Commentary: Sony overhypes and under delivers

Sony again got caught in the gap between expectation and performance with yesterday's announcement that only half the expected 1 million PlayStation2 game consoles will be shipped to the United States by the Oct. 26 launch.

By Paul-Jon McNealy, Gartner Analyst

Sony again got caught in the gap between expectation and performance with yesterday's announcement that only half the expected 1 million PlayStation2 game consoles will be shipped to the United States for the Oct. 26 launch date, with another 100,000 per week promised for delivery through the holidays.

The Japanese electronics giant had a similar problem in March when PlayStation2 was released in Japan. The company was forced to delay shipment of 260,000 consoles because of hardware shortages, creating lines outside stores in Tokyo the day before the new product went on sale.

See news story:
Retailers grappling with expected PlayStation2 shortage
There have been suggestions that yesterday's announcement is part of a calculated plan to boost the PlayStation2 prelaunch publicity. But Gartner believes this theory is fanciful.

Aside from the precipitous drop in Sony's stock price triggered by the announcement, there are several good reasons to doubt that Sony would engage in such a strategy.

First of all, the shortage created by the shipment delay will doubtless alienate many Sony distributors, especially smaller ones. Based on Sony's numbers, the 20,000 PlayStation2 distributors can each expect 25 consoles at launch and five per week thereafter. However, Gartner doubts that a retail giant such as Toys-R-Us and the local mom-and-pop gaming store will each receive allotments of 25 consoles at launch.

The delay also increases the likelihood that when people go to buy a PlayStation2 this November or December and can't get one, they may turn around and pick up a Sega Dreamcast.

Finally, Sony has also announced that the PlayStation2 with the optional modem and hard drive will not be available at launch. This means that none of the games to be available at launch can be played online. Although Sony's online gaming strategy continues to be unclear, all four major console players--Microsoft, Nintendo, Sega and Sony--have stressed that online gaming is a priority. This is more good news for Sega's Dreamcast, which continues to be the only online game console.

On the plus side, Sony has increased the number of game titles at launch from 15 to 26 and has stated that 50 titles will be available by the end of December. These numbers will help keep the sales momentum flowing into 2001. And, intentionally or not, yesterday's announcement will increase the hype surrounding the launch of the PlayStation2. Beginning Oct. 25, expect to see devoted gamers showing up with tents and sleeping bags at stores around the country, waiting for stores to open the next morning.

(For related commentary on customer service and online holiday shopping, see Gartner.com.)

Entire contents, Copyright © 2000 Gartner Group, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.

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