In a mere three years (between 1995 and 1998) Sony, which began as an unknown in the game console market, grew in such a short time to the domination of the market. To illustrate why this happened, the authors use Porter's Five Force model, which was a satisfactory model to apply at that point in time.
However, the continued growth in the industry and the major changes in players, suggests that a more valuable model -- the Four Ps of Product, Price, Promotion and Placement might be a more astute way to consider PlayStation 2, which is potentially the new market leader, a position that will not be won, however, without a fight. The reason for this assumption is the size of the market.
An article in Time (Oct. 30, 2000) pointed out that the market has changed considerably since the "drop-a-quarter-in-the-slot days. It's now a $20 billion-a-year worldwide business. Last year [1999] games contributed more than $6 billion to Sony's sales and $730 million in operating profits" (Cohen, 2000, 58). The article emphasizes that Sony leads the market with 75 million first-generation PlayStations in existence (27 million of them in the U.S), but that the market is wide open, even with the advent (and distribution problems) connected with the release of PlayStation2. We will vary from the case study by emphasizing PlayStation 2, which represents the possible technological benchmark against which the competition must operate.
The case study used Nintendo and Sega as the market leaders that Sony was competing against, and both of those players, while not formidable, will also play a part in this analysis. Not even conceived as a player in 1998 was Microsoft, with its projected X box. The rest of this analysis will deal with the competitive battle using the 4 Ps model.
As Cohen's article points out, PlayStation 2 is entering "the most competitive gaming environment ever. Sony is locked in a high-stakes platform war with Microsoft, S...