Sony Strategy Analysis

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SONY Strategy Case Analysis

Executive Summary
Sony is currently faced with the problem of low operating margin and stagnant market share in the videogame console industry. PlayStation3 of Sony is competing with Xbox360 of Microsoft and Wii of Nintendo. Despite the high technology, Wii outsells PlayStation in the market. This shows that the traditional strategy of Sony based on hardware should be reviewed according to the new trend. Considering gradually increasing market size and harsh competition, Sony should invest more on creating new customers and software. Analysis

After experiencing the five or six cycles defined by advancement of underlying technology, there are currently three main competitors in the videogame industry: Sony, Microsoft, and Nintendo. The PlayStation of Sony and the Xbox360 of Microsoft can be characterized by high technology and interoperability with other electronic products. Meanwhile, the Wii of Nintendo emphasizes innovative and user-friendly capabilities such as wireless motion-sensing controllers. Therefore, the Wii could appeal to more widespread customers such as senior people including traditional gamers. Based on enthusiastic reactions to Wii, the leading market share of PlayStation in the prior generation is replaced by the Wii of Nintendo. As of 2008, the Wii substantially outsells the two rivals. According to Five Forces Analysis, Sony has been faced with the following characteristics in the game industry. Suppliers: The bargaining power is relatively high since videogame console makers outsource the manufacturing of console. Also, they need the support of game developers. In this respect, the one of the main reasons why the PlayStation and PlayStation 2 could succeed as a new entrant would be the supplier-friendly strategy of Sony. Sony took the policy to license any PlayStation software as far as it does not clash with hardware. Also, Sony provided third-party developers with various development tools and soft...
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