Target market question
Sony has established itself as a technology leader over the last 2 generations, building and catering successfully, to a niche gaming audience. This audience is still loyal to Sony and has continued to acknowledge their technologically superior offerings. Sony must focus on remaining in this unique segment and leveraging its perceived uniqueness as a technology leader. Instead of competing on Nintendo’s terms, Sony should not react but exercise “Ukemi” by furthering its position in the serious gaming segment.
It is notable (From Exhibit 2b in the Responding to Wii case – Harvard Business Review) that Nintendo has been successful in keeping positive operating profits despite being a weak competitor during the previous 2 generations. Nintendo has shown prudence in waiting out 2 battles and coming up with a unique offering which has changed the way the market perceives gaming. Sony should concede defeat this generation of gaming, while maintaining balance through strong service to existing market.
Sony should target the serious gamers and not react to Wii in terms of re assessing its differentiation strategy.