We Fools aren't right 100% of the time. But in this case, three of us are hitting it right on target.
Yours Truly, along with fellow Fools Rick Munarriz and Patrick Martin, have all predicted that Sony's (NYS: SNE) new dedicated handheld gaming device, the PlayStation Vita, would fail. The mobile revolution being led by Apple (NAS: AAPL) iOS and Google (NAS: GOOG) Android is filling the need of the majority of mobile gamers.
The Vita seemed to be off to a healthy start when it launched in Japan two weeks ago. Within the first few days, more than 324,000 units were sold. That figure was about 50,000 short of the Nintendo (OTC: NTDOY.PK) 3DS debut earlier this year. Sales experienced a precipitous drop during Christmas week, tumbling by 78% to roughly 72,000 units.
After converting from yen, the Japanese debut prices were $320 for the Wi-Fi model and $385 for the Wi-Fi + 3G model. When it makes it stateside on Feb. 22, we can expect price tags of $249 and $299, respectively. Those price points are all insultingly high, when the 3DS is already selling for almost a third less after shaving a few pounds and smartphones that people already carry can satisfy mobile-gaming needs.
Sony never gives up its expensive proprietary format pushes, and the Vita is no different. You'd think the company would have learned its lesson with Betamax, which was 36 years ago. Over the years, it's tried MiniDiscs, Memory Sticks, and Universal Media Discs (UMDs), among others.
Comparing domestic preorder prices on GameStop's (NYS: GME) website reveals that a Wi-Fi Vita along with an 8 GB memory card will run you $295. You can get an 8 GB iPod Touch for $199, with $96 left over to load up dozens of iOS games. At least GameStop has recognized the turning tide and now actively distributes iOS gadgets for gaming.
Game developers like Electronic Arts (NAS: EA) and Activision Blizzard (NAS: ATVI) are also onboard. iOS games may not be as high quality or as immersive as those on dedicated systems, but I'd wager they're just "good enough" for the average mobile gamer.
Sony is sticking by its prices. In August, Sony exec Kazuo Hirai told Bloomberg, "We have a very good product at a very affordable price. There's no need to lower the price just because somebody else that happens to be in the video-game industry decided they were going to." Happens to be? Competition isn't a coincidence, and pricing strategy has been a staple of rivalry since the beginning of time. Hirai needs to retake Competition 101.
Dedicated handheld gaming systems are a dying breed. There will always be a market for them, but one that is rapidly shrinking in the face of "good enough" alternatives. The 3DS took about five months domestically to chop off 30%. I give the Vita three months before we see the same.
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At the time thisarticle was published Fool contributorEvan Niuowns shares of Apple, but he holds no other position in any company mentioned. Check out hisholdings and a short bio. The Motley Fool owns shares of Apple, GameStop, and Google.Motley Fool newsletter serviceshave recommended buying shares of Google and Apple, writing covered calls in GameStop, and creating a bull call spread position in Apple. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.