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SWOT Analysis for Sony

Strengths

Sony has various strengths that enable it to command a considerable market share in the video gaming industry. First, Sony’s video game devices and games are innovative, technologically advanced, and, therefore, attractive to gamers of all age groups. The devices are also suitable for hardcore gamers and casual gamers to a lesser extent. Secondly, the company has an innovative team that has build devices that can turntables in the market through the adoption of the latest technologies and enhance the gaming experience. Lastly, the company has a long-standing market reputation for producing quality electronic products. For instance, Sony’s PlayStation 3 (PS3) has more advanced features compared to Microsoft’s Xbox 360 and Nintendo’s Wii that belonged to the same video game generation.

Weakness

Sony’s major weakness is producing video game consoles that are too expensive. For instance, the PS3 was launched at a retail price of between $499 and $599, a price that was too high for many video game lovers. At the same time, the company was making losses as the cost of producing one unit of PS3 was around $800, and it had hoped to make up for the loss through software sales. Sony also produces advanced video game systems that target mainly target hardcore gamers’ market segment. The PS3 was largely avoided by casual and first-time gamers due to its advanced features and high cost.

Opportunities

Sony’s first and second-generation video game consoles were wildly popular due to their innovative and advanced features that changed the gaming experience. The technology used then was not that expensive, and so the devices were sold at fair prices. However, the PS3, though innovative and technologically superior, performed poorly when compared to other third-generation devices, particularly the Wii. Part of the problem was the global financial hardships that saw many families cutting their entertainment budgets. The company has an opportunity to build on its innovative advantage and develop video game systems that are affordable and able to satisfy the gaming needs of various categories of gamers.

Threats

A major threat to Sony comes from within the industry and notable from the other two major players, Nintendo and Microsoft. These companies, particularly Nintendo, have already adopted innovative and cost-effective strategies that are already paying off. Another notable threat comes from the macro environment. Though the video gaming industry was not badly affected by the 2007-2008 recession, some ripple effects have been observed in the year 2008. The world economy has remained unbalanced due to several contributing factors, such as rising oil prices. Many would-be customers are experiencing difficulties in meeting their basic needs, and therefore, they are likely to stay away from leisure activities such as video gaming.

The rising cost of fuel means that it will be more expensive to transport video game devices to retail outlets across the globe. The company has already registered a decline in sales volumes that can be linked to the recession, increased fuel costs, and competitors.