This Tech Giant Gets Kicked While It's Down

The failure of Sony's (NYS: SNE) new PlayStation Vita couldn't be more spectacular.

Along with fellow Fools Rick Munarriz and Patrick Martin, I've predicted that the dedicated handheld gaming device was doomed from the start. In the age of mobile smartphone and tablet gaming, dedicated devices are losing their spots in our pockets and purses. It doesn't help that the Vita's price tag, proprietary memory, and expensive games all combined cost far more than the alternatives.

So when Vita sales promptly fell off a cliff a single week after its Japanese debut, we three Fools couldn't help saying "I told you so." The first week saw roughly 324,000 units move before plunging 78% to 72,000 units. The third week has continued the precipitous decline, with just over 42,000 Vitas sold. That's another decline of roughly 42% from the prior week, and 87% from the debut week.

Nintendo's (OTC: NTDOY.PK) 3DS continues to be relatively strong, selling almost 198,000 in the same week. All systems saw a drop during the week, with 3DS sales also falling by more than half. That may add some context to the Vita's dive, but it's still a poor showing when the older Sony PSP and 3DS have outsold the Vita every week since launch.

For all of 2011, the overall Japanese games industry contracted by 8%, with the 3DS taking the gold medal with 4 million units sold since its February launch. Second place goes to Sony's PSP, with 2 million units sold.

Microsoft's (NAS: MSFT) decision to pass on dedicated handheld gaming looks prescient in hindsight, opting to stick with its Xbox 360 console and teaching it new tricks. Meanwhile, Apple (NAS: AAPL) and Google (NAS: GOOG) continue to lead the mobile revolution and provide growing content platforms that have consumers questioning whether they really need to carry around another device.

Apple's App Store now has more than 93,000 games available for an average price of $0.99. The Android Market has almost 46,000 games now, which might cost a few bucks at most.

The Vita will make it to the U.S. next month, and I had predicted that it would be three months before we saw a price drop. With the poor showing in just three weeks, I'm going to slash my time frame on Sony's slashing of the Vita's price tag. I'll predict that one month after its U.S. debut, Sony will cut its prices to match the 3DS at $170.

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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 Google, Apple, and Microsoft.Motley Fool newsletter serviceshave recommended buying shares of Google, Microsoft, Apple, and Google and creating bull call spread positions in Apple and Microsoft. 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.

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