Responding to the Wii Essay

1132 Words Nov 20th, 2012 5 Pages
Executive Summary
Sony Computer Entertainment Inc. has the unique distinction of being the first and only company to have had market leadership for 2 consecutive console generations. However, in recent times, the ecosystem has changed to include a larger audience and usability has trumped technological superiority as a key metric in generating buyer interest. In 2008, Nintendo’s Wii had 2 times the market share that Sony’s offering, the Play Station 3, had. I feel Sony should assess the following options. (1) Focus on catering to its niche advance game segment and focus on leveraging its progress form the previous 2 generations. (2) Respond to Wii onslaught by developing its previous generation console to include a low end offering that
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Sony must focus on remaining in this unique segment and leveraging its perceived uniqueness as a technology leader. Instead of competing on Nintendo’s terms, Sony should not react but exercise “Ukemi” by furthering its position in the serious gaming segment.

It is notable (From Exhibit 2b in the Responding to Wii case – Harvard Business Review) that Nintendo has been successful in keeping positive operating profits despite being a weak competitor during the previous 2 generations. Nintendo has shown prudence in waiting out 2 battles and coming up with a unique offering which has changed the way the market perceives gaming. Sony should concede defeat this generation of gaming, while maintaining balance through strong service to existing market.

Sony should target the serious gamers and not react to Wii in terms of re assessing its differentiation strategy.
The positioning question

While Sony is losing market share in the console market, it is winning the “Battle for the living room” with Microsoft. With momentum gained from the previous 2 generations and technological superiority of Sony’s offering, Microsoft has taken a bigger blow, with almost double the operating loss of Sony. (Sony operating loss of $1246.1 M vs Microsoft $2066 M, from Exhibit 2b in the Responding to Wii case – Harvard Business Review).

Sony has a broad offering in consumer electronics segment that it can leverage to provide a comprehensive