Swot of Sony

S.W.O.T. Analysis

To make a diagnostic of Sony's in the video games consoles industry, we use a very helpful tool, the SWOT analysis. It allows evaluating position of a business by analyzing different data. They can be classified into two categories: internal data (strengths and weaknesses), and external data (opportunities and threats). Once a company have completed its SWOT, it will have to find the best business strategy in order to convert their weaknesses in strengths and threats into opportunities. This view was supported in the work of David Jobber (2006). A SWOT analysis is presented here to illustrate the strategic position of Sony with its consoles the PS2, the PS3 and the handheld console the PSP with respect to the Wii and DS (handheld console) of Nintendo and the Xbox 360 of Microsoft. Regarding the console market, we can divide it into two different markets, one composed of "big" consoles (Wii, PS2, PS3, Xbox 360) and the second one composed of handheld consoles (DS and PSP).

Strengths of Sony

The first main strength of Sony is its strong brand name and strong identity which has been deeply rooted and which is still very well established in customer's mind. Indeed, the Sony Corporation was the world's leading manufacturer and marketer of audio, communications, videos and information technology products. Furthermore Sony's video game division has been the most profitable business unit as recently as 2004. The introduction of the PlayStation 1in 1995 helped a lot in the development of this strong brand identity as a specialist of video games. Then, Sony has a strong developed global market position, indeed Sony products and services are available throughout the world in about 200 countries. This diversification helps to minimize the impact of adverse conditions that may arise in any one geographic region. Furthermore, Sony possesses a strong network of games licensees and a large installed base of PlayStation 2 users. It is supported by a high quality Blu-Ray function and a strong multimedia support which includes top graphics and audio capabilities. Sony also integrated the next generation of DVD players. It also has the best raw computing power provided by its Cell processor. Plus, Sony is a highly diversified corporation with vertical integration. It has always given to their customers the latest and best gaming hardware and software, indeed highly-quality hardware outlasts most of its competitor's hardware. Sony also pays attention to what their hardcore gamers' wants and needs are.

Weaknesses of Sony

Since the launch of the PlayStation 3 in 2004 the Sony Video Games Division has been less profitable and according to the article of the Gamble (2008), it had made this business unit "a money loser". Indeed, we understand through this paper that the main weakness of Sony on the video games industry is the PlayStation 3. They wish to imitate the success of the PS2 by following a similar strategy. But the expensive price of the PS3 ($499 or $599) was one of the evident flaw in Sony's strategy. The second weakness of the PS3 is that the system was accompanied by only 24 game titles. Otherwise, if the consumers want to update their PS3 to fully enjoy the 24 HD games they would have to own an HDTV. Sony also has production problems with the use of the Blu-ray optical drive; it also affected the PS3's backward-compatibility capacity. This supply-chain and production problems had repercussions on the North American launch and to delay the European launch of the PS3 to March 2007. Another issue implied by the high technology used for the PS3 is the important video games development costs. Indeed, a PS2 video game has an estimated development cost between $2 and $7 millions whereas this estimated cost for a PS3 video game reach around $20 millions. The price of new video games for PS3 will be very expensive. Indeed, their gaming software being