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 reasons Sony's (NYSE: 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 (NYSE: 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 (NYSE: BBY  ) and GameStop (NYSE: 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.

The Motley Fool owns shares of Best Buy and GameStop. Motley Fool newsletter services have 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 services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure 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 the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

Read/Post Comments (6) | Recommend This Article (3)

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  • Report this Comment On January 30, 2012, at 11:26 AM, Strayjax wrote:

    I agree that the handheld could have an uphill battle at first because of the price point, however, being a gamer I know that we are fairly starved for new technology which isn't something gamers in Japan ever seem to run into the desire for. Because of that, just having something this new that isn't a kidified Nintendo product might be all it takes to get people to open up their wallets. Either way Sony needs to get on the ball with marketing and push a little bit harder.

    Your fifth reason however is completely flawed. The bundle isn't $50 more, it comes with the 3G version of the system, one of the better launch games, a case for the system, and one of the 'overpriced' memory cards. That is a decent savings over buying everything separately, and as a bonus you get it before the actual release. And the bundle was announced quite a while ago, before they had any reason to need to be desperate. The deal is fairly in line with other offerings in the industry that pop up as preorder incentives.

  • Report this Comment On January 30, 2012, at 5:22 PM, TMFBreakerRick wrote:

    Strayjax, this is the first time that a pre-order includes receiving the product a week early (unless I'm missing a launch that did that). And I didn't mean to imply that the 3G bundle wasn't a deal -- though I think you're wrong on the memory card (at least with GameStop's bundle), since that's only with the Wi-Fi model bundle that will be out on 2/22 -- only that one of the key attractions for early adopters will be getting it a week before the others.

    We'll see how it plays out. I think it will be hard at first, but you're right about the appetite for a serious gaming device. I'm still not sold on it, though.

  • Report this Comment On January 30, 2012, at 10:36 PM, spork1 wrote:

    In regards to the pricing of the new gaming handhelds, the 3DS had to have it's price cut, have you seen it's specs? It runs a dual core 266mhz cpu. has like 4mb video ram and 64 mb ram. That puts its overall power, or throughput, at roughly the equivalent of a Pentium 3 computer. Barely. The Vita, by comparison, has a quad core cpu clocked at 1ghz + , 512 mb ram and 128mb video ram. So, the 3DS at 250 bux vs the Vita at 250 bux. Which one do you think is worth it's cost? IMO, the 3DS is worth $100, that's it. Not to mention the 3DS has only one analog and it's 3D effect, which may be nice, is essentially useless.

    The Vita's sales in Japan mean nothing right now. There aren't any Japanese focused games out for it right now; they're not interested in Uncharted or Unit 13. They want Monster Hunter, JRPG's, etc... Once that type of game is released there, watch the sales and then we'll see how the Japanese market likes the Vita.

    It should be noted as well, that the 3DS, despite it's ridiculously low specs, silly dual screens and even sillier 3D effects, has now sold over 15 million units. Why? Because it now has good games, whereas at launch it didn't.

    The Vita is launching with TONS of great games and tons more are coming.

    In regards to Nike's Fuelband, what the heck is that? I follow many tech sites daily and have never heard of this thing. Whatever it is, it is no competition to the Vita at all.

    I find it hilarious that so many analysts and just general consumers are jumping up and down saying the Vita will fail. The main reason given is the rise of smartphone/tablet gaming supposedly taking the market away from the gaming centric devices. This is wrong. Most of the people who are "hardcore smartphone/tablet gamers" are not the same people who have been hardcore gamers on consoles and pc for years/decades. They are a NEW market of consumers that resides alongside the likes of long time gamers, they're not taking sales away from anybody.

    I predict the Vita will sell a minimum of 4-5 million units this year and will sell 60-80 million units during it's lifespan. I'm not an analyst, just a long time gamer. Watch and see. :D

  • Report this Comment On January 30, 2012, at 11:02 PM, Titan318 wrote:

    I think a lot of people are assuming that the core gamer market is enough to support a system.

  • Report this Comment On January 31, 2012, at 8:07 AM, delpiero1 wrote:

    @spork1, the 3D effect on the 3DS is not useful. It's awesome, and it's brilliant and it's beautiful. That already puts it ahead of the Vita. If you really want a second stick, which you don't need, because of the brliiant gryo controls of the 3DS, you can get the second stick attachment for $10 making it just like the Vita.

    The Vita's specs are much inferior to my Galaxy Nexus: less resolution, less RAM. Not to mention that the Vita uses some weird memory that costs a lot, and has no internal memory. By the way, the 3DS has both internal memory and uses SD cards. So the 3DS is not like a "pentium 3", it's in fact much much better than the PS VISTA.

  • Report this Comment On January 31, 2012, at 9:01 AM, spork1 wrote:


    I'm glad I decided to check the comments on here, I figured somebody wouldn't like what I had to say! :D

    The Nexus may have more ram and higher screen res, but who cares? Gaming sucks on tablets, with the exception of games like Edge, of course. At least now there's controllers you can get to use with them, but still, there's no comparison for gaming.

    As to the 3DS, did you see it's specs? It's just sad, 4mb of video ram? 266mhz dual core cpu? 64mb ram? Terrible. Those are brutal specs these days and it's in no way better than the Vita, not in terms of hardware or overall game control. Big N dropped the ball with the 3DS, only one analog slider (and that add-on needs it own battery! ) and it's incredibly weak specs will be so much more noticeable once the Vita is out worldwide and people have compared the two. Ninty is lucky they have some amazing IP's that people are ravenous for, otherwise that thing would have already failed.

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