Chapter 1140 – Price War
When Feng Yu was still inspecting AIWA, he received a call from Duan Yongping, informing him that PSone had dropped their selling price!
“What did you say? They lowered their retail price to 259 USD and started giving out games with their console?! The reason they gave is rebranding?! What is its new brand concept?”
After hanging up, Feng Yu felt speechless. Sony’s former brand concept was ‘Digital, dreams, and kids,” which is also their targeted customers.
But now, Sony changed it to “the ever-present value.”
Sony’s former brand concept is considered reasonable, and it is in line with their main products. Portable music players, gaming consoles, digital cameras, mobile phones all fall under digital products.
But the message now is the ever-present value network. Does it mean that they are making everything?
That’s right. Sony had made many investments. For example, Sony is still manufacturing rice cookers, and they are the ones who invested in rice cookers. Still, they did not focus on home appliances.
After that, Sony invested in rice, ramen, and other food products cooked with the rice cooker. But Sony stopped these businesses in the end.
When j.a.pan still do not have heating, Sony started producing heating blankets and heaters. It brought some profits for them, but they quickly become obsolete because their products are selling too expensive.
Sony is also the inventor of the world’s the first transistor radio, and they quickly were overtaken by others. After that, Sony started producing TV and Cathode-ray tube TV.
With these technologies, Sony produced Walkman and swept the world with it. But now, they were overtaken by AIWA.
Sony has many brilliant ideas, but none of them are sustainable.
During this period, Sony had also invested in many failed products. Like Toshiba, Panasonic, Nintendo, etc., many j.a.panese companies are the same as Sony, where they invested in everything.
Sony’s investments include coffee, creamier, toilet paper, hospitals… and they might not be as strong as Samsung. Still, Sony’s investments are more diverse than Samsung’s.
Are all these investments not related to each other? Some are related, but the majority are unrelated.
This “the ever-present value” is more applicable for Samsung, as most of Samsung’s businesses are profitable.
But most of Sony’s investments had failed.
Sony must have felt their investments are successful after their movie production company had finally become profitable and want to use their brand to promote their products.
If this is the case, it’s fine. Weird company will make weird investments. Tai Hua Consultancy had also invested in some weird products and suffered losses. Still, not all venture capital investments are profitable.
Now, Sony is lowering its console’s price and is giving out games. They are entering a price war with Gbox!
In Feng Yu’s previous life, Bill Gates had continued to sell game consoles despite suffering over 1 billion USD losses annually. It is much later when Microsoft’s gaming console started becoming profitable.
More importantly, this gaming console business had pushed up Microsoft’s share prices. Many people felt this will be a profitable business for Microsoft. Bill Gates took this opportunity to sell off some of his shares.
Although Microsoft had lost money, Bill Gates and his fellow shareholders did not suffer any losses.
For this to happen, one must be able to accept the initial losses.
Feng Yu did not want to do this because Aiwa Little Tyrant was not listed, and he will not make any money by doing this.
Also, Gbox uses Aiwa Little Tyrant’s technologies, and most of the production is in China. Feng Yu and Microsoft don’t need to sell their consoles at a loss with lower production costs.
Now, Sony had made the first move, but Feng Yu is not afraid.
Who is afraid of price war? Will Microsoft and Feng Yu be scare of entering into a price war with Sony?
Feng Yu called Bill Gates and told him that Sony is starting a price war. Bill Gates immediately agree that Gbox should also lower its price. He felt the initial pricing is quite high, as this is a new product.
Although Gbox had the support of Microsoft and Wind and Rain Electronics, their gaming console is still no match for Nintendo and Sony. Bill Gates had wanted to use low pricing to get the market share, but Feng Yu disagreed.
Now, Bill Gates has found an excuse to persuade Feng Yu. The losses will not be high for Microsoft, but this will push up their share prices. Microsoft will still be benefiting in the end.
Since Bill Gates agrees, Feng Yu informed Zhong Qingxian and Duan Yongping to prepare a proposal for Gbox’s price drop. They cannot lower the price suddenly like Sony, and the people who had bought their consoles before the price drop will feel cheated. They should come up with some conditions or remove the free games from the package.
Duan Yongping thought for a while and felt it will be easier to remove the free games from the package and let the console be preinstalled with a game. For example, the very popular Diablo. This game is only available on Gbox now. By removing the free games from the package, they can lower their product’s price.
Sony had dropped their prices to 259 USD?! We will sell our console at 229 USD. Duan Yongping had a.n.a.lyzed Sony’s selling price and concluded that Sony is also selling its product at a loss.
Now, Gbox is gaining popularity, and many people start loving the exclusive games available on Gbox. Gbox can also lower their games’ prices to entice customers to buy their consoles for the games.
Sony owned about 50% of the market share, while Nintendo took up 40%, and the remaining is shared by Sega and Gbox. Sony wanted to get rid of Gbox by lowering their retail prices.
But to everyone’s surprise, Gbox started selling their consoles at losses.
Sony is still as fine as they were prepared. But Nintendo and Sega were shocked. What are these two companies doing?! The profits from gaming consoles are not high in the first place, and yet you all still want to engage in price war?! Do you all still want to make money or not?!
Sega was deeply affected by Sony and Gbox. Their sales figures plunged, and the sales of Nintendo consoles also started to decline.
In Feng Yu’s previous life, there was a joke. When two top brands go into war, the third and fourth brands will be eliminated.
For example, when Jia Duo Bao and w.a.n.g Laoji started to go against each other, He Qizheng suddenly disappear. Just a year ago, He Qizheng’s sales were ranked second in China.
Sega immediately admits defeat, but Nintendo refused to bow down. They have sufficient funds and are not afraid of a price war.
So, Nintendo entered the war and slashed their console’s price to 199 USD!
The media were shocked. Is the gaming console war starting again?!
Translator’s notes: Jia Duo Bao, w.a.n.g Laoji, and He Qizheng are herbal canned drinks in China.