Analysts Speak PSP/DS

[Evan]

Pretty interesting. Here ya go:
Analysts Speak PSP/DS - Gameworld Network news story
================================================== ========================
Analysts Speak PSP/DS
Home : News : News Story
Analysts hit back at Sony and its PSP console, stating they feel it isn't in competition with Nintendo's DS.



Analysts have jumped out in full force in light of Sony’s recent price cut announcement for the PSP, stating that they feel the handheld is not in direct competition with Nintendo’s DS system.

"I don't think Sony will "beat" the DS, nor do I think that they aspire to do so. Nintendo has something different to offer with its touch screen and deep library of first party titles, and Sony is not in a position to compete with that offering," commented Michael Patcher of Wedbush Morgan.

"Rather, the DS is like a souped-up GBA, while the PSP is like a miniature PS2. Games for the two devices are different, and the gaming experience is quite different. I think that the only people who care about the DS-PSP sales battle are the media."

Meanwhile, IDC’s Billy Pidgeon offered similar views, stating that both consoles offer different features, which are not necessarily catered to the same demographic.

"I don't see the PSP as competing with the DS so much as bringing in the core console demographic to handhelds, and the PSP has convergent value as a multimedia player that appeals to that group”, Pidgeon said.

“Still, the DS Lite's value pricing will cause retailers to keep pushing Sony to bring PSP price down further, and strong DS hardware and software sales will reduce shelf space for PSP at retail," he explained.

Commenting on yesterday’s price cut announcement, Pidgeon stated "The price reduction will be good for retailers as PSP were not moving quickly enough at USD 199.”

Patcher, meanwhile, observed Sony’s reasoning behind the price cut, stating he believes that “Sony manages pricing based upon two things - cost of production and sales volumes. They will continue to lower price as they gain economies of scale, but it's not likely that the company will price below its marginal cost of production to move a few more units.”

"In the case of the PS2, they are making a profit because demand is still strong at the current price point. In the case of the PSP, their manufacturing costs have probably dropped to below the USD 169 level. With VAT and other incremental costs, they are pricing close to parity in the US, UK and Europe."

He also noted that Sony recently captured around 40 per cent of the market share in the US last month, thanks to the influence of all of it's three major systems, PS2, PS3 and PSP.

"Yes, it's true that the PS3 is behind, but I believe that Sony will persevere once it begins to market the device and once the game lineup catches up," he continued.

“That should begin to happen at holiday, and if HD monitor adoption picks up, I think that Blu-ray will become a factor in the battle."

Still, Pidgeon concluded that increasing the appeal of PS3 will likely have a positive impact on PSP sales in addition to the price cut, adding "I think a larger installed base of PS3 will have a more important impact on increasing PSP penetration."

Following the price cut, Sony PSP now retails for GBP 129.99/EURO 169.99 in Europe, and USD 169.99 across North America.


Apr 24, 2007
================================================== ==============================