The following case analysis describes and analyzes Sony's strategies used in launching the PlayStation - a gaming console that became one of the most popular gaming systems in the game industry. Sony's PlayStation story started with Nintendo Co. that wanted to incorporate CD-ROM (Sony's technology) into their gaming system. Sony agreed to create the PlayStation, a system that would allow playing games from a CD-ROM drive. However, the two companies couldn't agree with the conditions and the deal was cancelled. In 1993, Sony Computer Entertainment, a division of Sony was created, following the break-up of a joint development team formed by Sony and Nintendo Co. Sony decided to develop its own standalone video game system. Sony's PlayStation, a novice to the gaming industry outstripped two established big names - Nintendo and Sega.
Step 2: Analysis of the External Environment
This section looks at the Sony's external environment through the components of remote environment.
The external environment analysis if followed by the assessment of forces shaping the gaming industry using the Porter's industry model.
Analysis of the Remote Environment
The remote environment analysis describes opportunities and threats that originate beyond Sony's operating position but influence Company's strategic decision making. It is also important to remember that the case analysis describes factors as of the date of the case (1998).
North American and European economic boom, sharp growth of the market and bright outlook for the future are causing consumers to spend and invest more into new technologies. Also, markets favour and focus on the companies that are developing and selling new technologies. The economy growth has contributed to consumers' higher disposable income and increased spending power which translates as an opportunity for Sony.
Demographic and Social Factor
Threat: In the Sony's major target markets, the population is...