Sony Plays Catch-up With New Gaming Device

by Aaron Baar, Jan 27, 2011, 3:05 PM

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With the rise of smartphones as a gaming platform and the continued popularity of Nintendo's DS games (and all the various iterations thereof), Sony's entry into the field -- the PSP -- has struggled to be much more than an afterthought in the market.

But the company is hoping to change that with its Next Generation Portable Entertainment System. Announced on Thursday, Sony's follow-up to the PSP and PSPGo is designed to compete with the gaming capabilities of both the smartphone and the Nintendo systems, as well as the social connectivity that people have come to expect from their entertainment devices. (One assumes it will have a different name than its current "Next Generation Portable" when it launches in late fall.)

The device will have a five-inch touchscreen, as well as a high-performance processor that will allow for both gaming and general entertainment graphics, according to the company. The game will also have a touch pad on the rear to provide what Sony calls "three-dimension-like motion."

In addition, every game will have a "LiveArea" space that will allow users to share their game-playing skills and scores through Sony's PlayStation Network. The device will also include location-based services, allowing gamers in proximity to each other to meet and compete, as well as online competition.

And perhaps most significantly, the device will also be coordinated with Sony's PlayStation Suite, which will include newly developed and released game content compatible with Google's Android operating system. The NGP will also include wireless and 3G connectivity, which many consumers have come to expect from their smartphone devices.

"[Sony's] playing catch-up," Michael Pachter, a research analyst with Wedbush Securities, tells Marketing Daily. "But they have a different strategy than Nintendo. Sony's going after the iPod [Touch] and iPhone market."

While the system will launch with an array of titles, Lazard Capital analyst Colin Sebastian expressed doubts that it could catch on with consumers the way that smartphones have. "While clearly differentiated from the more casual games that have made the iPhone a phenomenal success as a video game platform, it remains unclear whether there is mass-market potential for high-end portable games," Sebastian wrote in a note to investors. "We note that Sony's PSP did not meet initial sales expectations despite offering the highest quality graphics on a portable device at that time."

Although the device will be available (and heavily promoted, Sony assured in its announcement) by the end of the year, a suggested retail price was absent from the announcement. Nintendo, which earlier this month announced its 3DS would be available in March, trumpeted that the cost would be under $250.

Noting that some of the bells and whistles of Sony's NGP (such as its processor and touchscreen) are fairly powerful, not knowing the price point makes it hard to predict whether Sony can make inroads against both Nintendo and the smartphones, Pachter says. (In his note, Sebastian predicted a $299 retail tag.)

"If they charge $100, it's going to be a huge success," Pachter says. "If they charge $400, it's going to be a tough sell."

 

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