An earlier than usual PS4 successor has its benefits. But why is the PlayStation NEO coming now?
Early console releases are usually for companies with lagging hardware and low sales. The news grabs attention, can drive sales, and establish a clean break from the past. Nintendo’s upcoming NX console is a textbook example.
Sony’s the opposite of underperforming. They’ve exceeded expectations: 40 million PS4s sold, over double the Xbox One, and sales are accelerating year over year. And consoles thrive on momentum. Sony’s lead allows them to coast on the PS4’s success for a while; don’t rock the boat and watch profits grow. Yet success also buys the chance to take some costly bets. That’s Sony plan, an investment on the NEO today for the chance to solidify PlayStation over the long run.
Apple made similar strategic moves. The success of iPod and iPhone didn’t leave them stagnant. They invested millions in R&D, carefully watched the consumer tech market, and saw an opening with tablets and personal wear. The iPad and Apple Watch were the result. The former is a massive hit, the latter unproven but with potential. Apple’s strong sales gave the company wiggle room to take an expensive bet where consumers were moving.
Sony is making a similar gamble. They’re about to release two costly hardware SKUs – the NEO and PlayStation VR – into an untested market. NEO is a early shift into faster hardware iterations. When PC or mobile markets threaten consoles, Sony has the flexibility to respond. It also diversifies their gaming hardware. For the first time, Sony can sell a older “budget” console (a sub-$300 PS4) that plays the same games as the latest release. Again, we see Apple parallels here; NEO is to the PS4 what the iPhone 6S is to the iPhone 6.
Granted, the console gaming market is niche and fickle compared to Apple’s audience. And mid-cycle console upgrades have had many failures like the Sega 32X. To boot, Sony can’t lean on the big hardware margins Apple can. Nor does Sony match Apple on PR, marketing, or financials. Maybe consoles remain one time investments every seven or more years.
But the optimist in me hopes otherwise. Apple and Sony are still innovative consumer technology companies. They both have commanding sales leads over the competition. Who’s to say Sony can’t surprise us with something big?