Battling for Hardware Supremacy

This holiday is the most competitive season for gaming hardware in history, and it’s only going to get worse in the future. The challenge is on for marketers trying first to make customers aware of their hardware, then to convince them to buy it instead of the competition. This year we see a multitude of name-brand competitors at every price point and set of features, without even considering the competition from no-name brands and used hardware. Any savvy hardware marketer has been anxiously anticipating this for months, and the battle is about to begin.

The halcyon days for gaming hardware were decades ago, when you had two or maybe three consoles to choose from, and if you wanted a mobile game experience you bought a Nintendo handheld (first the Gameboy line, then the DS line, both notching up incredible sales totals). A few people bought a PC for gaming, but that was a mere blip compared to console hardware sales. Marketers had a much simpler battle – compare your console to the competing console, directly or indirectly, and you were done. Mostly it was about the games that were available, since consoles had no other feature than gameplaying and exclusives were widespread.

Fast-forward to today’s marketplace, where nearly everything with a screen or video output can run games. The few that don’t, like Apple TV, feel almost quaint – and games could be made available for those platforms with a simple software upgrade at any time. Now consoles have to compete with smartphones, microconsoles, smart TVs, tablets, and streaming devices, as well as handheld consoles.

Games are everywhere, so you don’t need to buy a console just to play games. Any laptop or PC has a wide range of terrific games in all possible genres, including such staple console genres as first-person shooters – and many of these high-quality games are free-to-play. Smartphones are owned by the majority of people, and tablets are racing to get to that point as well. Partly in response, consoles have added an array of non-game capabilities like streaming or playing music, videos, and sports. Now consoles are even getting into original video content.

Two important things result from the ubiquity of games and the wide array of platforms that play them. First, the basic hardware features of the console and its price-performance become increasingly important, especially storage capacity (in order to maximize sales of high-profit digital content). Second, the confusion resulting from this means marketing’s task is harder than ever before, with well-funded competition and consumers with far more options for spending their limited money.

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Examining some of the major players is instructive. Microsoft has the low-end Xbox 360 weighing in at $199 for the 4GB version (which in most stores includes Kinect, though on Microsoft’s site that is $299). The 250GB Xbox 360 is $249 ($299 with a software bundle), and the Xbox One hits the high end at $499. Sony has a wider range, with the PS2 for $99, the PS3 12GB for $199, and a variety of PS3 bundles with from 250 to 500GB hard drives ranging from $249 to $349. The PS4 rounds out the line at $399. Nintendo has the Wii 512MB at $129 and the Wii U Deluxe 32GB at $299 (with either NintendoLand or Zelda: Wind Waker HD bundled).

The advantage here seems to be with Sony as far as price points go, with a full range from $99 to $399 covered, and superior storage capacity on the PS3 versus equivalent Microsoft and Nintendo offerings. Nintendo’s capacities are low, leading to an unusual trailing position for Nintendo’s price-performance (in past console generations Nintendo was often the leader in price-performance).

Dedicated gaming handhelds are the weak point for Microsoft, which must defer to its smartphone and tablet lineup for that – and those are barely registering in market share. Sony’s PS Vita may finally see some traction with its new $199 price point, but Nintendo is the company here with the best coverage. The DS is available for $99, the new 2DS for $129, the 3DS at $169, and the 3DS XL at $199. The DS lines have a solid software array, but the screens are a weak point when compared to what people now see on their smartphones and tablets.

The tablet market represents strong competition for holiday consumer dollars. Tablets present a visually compelling gaming platform, even if the controls aren’t as powerful for hardcore gaming – yet. The fall lineup of tablets already announced includes Amazon’s Kindle Fire HD 7” at $139, and the Kindle Fire HDX 7” at $229, with larger 8.9” tablets beginning at $269. Google’s Nexus 7 line is similar, as is Samsung’s. Apple is higher-priced with the iPad mini at $329 and the iPad at $499, but there will likely be new models announced soon.

Note that all of these tablets have large, high-quality screens that usually equal or exceed HD quality, far surpassing what you will see on Nintendo’s 3DS. For consumers that have a limited hardware budget, tablet prices are in the range of dedicated handheld gaming devices (especially if you look at off-brand or older discounted tablets) with far better screens and the ability to do far more than just play games. Parents in particular will be strongly attracted to devices that can browse the web or run learning applications, stream videos or music – and kids will likely respond well to those features, too.

By Steve Peterson

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