Sony Playstation and PESTEL Analysis

Sony Playstation and PESTEL Analysis

Political factors

The PlayStation was released in 1995. Successors were PlayStation 2, Playstation Portable, PlayStation 3, and now Playstation Vita. Success of each Playstation depended on political situation. The recession right now, for instance, despite government incentives for people to buy and indulge themsleves, deters consumers from investing in expensive products such as Sony's Playstation, particularly when they can acquire something similar for cheaper.

Economic factors

The recession right now is not very good news for Sony's Playstation or for Sony altogether. Sony's Playstation has been hit hard by the recession with sales slumping and it recorded a $231 million loss as gamers refrained from lining up for new consoles.

The recession has affected Sony in all ways, with buyers finding cheaper alternatives from the library or other free resources and with cheaper TVs further eroding interest in the PlayStation. On the other hand, it may not be all as bad as some sites make out. Sony's greatest slump seems to have occurred in 2008-2009 (particularly in 2009), but it still seems to be holding its own according to some rumors.

Nonetheless, in comparison to competitors such as Nintendo, Sony made very few sales with it selling only 74,479 units in the second week of its release, compared to 342,000 in its first week.

Social factors

Sony's idea came about in a fortuitious time when computer software games are the rage. It very succesfully launched with titles of almost every genre that included Battle Arena Toshinden, Doom, Warhawk, Air Combat, Philosoma, and Ridge Racer. It also continued to introduce developed models.

Generation X and GenY's interest in online technology and the sustained and growing interest in anything computer related makes Sony's Playstation a big catch. This is particularly so since anything connected with entertainment is popular. Sony's Playstation offers this in droves with providing access to online games, movies and TV shows.

Technological factors

The fact that Sony has made so few sales, with it selling only 74,479 units in the second week of its release, compared to 342,000 in its first week, and with even Nintendo's struggling 3Ds making more, may be attributable, social observers theorize, to the swelling and unceasing technological marvels on the market - such as the Amazon Kindle, that cannibalize the market and oust the Playstation. Mobile phones, Tablets, and apps have taken over the video game market and are not only offering the same product for less, but also package them with a host of other desirable and handy items. There are smartphones that cost less than Sony's Playstation does and people can access thousands of apps through them many of them free and others starting from only $9.99.

Environmental factors

Sony sells by virtue of its brand name alone. People respect the Sony tag seeing it as 'modern' and efficient, and something that gives them a certain status symbol. Creation of a strong and sustaining brand ensures that they have customers. The games also satisfy Eastern as well as Western susceptibilities and, therefore, Sony PlayStation has wide appeal. (Brooks (n.d.))

Environmental factors include ease of hackign which has cost Sony loads in its 2011 incident that sent share price plummeting and users to other systems.

Sony has spent decades trying to curb hacking, but hackers make up a good portion of its base. Avengeful at attempts to stop them, a gorup calling itself Anonymous conducted attacks on Sony webasites and services, making its environment insecure. (Fox news (2011)).

Legal factors

There are no laws that really impede it, but Sony almost got into severe trouble in April 2011 after security breach in the Playstation Network infiltrated data with some users' data stolen. Hackers stole names, addresses and likely credit card details form 77 million users, whilst one U.S. law firm filed a lawsuit.

Strict laws safeguarding privacy therefore make it all the harder for technological products who can never be certain that they will not be hacked into and, accordingly, run into serious trouble. The more popular the system is, such as Sony's play station network, the more drastic the results. In fact, some consumers did veer away from Sony to turn to Microsoft's Xbox that is another online game console and that has its own popular online network.

Discussion:

As the technological precis shows, technology can be a double-edged sword. The more developed the technology, the more complex it becomes and, ipso facto, the more problems it can introduce. Sony, as does its competitors, attempts to sharpen and innovate on previous technological models, but the more developed the design, the more likelihood it has for problems to occur exposing the company to more likelihood of setbacks and to even greater and more agonizing falls. Technological marvels though offering greater opportunity, likewise open the company up to greater risk.

That technology has become equated with 'modernity' is a fascinating concept since development or modernity, as Crewe and Harrison (2010), say is not necessarily equated with progress as so many think. Third-world countries, or so-called 'underdeveloped' nations are demarcated by their possession of technology. The more technology a nation has, the more 'developed' it is supposed to be and the more' intelligent' and evolved people consider it. Nonetheless, modernity's equivocation with progress may be a fallacy of Marxist, neo-liberal, Hegelian type of thinking.

Technology, as Sony's Playstation shows introduces problems as it grows. Technology is supposed to spell modernity since it resolves problems, but as Sony's Playstation demonstrates, cessation of one problem introduces others and the more complex the technology becomes, the more complex the problems become.

Sony's Playstation helped people with the introduction of online games and online entertainment such as DVDs and similar systems. It also attracted hackers and, therefore, not only did hacking become a problem causing monetary loss to Sony, but Sony endured crashes too.

The assumption that technology brings progress is derived from its seeming ability to tame the land and to introduce amazing scientific marvels. However, technology can also cause many problems that go unnoticed such as causing a greater degree of death (the nuclear bomb), wider dysfunctionality (complaint of TV), breaking up of family (again TV and Internet), and many other problems that the 'developing' world lacks. Sony's Playstation introduced a definite marvel. Yet along with that also came problems of technology such as hacking and repeated crashes of its system. Technology becomes more complex, and as it does, its problems become more complex too.

Part II Innovation and Sony's PlayStation

'Innovation' is a term that can have numerous meanings, but as Goosen (20008) indicates, 'innovation' need not necessarily mean the introduction of a great new idea that necessarily brings success. Whilst it is true that companies or businesses are advised to differentiate themselves in unique ways in order to attract attention and, accordingly, interest, innovation hinges more on 'opportunity' than on 'idea'. Goosen (2008) makes the distinction in the following way: 'Idea', he says, is something that many people can have and that are common. They occur all the time like passing buses. One has to test them to see whether there is substance to them, a market for them, and interest in them. One has to assess whether they would stand. 'Opportunity', on the other hand, is the one passing bus that oen has to jump on and take knowing that it may pass and that one may not be able to grab another.

Goosen defines 'opportunity' according to four qualities:

(1) It is attractive, (2) It is durable, (3) it is timely, and (4) it is anchored in a product, service, or business that creates or adds value for its buyer or end-user.

'Opportunity, too, is insufficient for innovation to succeed. It needs the persistence and tenacity of the entrepreneur, for him to have belief in his product, and for him to persevere, time and again, despite discouragement and dissuasion of others (Barney, 1997). In other words, it needs a great deal of confidence and trust in one's creation (Bensen. & Farrell, 1994; Sheremeta, 2004). Both of these elements, in other words -- opportunity and characteristics of the creator - spell product success.

Both of these characteristics can be seen in the Sony Playstation episode.

Ken Kuragari, creator of Sony Playstation, in 1984, realized the opportunities that video games could create and that there was a desire out there for them. This is the first - and most important step of an innovaiton -- that the innovator realizes that there is a need and market for an idea. With Kutagari, we see another aspect of innovation indicated in that, even though his superiors initially discouraged him, he persisted. His genius is further witnessed when he accepted the opportunity to produce Nintendo's sound chip for their next generation game console when offered despite his soliciting permission from his higher-uppers.

Kutagari, sold on his idea, persisted and when Sony broke off from Nintendo, encouraged Sony to go its own way. Sony transformed the "Super Disc Technology" into its own gaming console, and, in 1991, persuaded by Kuragari they launched the Playstation.

Kutagari's fervor did not impede him from researching potential of market for his idea -- another mark of the succesful entrepeneur. His persistence, belief in his work, tenacity, and originality led to the hugely popular Playstation that launched in December 1994 (Edge Staff, 2009).

Kutagari, in other words, epitomized all that innovation requires. Firstly he chose an article that possessed the four qualities of 'opportunity':

(2) Opportunity is attractive -- Playstation is attractive to users in that it offers entertainment and laughs -- always an attractive commodity (2) Opportunity is durable -- Playstation is here to stay as evidenced by its string of successors and continuing stream of success (3) Opportunity is timely -- Kutagari realized that Internet and computer was coming into its own and that video games may well be the fad of the future. He was correct. (4) Opportunity is anchored in a product, service, or business that creates or adds value for its buyer or end-user -- Playstation certainly provided benefits to its users in that it provided entertainment value and interest.

The product, therefore, provided one dynamic of the conditions for 'innovation'; but for innovation to succeed it needed the qualities of the creator and here is where Kutagari accomplished the other requirements in that he displayed the necessary tenacity and perseverance. Time and again despite setbacks and discouragement, Kutagari forged ahead with his idea. He had belief and confidence, too, in his creation, proceeding despite disapproval from his superiors and continuing even when he had to go it alone. Eventually, it took Sony to break off from Nintendo to accomplish the project, but the product idea, development, and eventual marketing only came to fruition through the genius of Kutagari.

'Innovation' fulfills a need, but it takes the genius of an individual to recognize this need and special tenacity and particular characteristics to persevere despite all discouragement (Lei, 2003).

The key marketing features were the attraction of online games and DVD. In fact, online entertainment in its various forms. This is what helped Sony Playstation stand out from its competitors and is attested to in reviews on Sony's Playstation that included the following:

"PlayStation re-ignited our imagination with video games" (Dr. Jeffrey Brand, associate professor in communication and media at Bond University). Game designers Yoshiki Okamoto called the brand "revolutionary -- PlayStation has changed gaming, distribution, sales, image and more," whilst Evan Wells of Naughty Dog opined that "PlayStation is responsible for making playing games cool." (Tretton, 2009)

All of those aspects lauded by the reviews cited above were the key marketing features, concepts and factors of Playstation's innovation that made it stand out from its competitors to the extent that in 2010, Gizmodo qualified PlayStation unique, stating that "If you ask the average person on the street what their favorite Sony product is, more often than not you'll hear PlayStation." (Johnson, 2010)