Strategic Marketing Management
Sony’s Trojan Horse PlayStation 2 is the latest in the war video games. In March 2000, Sony’s new generation entertainment, video game console, was launched in Japan. It is powerful and is considered to serve as more than just a game console. As a result, Sony's Trojan Horse PlayStation 2 flourished in the Japanese market, and customers would queue to purchase it in the electronic stores in Tokyo. Despite the rumour that PlayStation 2 could be used for malicious application, Japanese were able to read the truth behind its fast absorption in the market in a Japanese newspaper. It could be used on broadband network and it had a fast fluid and best quality graphics compared to any other electronic device in the market. Sony’s Trojan Horse PlayStation 2 also has a memory card, which was also a reason for its performance in the market. The constant mobile phone use and IT revolution in Japan make the future of a game console based on broadband engine very promising. By the end of the year 2012, over 150 million PlayStation 2 units had been sold. Japan has a large game console market, and Sony hopes that its Trojan Horse PlayStation 2 game console will enable them to dominate the broadband world.
Sony was founded over half a century ago, namely in 1946, by Masaru Ibuka and Akio Morita. Masaru Ibuka, who was the first president of Sony Corporation, handed this position over to his co-founder Akio Morita in 1971. Akio Morita is a open-minded person who has an unconventional business background. His successor was Norio Ohga, who was an opera singer. The current Sony’s president, Nobuyuki Idei, fits in previous presidents’ tradition perfectly as he used to be. a violin player. He played violin with Seiji Ozawa who conducts Boston Symphony. Mr. Idei studied in London and Paris before joining Sony. The firm should understand the competition in the market and develop strategies of lessening the possible impacts of competitive forces.
Sony has three departments that develop various products. These departments are televisions, videos and audio production. Before Mr. Idei became the president, these departments were performing their operations independently of each other. However, when Mr. Idei became the Sony’s president, the three departments were interlinked. A department called Home Network Company was formed to control production in these departments. This department also develops protocols that govern the interaction between these production departments.
Sony also works closely with The Core Technology and Network Co. This company is the manufacturer of a USB memory stick. A memory stick comprises of a neat plastic finger consisting of memory chips whose size is equal to that of a chewing gum. These memory sticks are used in many Sony devices. They can be used for music recording or video downloading from the Internet after a person purchases an album thus threatening to make use of tapes and CDs obsolete. The memory stick was the greatest reason for hefty sale Sony’s Trojan Horse PlayStation 2 achieved.
Sony’s PlayStation 2 game console has a sophisticated memory card. Within three days after launching, almost one million units had been sold. PlayStation 2 has a fast and fluid graphics and can be used by users to coordinate other electronic devices in the same broadband network. Therefore, Sony’s PlayStation 2 is technologically superior to a personal computer and a wide range of other electronic products. It is extremely powerful. The memory card is also highly advanced, and it can also be used for military purposes. As a result, the Japanese government imposed import regulations to prevent malicious users from converting PlayStation 2 into a missile guidance system.
Competitive Forces in the Gaming Console Industry
The Trojan Horses PlayStation 2 console games industry’s future is challenged by various competitive forces. Using Michael Porters framework, we can analyse the console games industry and our existing business strategy to determine The Trojan Horse PlayStation 2’s attractiveness to the market considering the expected intensity of the five competitive forces. This will define its interaction with each force and shape its ability to remain profitable in the existing and future Japanese market.
Threat of Substitutes
One of the challenges expected by the end of the year is a projected threat from the substitutes. The greatest selling point for PlayStation 2 was its advanced memory stick. Matsushita is also pushing to have their memory card made according to the standard secure digital memory card. This memory card is less sophisticated than the one used in The Trojan Horse PlayStation 2 game console, but it is likely to cause a reduction of sales and consequently the expected profit. If it is made according to the standard, the buyers’ will be in favour of the Sony’s game console substitutes. The possible implications would be similar to what happened in 1980s when Sony’s Betamax was overpowered by Matsushita’s VHS on the basis of video format.
Threat of New Entrants in the Market
New entries in the console games industry are a challenge that lies ahead. The Internet adaptable consoles expected in the market by the end of the year from Microsoft’s X-Box latest generation is likely to cause stiff competition to The Trojan Horse PlayStation 2 game console. New technologies in the other mobile communications manufacturers, such as Matsushita and Fujitsu that are ahead of Sony, challenge the compatibility of its game console with the new devices.
Fall in our customers’ buying power is also challenging the future of the profitability of The Trojan PlayStation 2 gaming console industry. In March 1946, Sony’s share price in the exchange markets was $152. At the time, the quarter results showed that the Sony’s share price had fallen to $97.6. Availability of cheaper memory cards from Matsushita would cause the prices of the Sony’s game console substitute to go down, and consequently, reduce its customers’ willingness to buy.
Our supplier’s power to control cost of their products will directly affect the future profitability of Sony’s gaming console. The Core Technology and Network Co. is Sony’s memory sticks supplier. If they transfer any costs incurred to Sony by increasing the cost of the memory sticks, it will result in switching these costs to Sony’s industry by increasing the cost of its products. This is likely to cause a reduction in the amount of sales and reduce profitability.
Threat of Rivalry among existing Competitors
The existing rivalry can reduce a firm’s profits to zero if Sony does not implement the right strategies that will enable the company to remain competitively advantaged over its rivals in this industry. Sony needs to introduce measures that will reduce the impact of import regulations imposed on its console games products. This can be achieved by using different brand names to sell the products in order to diversify the number of units sold and thus, ensure the company keeps pace with the growth in the market.
Porte’s Forces that affect competition in the gaming console industry
The main force which threatens the competitive advantage of Sony's Trojan Horse PlayStation 2 over its rivals in the gaming and console industry is the impact on the presence of substitute product and services. Despite The Trojan Horse PlayStation 2 dominance in the market, later versions of video game consoles launched such as PlayStation 3 and PlayStation 4 generations pose a threat to its survival. Past performance in the market cannot guarantee that it will maintain its performance in the market because the consumers may prefer the later versions of a PlayStaion. There is rapid growth in the processing and graphical technologies leading to a wider range of colours and quality consoles. Externally, the Microsoft’s Xbox 360 and Nintendo GameCube pose a real threat to our products and service market share. These substitutes are likely to satisfy the customers’ needs as effectively as The Trojan Horse PlayStation 2, and ceil their expected profits.
To lessen the impact of substitute game consoles on the performance of The Trojan Horse PlayStation 2 in the industry, the target customers, such as males in their 20s, have to be identified. Then the company should do effective campaigns for the game console. To remain dominant in the Japanese console games industry, PlayStation 2 must be the best deal a customer can get for that particular generation. This can be achieved by being alert to changes in the industry that might be made In order for The Trojan Horse PlayStation to remain competitively advantaged, it is necessary to keep accessing the market and the other products to ensure the PlayStation 2 offers a better value to the market than its competitors. After identifying the target customers and ensuring the game console offers better value than its substitutes, the company should advertise this game console intensively. Sony should also maintain its brand loyalty to its customers.
Strategic Uncertainties related to External Environment
There are two external strategic uncertainties related to The Trojan Horse PlayStation 2. Firstly, this game console is initially designed to be a broadband device. It is intended to enable various functions and applications in a home network; at the time it was first launched, it could only be performed by personal computers. It is expected to interconnect all electronic devices in a home network using a broadband network. Users should be able to access and coordinate computers, televisions, game consoles, videos, audio systems, mobile phones, cameras and home robotics. In this scenario, a woman is working in an office far from her home. To access files from a computer in her house, monitor the television channels her children watch and change the channel if she finds what her children watch unsuitable, operate an oven or download music from the her office or car. Her ability to perform these roles requires a powerful and high speed broadband network. Therefore, success of The Trojan Horse PlayStation 2 depends on the strength and speed of the broadband network. This poses a strategic uncertainty from the external environment.
The PlayStation 2 is not just a game console. It has features of more than just a consumer electronics device. Its software and hardware technology should be compatible to that of other electronic devices. The second strategic uncertainty from the external environment is the trend of technological advancement of the various electronic devices found in a home network. We aim at moving from conventional methods of accessing the web on the personal computer using a modem to mobile and broadband networks and non-PC network devices. The other scenario would work if Sony’s main competitors Matsushita and Fujitsu in mobile communication technologies produced devices of greater technological sophistication than what The Trojan Horse PlayStation 2 would match. The two competitors are already ahead of Sony in mobile communications technology and in the Japan market share of these devices. In order to maintain supremacy in the console games industry, Sony was once battling with Toshiba, which is one of the Japanese electronic devices manufacturers, and it collaborates with Microsoft. Toshiba had set a digital video standard HD-DVD, and most of our competitors aligned themselves with the new hardware technology set as a standard. Using different hardware and software technology formats, makes our game console incompatible with many home network devices. The software sales drop when the hardware used in the gaming console transit to the next generation. The trend in the advancement in hardware and software technology is a strategic uncertainty in the external environment. It has a significant impact on the game console industry.
Sony’s Strategies to Lessen the Impact of Uncertainties
Sony management has existing strategies to lessen the above mentioned strategic uncertainty from the external environment. Following the IT revolution pattern in Japan, the wireless technology is dominating Internet access. Therefore, we introduced DoCoMo’s i-mode. It enables millions of users to access distinctly formatted Internet portals via conventional mobile phones. This strategy will facilitate growth in PlayStation 2 market in Japan. Japanese culture shows that they are obsessed with mobile phone use. Thus, making the PlayStation 2 game console available on the distinct Internet portal via mobile phones reduces the impact of the strength of the broadband networks. To lessen the impact of software and hardware technology on the game console industry, Sony uses synergy between its software and hardware. To achieve this, Sony bought Columbia Pictures. They would repackage their films as videos and laser disks. The growth in the network in the modern society has enabled Sony to achieve a real synergy.
Possible Strategies for reducing Impact of external Environment Uncertainties
There are various possible strategies that Sony can apply to reduce the impact of the external environment uncertainties affecting the performance of The Trojan Horse PlayStation 2 in the industry. After interlinking all the production departments, they can ensure produced electronic devices can all be linked to the broadband networks. This will improve the speed and strength of home network which can then connected to such future boxes of tricks to ensure PlayStation 2 remains at the centre of this internet. Sony should ensure The Trojan Horse Playing Station 2 take advantage of everything that the technology and the economy have provided as they wait for the better networks and broadband to arrive. This will help them to increase its profitability as we wait for the future of a better external environment. Sony should integrate The Trojan Horse PlayStation 2 consoles hardware with its key complementary good, which is the software. The integration should also consider the trend in growth technologies of other electronic devices comprised in a home network. They should also consider the effect of convergence of the new hardware and software technologies with the Internet on the way people use entertainment. The integration of these systems will make Playing Station 2 maintain its relevance in the industry of the consumer electronics. This strategy will also lead to integration of various functions into a single unit that can be installed on mobile phones. After achieving Mr. Idei‘s vision about leading over our main competitors Matsushita and Fujitsu in mobile communication, we will have reduced the possible impacts that would result from technological advancement in the external environment.
Sony’s Trojan Horse Play Station 2 has been dominating Japanese gaming and console industry in the past. Despite the existence of competitive forces as indicated in the Porte’s model, Mr. Idei is determined to ensure we maintain the outstanding performance today and in future. Therefore, there are strategies that have been put in place to control the impact of the competitive forces from both internal and external environments. Although several elements in our vision are incomplete, Sony is confident that implementing above strategies shall enable our play station 2 gaming console to adapt and survive in the fast changing gaming and console industry.