. This conference was allegedly cancelled shortly after the initial batch of data- including price point, the bonus software, and release date of the DS- was announced from Redmond. Like I say, I don’t personally have hard proof of this, but it wouldn’t surprise me in the least if this were the case. Why would Sony do this? They’re running away from their impending financial train-wreck, the PSP. This is even more true following the release of their price information. At the price of $185, Sony is frankly out of their damn minds.
For the purposes of calculation, I’ll figure that the PSP costs Sony $320 per unit to manufacture- a conservative estimate. Now, figure in the costs for deployment and then what the wholesale cost is to retailers- we’ll say it’s fairly high, around $165. So, Sony recoups $165 per console. This is a $155 dollar loss per unit. Think about it this way: if Sony comes even close to their sales projections- say three million units are sold within the first year, Sony will have lost almost half a BILLION dollars. Frankly, this is financial suicide the likes of which have NEVER been seen in the industry. Not even Microsoft went this far- they only lost at most $100 per system near launch, and that number has gone down over time. The most expensive parts in the PSP, the screen and battery, will not go down in price over time as more are produced (for Microsoft, the processor and graphics chip costs, as well as the hard drive cost, went down over time.) In fact, there’s evidence that the price of the LCD may even go up, as there’s a shortage of the materials needed to make them right now.
All of this leaves Sony in a constant tailspin financially- a loss they can’t afford to make up through other product lines. If you take a close look at Sony’s financials, they’ve been hemorrhaging money on their Trinitron and Wega TV lines for some time now, and recently had to discontinue their Clié line of PDAs due to lack of profitability. The new Walkman is being trounced by the iPod. Their music store is sagging in the face of iTunes, due mainly to very restrictive rights and Sony’s asinine insistence on converting all MP3s to their standard format (to be fair, it seems this may change for future iterations). You know what’s sustained Sony financially for the past two or three years? The Playstation 2. As that console ages and the market simply gets saturated, Sony’s profitable standby is beginning to fade. The PS3 won’t hit the market for another two years at least, leaving the PSP to bring in much needed cash. Losing five hundred million dollars by your own projections in the first year worldwide doesn’t exactly accomplish this.
Shareholders simply won’t stand for financial indiscretion of this magnitude. As the analyst reports come out, favoring Nintendo if only for their stranglehold of this Christmas, they will begin to criticize Sony’s outlook on sales. To combat this, Sony needs to woo the analysts quickly- today’s launch lineup, though numerous, only has two or three big-hitting titles. They need to fix this for the US release; table-top and puzzler games won’t suffice. Assuming negative analysis begins to emerge, combined with the prospect of losing money, it will be made to seem they’ve lost the war before it began. This is not a winning strategy. Either Sony’s accountants know of arithmetic magic far past my level of comprehension, or they think they’ve got one hell of an Investor’s Relations team. Of course, I’ve not even accounted for the money involved in marketing the product- add a couple tens of million of dollars to the overall launch/sustain costs there.
This type of money crunch is clearly unacceptable to all involved. So, Sony is only left with one option- coercing developers. Expect the royalty and manufacturing fees to be astronomical on the PSP. Sony will most likely force PS2 developers to release games for the PSP in order to continue releasing PS2 games- much like Nintendo did to Square-Enix with Final Fantasy: Crystal Chronicles, except in reversse. At its new $185 price point, Sony will undoubtedly sell a sizable number of PSPs at launch, giving them the chance to poke the developers in the eye. ”My way or the highway, buddy…” will be the mantra. And in this decision, I think that you may see developers choose the highway; remember that this kind of strategy is what lost Nintendo its home-console crown. Clearly from the simple business standpoint, Sony is grasping for straws that don’t exist, preferring to weave themselves in a web of financial deception than cede the day to Nintendo."
"SYSTEM
I’ve seen the videos of the DS in action, side by side with videos of the PSP. The PSP is admittedly very impressive in its graphical prowess- but that’s its downfall. This is crazy, you say- let me clarify: the graphics won’t kill the system, but the side effects will. Three major side effects will plague the PSP:
1) Battery Life
First and foremost, the battery life of the PSP is despicable. There, I said it. It’s not Sony’s fault, understand- there isn’t battery technology with the capacity, stamina, voltage output, size, and right price point for the PSP anywhere in the world, and it won’t be another ten years until there is. The best hope for Sony are the new supercapacitors being developed by Honeywell- essentially batteries that can fully charge in seconds, rather than hours or at best minutes. Next to that, some sort of photovoltaic solar cells that could be used as the PSP’s casing would be preferred. It’d be nice to use fuel cells, but they’re too expensive, big, and have the tendency to explode. Now I know this all sounds funny to you, but I’m serious (relatively)- a portable system isn’t portable if its battery lasts two hours. I can hear some of you now: “Sony claims it’ll have up to three to six hours of on-time, though!”. Sure, maybe if the system’s on standby, with the screen off, and no disc in, the wireless disabled, and you don’t hit any buttons.
The battery-use of keeping the UMDs spinning, in addition to the high-power, high-range WiFi, added to keeping that really awesome screen going is incredible. If a developer does a bang-up job with dumping disc information into memory and letting the discs spin down, you can probably add an hour or two- but it’s still not even close to enough.
I don’t know how Nintendo managed to keep the battery life so high with the DS, considering the fact that it’s running two backlit screens- I believe this is truly telling of just how damaging disc-use is to battery life. Even from Nintendo, however, I’m slightly skeptical of these numbers- I’m almost positive the 8-10 hours predicted refer to using the system without wireless use. However, even here Nintendo has an advantage- their proprietary wireless system for short-range linkups is very similar to Bluetooth, in data speeds, frequency, and low-power consumption. So yes, WiFi will tend to cannibalize your battery life, but you’ll be using the proprietary wireless far more with the DS, methinks.
2) Development Issues
Developer interest is another big issue where the DS edges out the PSP. The DS, Nintendo claims, stands for “Developer’s System” as much as it stands for “Dual-Screen”. Well, we’ll see if that’s the case, but already we’re seeing promising signs. For one, if you ask developers about the DS, almost all of the quality studios seem genuinely excited to see what they can do with the system. Nintendo has truly provided developers with a funbox of tools- touch screen, two screens, wireless, dual cartridge use, 3D/2D graphics, etc. Not many developers will utilize all of these tools, but almost all of them will utilize at least one. Frankly, they’re all grand gimmicks- but people love gimmicks, and if the gimmicks make the games more fun, I’m all for it. After all, the analog stick, rumble pak, and transfer pak were all gimmicks in their day, were they not?
However, Nintendo faces a double-edged sword in that developers will never be able to merely make a port of a PSP game for the DS- any ports would have to be so heavily reworked that they’d basically be new games. Assuming the DS grabs the lion’s share of the market, this is great news, as it will serve to further choke off the PSP. However, if the PSP somehow makes a sizable impact, this could come back to haunt Nintendo. Of course, I’ve not touched on perhaps the most important element- portable developers have used Nintendo’s development kits for years. I assume that Nintendo has made sure development tools are similar to the GBA’s in many ways, and this will make it much easier for developers to adapt to the new system.
Sony has made the argument that the PSP is easy to develop for, as well. From what I can tell, their idea of easy is making PSP development as similar to the PS2 as possible. Don’t get me wrong- this definitely has advantages. Developers have been pumping out games for the PS2 for years now. This doesn’t mean that it’s easy, though- the PS2 is the most difficult of the current systems to develop for, especially now that Microsoft has developed XNA. What Sony really means is that development will be easier for those with experience on the PS2. Where does this leave developers? Well, they have two choices- they can take their portable-system developers and waste valuable time training them on PS2 intricacies, or they can take their PS2 teams and shift their focus to PSP. This has multiple repercussions. If they choose to retrain their portable teams, this wastes both time and money. If they shift their PS2 teams to the PSP, either the amount of PS2 titles will decrease, or the systems will forever be caught in a synergetic deadlock of simultaneous releases of the same title. Sony has already said this won’t be acceptable, leaving developers in a financial sticky spot.
In addition to this simple case for developer interest is developer cost. Did you know that it costs less for developers to manufacture DS titles than GBA titles now? This is including a recent drop in Nintendo’s GBA surcharges, too. Nintendo’s cutting Sony’s legs out from under them on this issue- they’re realizing (for once) that they may lose a buck here to pick up five or ten later on. Sony’s UMD format could potentially pose a threat in this area, as discs are much cheaper to manufacture. However, Nintendo claims that the new “Game Cards” are much cheaper to manufacture than traditional cartridges. This remains to be seen. Nintendo’s best bet is to keep their manufacturing royalties low enough to make the cost difference negligible- and make sure it stays that way, lest risk losing developer confidence, which will be unimaginably important in this race. "
This goes on with a third page click the link to read his third page please......
Link:
http://ds.advancedmn.com/article.php?artid=1249
Very interesting..
