5 More Reasons the Vita Will Fail

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It's been seven months since I angered the gaming community with my article detailing the five reasonsSony's (NYS: SNE) new handheld gaming system will fail.

Well, we're finally now less than a month away from the stateside debut of the PlayStation Vita. Given time to reflect on some of the negative comments raised last spring -- including an ominous warning that the article will haunt me for the rest of my life -- I figured I would think about it some more to make sure that I didn't want to change my mind.

I've got a little more than three weeks here. I don't want to be on the wrong side.

Well, no, I'm not switching sides. I still think that Sony's going to blow it, and I have five new reasons.

1. The price is still too expensive.
When Sony priced its Vita at $250 for the entry-level Wi-Fi version and $300 for the 3G model, it felt too expensive for a handheld. Nintendo (OTC: NTDOY.PK) was struggling to move its 3DS handheld at the $250 price point, and several weeks later resorted to a dramatic $80 price cut.

Sony has stuck to that price point, even though it's now more expensive than even entry-level consoles, smartphones, iPods, and Kindle Fire tablets.

Die-hard gamers will laugh at comparing a powerful dedicated gaming device to a wireless phone or a tablet, but there's a reason Nintendo jumped off its price just months after its rollout. There's no way that the Vita is still at $250 by the time this holiday shopping season rolls around -- if it's even around at all.

2. The PS Vita is already floundering in its home market of Japan.
Sony sold a reasonable 320,000 Vita systems in Japan during its first week on the market. It was all downhill from there. Global gaming audiences were stunned to see that figure fall to just 72,000 units the following week, and less than 43,000 Vitas the week after that.

If the Vita is pulling up lame on its home turf it's unlikely to fare well stateside, where even its console business is lagging the competition.

3. Proprietary memory is a costly anchor.
Unlike most gadgets that rely on dirt cheap SD memory cards for removable storage, Sony continues to greedily cling to its more expensive proprietary format.

If you think that buying a Vita and a couple of games will be enough to get a player going, think again.

"The memory is, effectively, not optional, and one of the more unfortunate (and expensive) hidden costs in a gaming platform," video game enthusiast website Kotaku argued in discussing the PS Vita's memory pricing last month.

4. Sony's sharing a birthdate with something bigger.
Sony set its release date of Feb. 22 three months ago, long before Nike (NYS: NKE) nailed the same day for the debut of its FuelBand.

Obviously you can't blame Sony for that. The overlap of PS Vita and Nike FuelBand buyers will be minimal. One is a $250 handheld gaming system. The other is a $149 mobile health wristband. One encourages a sedentary lifestyle. The other rewards you for an active lifestyle.

However, after selling out of its two first preorder batches -- and now airing its first national commercials -- Nike's FuelBand is going to be commanding plenty of media attention. It's going to be diverting attention from the Vita launch, making it harder for Sony to get noticed outside of die-hard gamers who are probably now smart enough to wait a few months until the inevitable price cut comes along with a better selection of game titles. 

5. Signs of desperation are already there
Best Buy (NYS: BBY) and GameStop (NYS: GME) are now accepting preorders for the Sony Vita -- with a twist.

The two retailers are offering 3G bundles for $50 more than the regular price. The key attraction here is that the handheld will be available on Feb. 15 -- a week before the actual release.

This may seem like a clever marketing strategy, but it's also desperate. It appears to be a way for Sony to gauge demand quickly. If the early adopters aren't willing to pay more for a week of bragging rights and a few extras, Sony's going to have to dive below the $200 mark on the Vita sooner rather than later.

The game's about to get interesting, and Sony apparently hasn't learned a thing after the past few humbling years.

A new special report singles out three winners in the iPhone, iPad, and Android revolution. Sony's PS Vita isn't one of them, but can you guess what the three are? The report is free, but it won't be around forever, so check it out now.

At the time this article was published The Motley Fool owns shares of Best Buy and GameStop.Motley Fool newsletter serviceshave recommended buying shares of Nike and Nintendo, creating a diagonal call position in Nike, and writing covered calls in Best Buy, and writing covered calls in GameStop. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

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