DG511 Analyzing & Modeling NPD

DG511 Analyzing & Modeling NPD 10 – 12 – 2010 Glenn Jacobs – B3.2 – s071437 Sophie Brenny –B2.1 - s099008 Tijmen van Gurp - B2.2 - s081936 Edwin Meijne - B2.2 - s086681 Sharon van der Geest - B1.2 - s091590

Introduction To be able to give Sony recommendations about a new product launch a thorough analysis is necessary and should be done in multiple steps. When first coming on the market, there are many products that fail. The reason behind them failing can be numerous. The goal if the company’s product did not fail previously is to find its strong points. Often the reasons of a product failure can be linked back to the company who produced it. It can vary from how a company handles its suppliers, to how they address innovation success factors and more.

Secondly, when trying to understand what went wrong, it is important to understand what was done during the development of the product. It is also important to look at the Micro Business Environment to look at the multiple factors that influence the product being researched. Thirdly a macro business analysis allows for a better understanding of the circumstances surrounding the product on the market.

Finally, through these multiples analysis, a conclusion and recommendations list can be given.

These are the steps we will take when looking at Sony’s PSP who came out in 2004, writing as if they were to produce a new product in the same genre, in this case, hand held games.

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Table of Contents Introduction .................................................................................................................................................. 1 Table of Contents .......................................................................................................................................... 2 Step 1: Company level analysis ..................................................................................................................... 5 1.1 Company Background ......................................................................................................................... 5 Mission .................................................................................................................................................. 5 Size ........................................................................................................................................................ 5 Locations: .............................................................................................................................................. 5 Organization .......................................................................................................................................... 6 Core capabilities .................................................................................................................................... 8 Design for X ........................................................................................................................................... 9 Market Segments and products .......................................................................................................... 11 Value Chain Coverage ......................................................................................................................... 12 1.2 The Current Product ......................................................................................................................... 16 Target group........................................................................................................................................ 16 Target Geography ............................................................................................................................... 16 Product Characteristics ....................................................................................................................... 16 1.3 Means-end analysis........................................................................................................................... 17 How does the Sony PSP address these values? .................................................................................. 17 Conclusion ........................................................................................................................................... 18 1.4 Innovation success factors ................................................................................................................ 19 1. Relative Advantage: ........................................................................................................................ 19 2. Trial Ability: ..................................................................................................................................... 19 3. Observability: .................................................................................................................................. 19 4. Communication Channels: .............................................................................................................. 20 5. Homogeneous Groups: ................................................................................................................... 20 6. Pace of Innovation/Reinventions .................................................................................................... 20 7. Norms, Roles and Social Networks: ................................................................................................ 20 8. Opinion Leaders: ............................................................................................................................. 20 9. Compatibility: .................................................................................................................................. 21 10: Infrastructure: ............................................................................................................................... 21 Step 2: Micro Business Environment Analysis ............................................................................................ 22 DG511 – Analyzing and Modeling NPD | page 2

Suppliers of Sony:.................................................................................................................................... 22 Substitutes: ............................................................................................................................................. 25 New Entrances: ....................................................................................................................................... 26 Industry Rivals of the PSP: ...................................................................................................................... 26 Buyers: .................................................................................................................................................... 27 Conclusion: .............................................................................................................................................. 29 Step 3: Macro Business Environment analysis............................................................................................ 30 Economical .............................................................................................................................................. 30 Economic growth: ............................................................................................................................... 30 Inflation: .............................................................................................................................................. 31 Economic Projections:......................................................................................................................... 31 Consumer Confidence: ........................................................................................................................ 32 Unemployment Rate: .......................................................................................................................... 33 Socio-cultural .......................................................................................................................................... 34 Lifestyle (the American dream)........................................................................................................... 34 Capitalism............................................................................................................................................ 36 Individualism ....................................................................................................................................... 36 Vision on/of gamers ............................................................................................................................ 36 Content of games ................................................................................................................................ 37 Trends in gaming ................................................................................................................................. 38 Technological .......................................................................................................................................... 39 3g (internet focus)............................................................................................................................... 39 Speed of development ........................................................................................................................ 39 Industry development (smartphone trends) ...................................................................................... 40 Game Development ............................................................................................................................ 42 Trends in gaming (technological) ........................................................................................................ 43 Step 4: Recommendations .......................................................................................................................... 44 Strengths: ................................................................................................................................................ 44 Weaknesses ............................................................................................................................................ 45 Product Segmentation ........................................................................................................................ 45 Opportunities .......................................................................................................................................... 45 Wireless gaming platform ................................................................................................................... 45 DG511 – Analyzing and Modeling NPD | page 3

Integration of technology/ compatibility ............................................................................................ 45 Update ability ...................................................................................................................................... 45 Cheaper wireless (3G) ......................................................................................................................... 46 App stores ........................................................................................................................................... 46 Threats .................................................................................................................................................... 46 New entrances .................................................................................................................................... 46 Dependency on suppliers.................................................................................................................... 46 Mobile phone competition ................................................................................................................. 46 Consumer confidence ......................................................................................................................... 47 Recommendations: ................................................................................................................................. 48 Bibliography ................................................................................................................................................ 53 Table of Figures ........................................................................................................................................... 59 Appendixes.................................................................................................................................................. 60

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Step 1: Company level analysis To be able to give recommendations you first have to understand the company for whom you are trying to give recommendations. The characteristics of the product you are analyzing are equally important. To see if the product in question fulfills what values people are looking for in that type of product, a meansend analysis must be done. Finally innovation is very important nowadays, so by taking innovation success factors, allows a company to almost certainly obtain a success on the market. Looking if the company in fact did uses these factors can allow for more precise recommendations.

1.1 Company Background Mission "The Sony Group is primarily focused on the Electronics (such as AV/IT products & components), Game (such as PlayStation), Entertainment (such as motion pictures and music), and Financial Services (such as insurance and banking) sectors." (Sony Corporation, 2010-b) Sony wants to be in every sector of consumer electronics and media as well as the consumer experience, and improve people's lives. Sony is present in a wide range of businesses, from a record label to mp3 players. . (Sony Corporation, 2010-i) Size Sony has multiple departments, which operate in a large number of consumer product groups. They employ a total of 167,900 people, who generate revenue of 7.214.000.000.000 yen (64.026.520.100 euro).

Locations:

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Organization The organizational overview of Sony displays the different groups Sony consists of. Each group works together with other groups to bring products to the user, with as common platform the sales and marketing team. The split in different groups makes it easier for Sony to keep track of what they are doing, and divide resources and finances over these groups. The PSP was created by the Sony Computer Entertainment group. (Sony Corporation, 2010-e)

Figure 1: Sony Group Organizational Chart. (Sony Corporation, 2010-e)

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Sony carries a flat and transparent structure. All of the boards, committees and departments have to answer to each other instead of directly to the corporate executives. (Sony Corporation, 2010-d)

Figure 2: Governance Structure. (Sony Corporation, 2010-e)

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Core capabilities “A competence which is central to the business's operations but which is not exceptional in some way should not be considered as a core competence, as it will not differentiate the business from any other similar businesses.� We have used the three factors of Prahalad and Hamel, to identify the core capabilities. (Tutor2U, 2010) 1) Provides potential access to a wide variety of markets (The key core competencies here are those that enable the creation of new products and services.)

Sony is one of the largest electronic companies that exists and has extended its power to a whole variety of this t market. Not only do they sell televisions, they provide artists with a record label, video producers with cameras, video editors with editing software, game developers with a game-studio (SCEI), amongst many other things Their company strategy is to enable people to experience and create the best possible media experience, and they have all the material, equipment and software they need to achieve this. Their brand name is everywhere in the industry, and anyone who has ever worked with rich media knows Sony from one of their products.

2) Makes a significant contribution to the perceived customer benefits of the end product (Core competencies are the skills that enable a business to deliver a fundamental customer benefit - in other words: what is it that causes customers to choose one product over another?)

When consumers buy a PlayStation Portable, they buy a small portable device with the power and status of a popular gaming console. Popular game creators are likely to make games for this console, and Sony develops games themselves as well.

3) Difficult for competitors to imitate (A core competence should be "competitively unique": In many industries, most skills can be considered a prerequisite for participation and do not provide any significant competitor differentiation.)

The PlayStation Portable was the only device that was a complete console replacement when it came out. It was a handheld device with the power and the games of an actual console. Competitors like Nintendo (DS) offer a mobile gaming device, with mobile games. It is the only small version of a gaming console available.

Even now, with mobile gaming devices like the iPad and iPod touch, the PlayStation Portable is still considered by serious gamers as the mobile gaming device for them. This is a smaller target group, but within this target group they are king.

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Design for X We want to look at a selection of factors that made difference with the PSP, what made it unique for its time.

Design for Assembly Like all other electronic products, the parts are manufactured in different factories and finally assembled. Some parts are created in Sony’s own factory, others are ordered from different manufacturers (like the LCD screen). From a ‘teardown’ of iFixit the structure and the components are revealed (Talic, 2010), which we have used to analyze the assembly process. The shell of the PSP can be accessible from all sides, for the placement of a front panel, the LCD and then the motherboard and other components. The teardown shows that all parts are easily removed, they are attached with a few screws or click into place.

Figure 3: Disassembled Sony PSP. (Talic, 2010)

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Design for Disassembly As seen at the teardown (Talic, 2010), the PSP is very easy to disassemble and/or repairable. There are a minimum of Torx screws, and all parts are accessible within two or three steps. The parts that are likely to break (battery, LCD), are most easily to replaceable or accessible. The parts that are not meant to be user replaceable (the chips) are a bit harder to get to.

Small components like the joysticks are offered on the internet (iFixit.com) and come with detailed instructions. You can replace the joystick within a few steps.

Design for ergonomics The PSP is a device with a small form factor, and is usually used for gaming that can take long periods of time. It is designed to be held in both hands, and provides a good grip.

Figure 4: PSP in hand (Marianna, 2005)

The PSP has the same button layout as the PlayStation controller, a controller that is proven for its ergonomics and pleasurable grip. The PSP continues with this strong product characteristics, with a screen added to the middle. (Marianna, 2005)

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Market Segments and products Sony’s market segments are based on the products they offer; they want to have ‘Product Segmentation’. In each market they want to have a product that stands out by having the Sony style and quality.

One of their product groups are mobile phones. With Sony Ericsson they managed to create a large user base, with mobile phones that are easy to use and competitively priced. Sony Ericsson phones range from high-end smartphones to low-functionality cheap phones.

In the entertainment industry they focus on High Definition content, with their range of Sony Bravia TV’s and Sony HD camera’s. With their Sony Vegas software they focus on the editing of digital HD content, in audio, video and photos. The creation of High Definition entertainment can also be found in their high-end mobile phones, Sony Ericsson phones are known for their good quality cameras.

Sony created the Blue Ray disks, and a collection of Blu-Ray players that can be used to fully benefit from HD quality. The Sony PlayStation 3 is also a well-known and often used HD Blu-Ray player.

In the computer industry they have a range of Sony VAIO notebooks, netbooks and accessories like USB sticks. The brand VAIO is considered by consumers to be top-class, the windows equivalent of Apple notebooks in style and quality. The prices are relatively high. This is the top-segment of consumer notebooks.

Since the Walkman years ago Sony still has a line of mp3 players and Discmans, with the brand-name Sony-Walkman. The MP3 players try to differentiate from other through style and sound-quality.

Ironically they still offer tape-players and recorders. In the professional industry they offer a range of recording devices as well.

Sony Headphones have a wide range of products, from professional DJ headphones to Bluetooth wireless headphones.

Sony Music and Sony Pictures are big labels, with artists and movies like The Social Network and Susan Boyle. Smaller artists, like Jacqueline Govaert from Krezip, have a record-contract as well. It is not a small independent record label; it is only for successful artists.

Sony Computer Entertainment, the creator of the PSP, is one of the largest gaming companies of the world. With the PlayStation, PlayStation 2 and PlayStation 3 they conquered a lot of living rooms over the past 10 years. Their consoles are for serious gamers, and unlike the Wii, focus more on graphics.

(Sony Europe, 2010) (Articlesbase, 2010).

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Value Chain Coverage Support activities The support activities are not of real value for our analysis; Sony Corporation has such a wide range of support activities that it is not specific for the PSP. For the primary activities it is impossible to find specific information about the PSP, thus we give a general overview of the production and marketing of consumer electronics.

Figure 5: Value Chain. (Porter, 1985)

Inbound Logistics The components that make up the device are made by different companies of Sony, while some parts are ordered from other companies. This is the case with almost all electronic products. The materials are not manufactured by Sony, but by chemical companies. These components range from sand for the chips to oil for the plastics, the raw materials.

These materials are used to make all the different parts, from chips to plastic housing to LCD screens, all at different locations. The materials have to be transferred to these locations in big batches in a form that is easy to use (small plastic bulbs that easily melt). These ground-materials are manufactured and molded into shape, either by Sony or a chip manufacturer like Broadcom (the Wi-Fi chip). The LCD’s screens are mostly made by large manufacturers like LG, and Sony is not the only client of these companies (Apple uses displays as well). (Sony Global, 2010) As you can see in the image, the PSP consists of a plastic casing, an LCD, various chips on logic boards, metal shields and advanced optical electronics to read the UMD discs, various small parts and screws and wires.

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Figure 6: Disassembled PSP. (Talic, 2010)

Because of the great variety of components the inbound logistics are not just raw materials, but also finished parts from other companies. Sony does not make everything themselves and pays an end-price for a product, like the Broadcom WiFi chip.

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Operations The operations are where the final product is assembled and finished. The components are assembled in one or more production facilities, depending on the production numbers.

In most cases the different parts are assembled by different facilities, and assembled in various locations. There can be one factory that makes the plastic housings for PSP’s, but it could also be used for other products from Sony. It is a complex structure of parts and components that come together at the final product line.

Outbound Logistics Outbound logistics are the “Movement of material associated with storing, transporting, and distribution a firm's goods to its customers.”(businessdictonary.com).

Before the PSP gets in the hands of the buyers, a few other parties have had the PSP in their warehouses or vehicles. Sony uses intensive distribution, a large number of resellers (stores, web shops) receive a stock of PSP’s. They can compete in price and extra’s so they can sell as many PSPs as possible.

The shops receive their products from a distributor, a company that is specialized in getting products from factories and getting them to the stores in smaller amounts. Otherwise, each shop would have to order from the factory, which is not very cost-effective. The distributor orders a large number of PSPs, and divides these over all the retail stores in smaller amounts.

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Marketing & Sales The marketing campaigns of Sony always focus on a specific target groups, and recently they focused on younger kids that game with smartphones. In this campaign, a child makes fun of stupid mobile apps that are not ‘real games’, according to Marcus Rivers, the child in question and the face of the campaign. In hip short clips Marcus tells the viewer that the PSP is a different game, and that they have to ‘step up your game’.

PSP is now the number 2 handheld device, after the Nintendo DS. Both consoles have gotten a lot of competition from the Apple iPhone and iPod Touch, who gained a market share of 19% in 2 years.

This shows that marketing and sales never rests, and has to apply to new developments in the market it is active in. For Sony this was a change of market, in the early days it was one of the few mobile gaming devices, now mobile phones are getting better and better in replacing dedicated devices. Normally, a company would adapt to changes in the market at a slow pace, because changes happen slow. But now with the mobile phones, there is a big change. People all need a mobile phone and are willing to pay for all of possibilities they have, but a dedicated gaming device is still a luxury. Because of the number of devices and lack of a physical data carrier (all mobile phones download over the internet), the games are cheaper than regular PSP games. Sony has selected 25 games that are now selling for € 9, 99,-, the lowest price. For a mobile phone, € 9, 99 is an expensive and ‘premium’ game. (Bulik, 2010) Sony is trying to reposition itself again as an industry leading innovator, by showing their capabilities with HD content (HDTV, Blu-ray, VAIO PC’s, Handycams, etc.), and focusing again on mobile gaming. The rapidly developing mobile phone segment is taking away the uniqueness of the PSP, which Sony needs to react to.

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1.2 The Current Product Target group The Target group for the PSP when it initially came out was to be gamers between the ages of eighteen to thirty-four. This target group is older than the usual target group that most gaming companies tend to target. Nintendo for example targets the younger audience between the ages of thirteen and seventeen.

Sony thought to be stronger in the older age category and would have more success. (Johnson, 2005) In the year 2007 Sony decided to change the target group from the older eighteen to thirty-four, to the younger group of thirteen and seventeen. This decision followed databases that showed that the majority of registered owners of the PSP where part of this younger age group. Sony also wanted to expand its consumer group and thus based this decision on the fact that the “The intend-to-purchase crowd is living mostly in that group as well.” (Kohler, 2007) Target Geography “PSP was introduced in Japan and U.S. in December 2004 and March 2005, respectively and will be introduced in Europe in September 2005.” (Sony Corporation, 2005) From this you can say that they first introduced the PSP in Japan later in North America, and then in the rest of the world. But as they had decided from the beginning that the PSP would be introduced in those three locations, it is hard to say that the PSP was designed for one specific country. But as the three places target initially where Japan, the USA and Europe we can say that the general geographical target was within the Triad. The Triad is the union of three major markets: USA, Japan and the market of the western EU. The data found about the number of PSPs shipped show that the biggest target group is North America, after that Europe and after that Japan. It can be said that in relation to the PSPs sent Japan is the biggest costumer. (Yoon, 2007).

Product Characteristics One thing that was unique to PSP-1000 when it came out in 2004 was its capability of console-quality graphics, the movies that could be viewed on it, its Wi-Fi capabilities. In other words, the PSP was a little unique device that mixed gaming, listening to music and watching movies into one pocket size gadget.

The quality of the graphics was superior to the other handheld gaming consoles of the same time, the quality of the movies and music were equally exceptional. Another characteristics of the PSP, is the carefully placed controls that allows the user to fully concentrate and immerse him or herself on the video content (Sony Corporation, 2010-f). Another characteristic that also draws the eyes of the user inwards is the shape, this allowing for even more immersion on the video content. The shape in general with it’s cut out edges, the black and clear coloring and the acing grips that are situated on either side of the PSP which makes it easy to hold are physical characteristics (Sony Corporation, 2010-a). To summarize, we can say that, the mixing of its, video, music, gaming, internet use capabilities with specific aspects about its appearance are what form the characteristics of the PSP. It was revolutionary gaming console when it came out because of this unique mix.

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1.3 Means-end analysis To find out what types of values are important to an average person, a Means-end Analysis was done.

This means-end analysis was done is steps. First each team member interviewed two people. The individuals interviewed did not have to be hard-core gamers, but just an average person who played games, for isnance a board game, computer game or other. (The interviews and details about interviewed can be found in appendix C) The interview was done by continuously asking ‘why’ when the interviewee answered a question about what his or her favorite game was. This was done to finally reach the essence of why the individual liked that game. The various answers were then analyzed and linked together in the value map. (A larger version can be found in appendix A). This is called ‘Laddering’. (Wansink & Chan, 2002)

Figure 7: Value Map

How does the Sony PSP address these values?

The main advantage of the product lies in the fact that it supports a standard of high quality video games.

The Sony PSP supports a broad variety of games to address all of the above mapped consequences and values. It is in the product's sound, video and game quality that it can fulfill these values as if it were a PlayStation. The possibility of playing online against each other makes it so that it also addresses the value “connected with society”.

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Escape from daily life: In this case the value that is achieved is actually the fact that people can momentarily take a step out of their daily lives. A way to get your mind of things and get sucked into a different reality, for no specific reasons. One of the consequences that cause this value is freedom. They want to decide themselves when they want to game. They might have something going on, but not necessarily. They can also feel bored and decide to start playing a game. The Sony PSP offers freedom in its game selection as well as in its portability. The ability for a game to last is another attribute to this value, considering the many addicting games that are out there the PSP addresses this value. However the PSP is a portable device and the battery only last about 3 hours in WIFI gameplay.

Excitement: Unlike we expected the excitement factor doesn't derive from loud sounds in combination with a big screen. This value is a consequence of the challenge and fun that the video game brings forth.

Learning: This Value is a direct consequence from exploring. The PSP provides several functions to support exploration. Its games can be educational or from exploring nature, but the most important function to support this value will be the internet. The internet enables people to explore the web, as well as explore different worlds and get to know different players in games.

Work efficiency: This value is actually a consequence of the ability to focus on something else. This focus can be reached by solving a puzzle or plainly get involved in an exciting activity. Escaping from life is in this value a cause, since they want/need to escape from their work; they want to focus of something else for a while. The main difference with the value Escape from daily life is that there is a shift in emphasize.

Escaping from daily life is often accompanied with a long lasting gaming session, whereas in this case it is a matter of minutes. This way people will work more efficient when they start with their work again. In this case the PSP offers action and strategic games to keep you mind from wondering back to work.

However in this case the PSP can be dangerous as it can consume allot of your time.

Connected with society: The internet function of the PSP enables multiplayer game mode from distance. Users can choose to challenge friends, or engage in open game sessions with strangers. The PSP offers the ability for online chatting and even the possibility to connect a webcam. (Sony Corporation, 2004) Conclusion In conclusion it can be said that most of the values are addressed by the games instead of the device itself. As this device was the first commercially available, portable device that offered this variety of games, the product was just the means to play the games. For this reason we conclude that the PSP addresses all the above mentioned values.

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1.4 Innovation success factors 1. Relative Advantage: During the launch of the Sony PSP in 2004 its main competitor was the Nintendo DS. In comparison to this Nintendo DS the PSP offers a different platform with advantages in: audio, video, compatibility and storage. Where the Nintendo DS merely is a handheld game console, the Sony PSP is a handheld media center with game graphics that could only be found on stationary game consoles. (Sony Corporation, 2004) 2. Trial Ability:

Figure 8: PSP tryout stand in retail stores. (Kennedy, 2005)

Sony's PlayStation range is always on trial in featured stores demonstrating all of its functions and previewing a demo game. Considering the PSP to actually be a portable PlayStation, the platform is already diffused into society. For this reason the only thing that had to be tried was the ergonomics and overall feeling of the product, like how heavy it feels in your hand 3. Observability: Because the PlayStation Portable is portable and carried around through society Sony does not need to do anything more to show their innovation into society except for the Trial Ability. People who have first bought the PSP can play with it in public spaces like in the Metro; other people will see this and think about what product this is. People who bought it will also want to show it to their friends and family and can easily do so because it is portable.

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4. Communication Channels: Sony uses all sorts of common media to communicate to the consumer such as TV ads, billboards, internet banners and more. In the Asian-Pacific region game developers advertise their games primarily and Sony shows that it is available on the PSP. In the western society, Sony advertises the features and feel of the PSP, here the emphasis is on the device instead of the games.

5. Homogeneous Groups: For the development and launch of the original PSP Sony specified a reasonable homogeneous target group; gamers between 18 and 34 years of age. (Kohler, 2007) Within the category of gamers even though sub groups exist, research shows that gamers can actually be called a homogeneous group. This group shows strong resemblance because they game and their use of media. (Beemt, 2010) 6. Pace of Innovation/Reinventions The history of the Sony PSP shows us a not to drastic pace of Innovation. They did not come up with a new version of the PSP every year with several dramatic changes every time. Instead, over the past six years Sony introduced three iterations on the first model and one new type, the PSP Go. Between the first PSP, the PSP 1000 and the second generation PSP, the PSP 2000, there were minimal changes.

Between the PSP 2000 and the PSP 3000 though, there were a lot of innovative changes, essentially to the performance. The final innovations done to the PSP go where also redesigns from a shape point of view and not only on the performance. (For more detailed information, please see Appendix B) 7. Norms, Roles and Social Networks: People, who are part of a social network, are a group of people who are connected in some way to each other and thus communicate with each other about this common connection. These various groups of social networks each have their own norms and roles. As the PSP is a hand held gaming device, it would be logical to conclude that Sony approached the social networks of gamers by appealing to their norms and patterns of behavior. But this is not the case with Sony. It seems that Sony depends on social networks discussing their products naturally without having to push it. There is no evidence to prove Sony’s use of social networks.

8. Opinion Leaders: The apparent opinion leaders are, video game show hosts, professional gamers and writers. In the case of the PSP, media critics such as TV show hosts and magazine writers addressed the PSP. Before the launch these critics speculated about the introduction of the new device. It is not clear whether it’s Sony initiative to start these rumors and publications during the launch of the initial PSP. Recent TV shows indicate that it was Sony’s initiative to do so for the launch of the newest PSP Go. For the American market Sony introduced a new child character Marcus Rivers (portrayed by child-actor Bobb’e J. Thompson, Marcus can be seen as a made up opinion leader. Sony’s first TV commercial featuring Marcus shows that Sony hires him in order to advise them upon the PSP. Following commercials show Marcus taking full advantage of the PSP in comparison to the competition, where Marcus heavily expresses his opinion upon both.

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9. Compatibility: In a time where portable media is getting increasingly popular the Sony PSP offers a total media package with an astonishing capacity of 16 GB. The PSP's compatibility with the MP3, MP4 and 3GP codec ensures a smooth diffusion. The memory stick slot in the PSP offers an expansion of its memory and is compatible with Sony products that use this memory stick. The PSP is in the same category as the PlayStation, but they are not compatible in the sense that they cannot exchange games. (GizmocafĂŠ, 2010) 10: Infrastructure: The PSP is part of the PlayStation family, it and its games depend on the sale channels and infrastructure of its stationary brother, and they walk hand in hand. These sale channels are a central point in the PlayStation family; many of these points include testing stations and a variety of media content.

In conclusion it can be said that Sony did apply all innovation success factors to a certain degree. The fact that all factors are addressed heavily depends on the fact that the PSP relies on the foundation that has been set by the PlayStation.

In terms of the homogeneous groups, Sony has committed a mistake. After the launch it turned out that the product was actually more popular within a different age category. As a response to this Sony launched a new campaign emphasizing this age category which resulted in the birth of Marcus Rivers.

(Kohler, 2007) For the Norms, roles and social network, Sony relied on the fact that the gaming community would share information about the PSP because of its innovative characteristics, but there is no proof of Sony doing so. There for we conclude that Sony relied on the fact that it would happen naturally. Sony did not suffer majorly from this but it is likely that the PSP would have done even better if Sony had used social networks to their advantage and concentrated more on their target group. This might have also prevented a change in user group later on. It would thus seem that Sony did not pay enough attention to this innovation success factor.

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Step 2: Micro Business Environment Analysis A micro business analysis allows for a better understanding of the multiple factors influencing the product that you are researching. These influential factors can be suppliers, substitutes for the product and more. For this analysis a Porter analysis was done.

The STEP Diagram can be found in Appendix D.

Suppliers of Sony: The power of suppliers can be very strong, if they are in a position where they can determine the terms and conditions of a contract. A supplier has more power when it is one of few. Switching to another supplier can be especially difficult and expensive when the supplier can afford to take over competing suppliers. (Oxford University Press, 2007)

Figure 9: Basic Structure of the Supply Chain. (Sony Corporation, 2010-l)

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The process that Sony uses when selecting a new supplier is displayed below. This diagram show that they are a high priority client to their suppliers and that they are able to choose their suppliers.

Figure 10: Supplier selection process. (Sony Corporation, 2010-c)

Sony believes in mutual trust, fair business practice, collaboration with their suppliers as well as transparency and equal opportunities.

For this, Sony works with prescribed policies and procedures to guarantee fair business practices. When speaking of transparency, Sony avoids random and arbitrary actions. As for equal opportunities, Sony gives each potential supplier an equal playing field, no exceptions. (Sony Corporation, 2010-g) This shows that Sony chooses its suppliers, but also finds it important to have the products adjusted to what Sony requires. Sony also wants to know what’s going on within these companies, and keeps its options open to switch between suppliers.

Sony is very strict when it comes to the companies they collaborate with. They want to assure that the employees are treated well and that no corrupt activities are taking place. (The Sony Group, 2010) DG511 – Analyzing and Modeling NPD | page 23

Suppliers find it important to have a fair financial base so they can get the best available deal; therefore Sony asks to provide information on their management and operations, including their financial activities. (Sony Corporation, 2010-h) Sony Supply Chain Solutions (Thailand), who also ensures the quality of the product Sony Suppliers need to provide, writes about their way to handle Sony’s suppliers: “To ensure that the supplier's capacity and parts quality are being managed accordingly to production plan, with monitoring and expediting the Purchasing order in lead time commitment.” (Sony Supply Chain Solutions, 2009) From this information it can be said that Sony is very demanding of its suppliers who have to fulfill many requirements. They have the ability to choose their own suppliers, and keep track of their activities.

Therefore the power of suppliers is not very strong for Sony.

When it comes to the PSP though, in 2005, Sony decided to outsource the assembly of the PSP from Japan to China and Taiwan. The stock could not keep up with the demands. This was to be able to fulfill the demands of the American market before they had even launched the PSP in Europe. The manufacturing of the parts would stay within the power of the Sony Corporation in Japan (Humphries, 2005). A dangerous matter when deciding to outsource is that a company such as Sony because of its wide variety of product it produces, might lose the knowledge of the assembly. This would mean that Sony would become fully dependent on its supplier for this crucial aspect. This would give a supplier a certain bargaining power over Sony. Until now it would seem that Sony has been able to control its suppliers by spreading them and usually depending on themselves or branches within the company. As said previously, Sony keeps its suppliers on a very short leash to make sure to prevent giving their supplier too much power.

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Substitutes: In the time of the first Sony PSP, substitute products can be found in many categories. Because of the multifunctionality of the PSP, many stationary game consoles can be considered to be a substitute product. Other such substitutes include board games, card games and childhood games.

The PSP could be substituted by its stationary competition, the products offers media playback but all with a focus on gameplay. One might consider buying one of these products instead of the handheld PSP. These devices are the Microsoft XBOX, the Nintendo GameCube and the Sony PlayStation 2. Sony’s efforts in expanding their product range could be considered as cannibalization, but what is important here is that Sony shows a clear relative advantage for each of their PlayStation products. For this reason Sony is able to compete with the other consoles without substantially affecting their own products.

(Product source: (Wikipedia, 2010-a) ). Another substitute to the PSP is board games such as Monopoly, Candy land, Do not get angry, and many more. A board game allows you to interact with friends and family in a healthy competitive fashion, they are fun to pass the time and if you are fully engrossed in the game you can get very excited and caught in the moment. Card games are a good pass time that you can take with you and can play more or less anywhere like the PSP without worrying that you will lose your dice or a small component of your game as you would with a board game. Card games such as poker and Rummy are usually played with a group of at least two, some exception to this are solitaire (and spider solitaire). But card games remain a fun way to stay entertained without causing too much havoc. This could be why still so many elderly people love playing card games. Finally, childhood games can be a free substitute to the PSP. Games such as hide-and-seek and tag are very social games where people need to interact, it’s the whole essence of the game, and it can also be very energy consuming and allows people to escape briefly from their daily life. If the players are adults, maybe it allows for a glimpse back into the past when they were children. All in all there are various substitutes to the PSP, more expensive or completely free. The majority of the substitutes are personal in a direct way which is less present when it through an electronic devices such as the PSP. Each game form has its pros and cons, it really depends what you are looking for.

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New Entrances: The threats of new entrances to the PSP since it came out in 2004 are relatively few, but have been important. These new entrances include Apples IPod touch, the IPhone 3GS and finally the Zune HD produced by Microsoft. (Wikipedia, 2010-a) The IPhone 3Gs and the IPod touch are portable media players that are also a personal digital as well as a Wi-Fi mobile platform. These are the same major characteristics as the PSP of Sony. Apple also has a very wide variety of games to offer to their consumers. Consumers themselves can even create their own games for the “App store” (Apples application store). For these reasons are the IPod touch and the IPhone 3Gs threats to Sony’s PSP. The Zune HD produced by Microsoft is a portable media player. As the PSP is also a portable media player, this entrance of this new small portable media player in late 2009 may hesitate between the PSP and the Zune if one of the main reasons for them to choose the PSP was for its media options. This makes the Zune HD a threat to the Sony PSP market.

Industry Rivals of the PSP: Industry rivals are companies who have the same type of products. In the Case of the PSP, other handheld consoles. The portable Nintendo range such as the Gameboy and the DS offer a platform for mobile gaming which has got a big overlay with the PSP. For this reason it can be said that Nintendo is an industry rival of Sony’s PSP. On another noteworthy product that can be seen as an industry rival from the time the PSP came out was the Nokia N-Gage. This device is actually a mobile phone that offers 3d video games and media playback. In comparison with the PSP this device resembles the functionality of the PSP the most; however it’s primarily a phone which shows in game quality.

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Buyers: Sony sells its PSP to a lot of retailers. They make a distinction between online and store retailers.

Looking at big places in USA like New York they mostly promote the official Sony style stores if you look for an official Retail store. It is unclear which channels sell the most PSPs in the USA, in Holland it is online.

Figure 11: Sony retail store locations. (Sony Style, 2010)

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For other parts of the world they have agreements with a lot of retailers. The only thing what we can say is that retailers have to have certain standards before they can get an official Sony retailer. One demand is for example: “Sony Retailers are properly trained on Sony products so they can answer your questions” and “Sony Retailers only deal with factory-authorized merchandise, which hasn't been tampered with or had its serial numbers altered by unauthorized third-party resellers.” Taking these demands into account we can assume that only the bigger electronic retail organizations can get the status of an official Sony retail store. (Sony Style, 2010)

Figure 12: Sony store. (Sony Style, 2010)

Biggest buyer in the Netherlands is NEDGAME; the fact that they want to stop selling the new PSP GO tells us that they had already an agreement with NEDGAME for the rest of the PSP product line. (Glenn, 2009) Sony also takes the power in his own hands by selling their products on their official website. They also indicate there a long list of official retailers and online retailers. Official retailers have to fulfill for certain quality and service aspects. Sony has his own stores called Sonny Style stores, where they sell only Sony products. (Sony corporation, 2010-j) Mobile phone bargainers offer the PSP as a gift in combination with a phone subscription and a phone.

These bargainers are for example, Orange, T-Mobile, O2, and Vodafone. (Free PSP Mobile Phones, 2010) (Best Mobile Contracts, 2009)

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Conclusion: In conclusion it can be said that the largest threat is the one of the new entrances. Since technological innovation is high, the new entrances are approaching the PSP's level of game quality. However contrary to the PSP, the new entrances do not emphasize their games or gameplay but have different primary functions such as phone calls, SMS and can play music. Currently the difference in game quality can almost be neglected by those who are not considered to be "power gamers". If the difference between the PSP and new entrances in game quality only becomes smaller the consumer market for the PSP will shrink, because the relative advantage for the mainstream consumers will become insignificant.

Suppliers are not a great threat because Sony keeps a very short leash on its suppliers. Because of this we can conclude that the risk of bankruptcy of the suppliers or shortage in supplies are very low.

The substitute products are not of a great risk because the difference between Sony PSP and these products are big and they will not easily become a replacement of the PSP.

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Step 3: Macro Business Environment analysis To comprehend the environment surrounding a product in a certain country, it is wise to get a better understanding of the big picture. The big picture can be studied by doing a STEP analysis. A STEP analysis makes you look at factors such as economic, political, socio-cultural and demographical. In the case of the United States when taking into account the PSP, the economical, the socio-cultural and the technological factors are the most important. We have chosen to work on the United States (USA) because it is in the USA that most gaming products and games come out first.

Economical

Figure 13: Where does the money go? (U.S. Departement of Labor, 2009)

Economic growth: The credit and financial crisis, which began in 2007, were the cause of the global stock market crashes.

The economic recession over 2008-09 cut the incomes of the highest earners in many countries, and triggered a high unemployment rate amongst laborers.

Although the financial crisis affected economies on a global scale, high earners were most affected in developed regions such as North America and Western Europe. In 2008 the average annual disposable

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income of the richest 10% of households in the United States of America fell by 2.4%. This in contrary to China where this disposable income rose by 8.7% over the course of the same year.

However the income growth of high earners does not reflect the whole national economy. Real GDP growth shows a meager improvement in most developed markets while unemployment rates remain high.

Statistics predict a steady grow in income relative to constant 2009 prices. In order to draw conclusions from these graphs, inflation has to be taking into account.

Figure 14: Annual Gross and Disposable Income (Euromonitor, 2010)

Figure 15: Annual Gross and Disposable Income (Euromonitor, 2010)

Inflation: The table above shows a stable Gross and disposable income growth over the coming decade. If we put these values in perspective according to the expected overall inflation (0.9% to 1.17% (FOMC, 2009), growth is a fact.

Economic Projections: Economic Growth Inflation

2009 -1.3% to -0.5% 0.3% to 1.0%

2010 2.5% to 3.3% 1.0% to 1.5%

2011 3.8% to 5.0% 0.9% to 1.7%

Long-Term 2.5% to 2.7% 1.7%-2.0%

Figure 16: Economic Projection. (FOMC, 2009)

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Consumer Confidence: Although the American economy appears to be slowly recovering from the Recession, many consumers are keeping the habits they acquired during the downturn. This is the main finding of a survey conducted by Booz & Co. In October 2010. The survey shows that the behavior patterns acquired during the recession still apply for most consumers. In some cases consumers are cutting back even more on their spending than during the recession. The survey found that 56% of respondents reduced their spending on consumer electronics during 2010, which is an increase from the 53% in 2009.

(Euromonitor International, 2010) This behavior can be confirmed by the pattern shown in payment methods.

Credit card usage has declined significantly since the recession. An annual survey by Javelin Strategy & Research shows that credit usage in the USA dropped from 87% of consumers in 2007, to 56% in 2009.

These signs of lack in consumer confidence are supported by the fact that US consumers significantly cut back on their purchases and attempted to pay off their debts. Since the recession debit cards became the preferred method of paying for purchases.

Figure 17: Consumer data. (Euromonitor, 2010)

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Unemployment Rate: The recession led to a high, long term unemployment rates, according to the U.S. Bureau of Labor Statistics, the jobless rate of 2010 stands at 10% of the total U.S. population. BLS predicts merely a small improvement in the unemployment rate over the coming 10 years. These predictions support the low consumer confidence.

Figure 18: Unemployment numbers. (Klemmer, 2010)

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Socio-cultural The United States of America is a federal constitutional republic. It is situated in North America and is composed of fifty states. Each state has a certain amount of independence. For example educational laws may be different in the state of Georgia then in the state of Alaska but no state may over tray federal laws. Over the course of the last thirty years, the growing economical and market power of the United States has grown, making it one of the major members of the Triad. The Triad, an expression first used by Kenchi Ohmae, the combined power of three well developed markets. The Triad is composed of the United States, Western Europe and Japan (Wikipedia, 2010-c) . The United States is a two party political system unlike most European countries. The United States has long been on the frontier of breakthroughs in science, technology and renowned for its cinematic endeavors. Now in the 21rst century, the United States is a melting pot of cultures, but its soul is based on the American Dream with its individualistic traits.

Lifestyle (the American dream) The American dream which has been the base of the American lifestyle for the past fifty year is the strong belief that no matter who you are, no matter what your status is, you can “pull up your boot straps” and overcome poverty. (Clearly Cultural, 2009)

Figure 19: How Americans Shop. (Visual Economics, 2010)

When looking at every industry available, it can be said that an average American spends money in every one of those. The five retail categories that the most important for Americans are: jewelry and watches, consumer electronics, event tickets, computer hardware and books and magazines. In America as in most countries in the holiday’s seasons, more money is spend then on an average normal day.

(Visual Economics, 2010).

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Most likely due to the belief in the American Dream and the individualistic mindset within the United States of America (USA), very few if none Americans take their paid holidays. This is the lowest toll worldwide. The reason often used to explain this is that people who want to climb the ladders of the company do not take paid holidays.

Figure 20: Paid vacation and paid holidays. (Mark, 2010)

Another characteristic of the lifestyle in the USA is the cost of health care. The USA has increased over the course of the past fifty years to the highest tole of its gross domestic products when it comes to health care than its peers

Figure 21: National Health Spending. (Rampell, 2009)

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Capitalism The USA is considered as a Capitalistic country. This term was used for the first time by Karl Marx, a German Economist of the 19th century. His description of capitalism is “a system in which a small group of people who control large amounts of money, or capital, make the most important economic decisions” (Conte, 2003). According to Karl Marx a capitalist society was different form a socialist society where most of the power is held by the political system. Nowadays, it can be said that the American economic system has actually become a mix of the government holding a certain amount of power and role within the private sector (Conte, 2003). Adam Smith is one of the lesser known founding fathers of the USA. One of “Smith's great revelation was that political freedom would most likely emerge and persist under conditions of economic freedom, what we now call capitalism.” (Schramm, 2006). This way of thinking had allowed the USA to advances itself to become the birth place of modern commerce.

Nowadays we can say that in the USA the wonderful economic engine that has stayed strong through the great depression is the entrepreneurial capitalism of Smith at work centuries after he has passed.

Even if it is now fighting through a new struggle. (Schramm, 2006) Individualism The United States of America is rated as the most Individualistic cultures in the world with France ranking on the tenth place. The goals of each individual are the most important and most emphasized in these cultures. “People in individualistic cultures emphasize their success/achievements in job or private wealth and aiming up to reach more and/or a better job position” (Via-Web, 2010) . The fact is that the “American Dream” that has been promoted over the past fifty years is a strong example of an individualistic society. It represents Americans hope and belief in a better future as well as a higher and better quality of life than their parents. (Clearly Cultural, 2009) As the society is becoming more and more individualistic, it does not stay only on the general front of society. According to (Datamonitor, 2008), a trend towards personalization is becoming stronger in the consumers way of shopping. The fact is that a “just-for-me” way of thinking is becoming more important and is driving the desire for products, as well as services and experiences. The products, services nowadays have to cater to specific identities and needs. “Shoppers will increasingly expect additional possibilities by which they can co-create and self-customize. By providing a platform for customization possibilities, companies also enhance the probability of benefiting from word of mouth multiplier effects.” (Datamonitor, 2008) It has become apparent of the course of the last few years that the individualistic traits and attitudes are showing in the behavior of consumers and of society. This individualistic characteristic that is driven by the maturity of the market also drives consumer societies, thus this trend in individualism. (Datamonitor, 2008) Vision on/of gamers Since the birth of video games more than thirty years ago, this form of entertainment has become the most influential within the USA. In the year 2000 one in every four households within the USA owned a PlayStation of Sony. The power of video games within the US is not only influencing the economical sector and entertaining millions of Americans, but is also provides a new cultural landscape. It is allowing gamers to get to know other cultures and type of games like when Pokémon and Yu-Gi-Yo. Video games have become so influential within the American community that some educators use them DG511 – Analyzing and Modeling NPD | page 36

to motivate students to learn. Video games primarily try to entertain the gamer. They also bring up powerful emotions. These emotions are reactions caused within the user and can vary like a rollercoaster from fear, to power, to aggression and joy. Video games are often played with a group of friends, thus bringing them together. This can be seen as an outlet for young adolescents to use for releasing their aggression or for escaping from daily life. Video games can be a powerful tool to influence the impact of technology and the social context of certain communities. (Squire, 2002) A hardcore gamer is defined by Charlie Scibetta as being “usually the early adopters that want to get the latest version of something, and they'll be the ones that put it through its paces the hardest and give us all kind of feedback and tell us what they like and don't like.� (Wikipedia, 2010-b). As the United States has one of the most important gaming markets, it is here that many video games and consoles come out first. This feeds the need of power gamers. Though the percentage of power gamers compared to occasional gamers is low, in toll of millions of households, the number is still high. (Hanlon, 2006) Since the use of social networks, social gamers have increased with leaps and bounds.

Figure 22: Gamers from different Segments. (Hanlon, 2006)

Content of games The content of games is becoming seasonal. The content is adjusting itself to the season and is becoming an annual trend. (Lee, 2010) Game developers are also basing the content of their games according to the usage of social networks and the direct competition it creates between users. (Fletcher, 2010) The reinvention of classic characters seems to still hit close to home for gamers who have been around for some time. For example Super Mario, Galaxy 2 has been rated as being in the top ten video games that have come out in 2010. (Light, 2010)

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Trends in gaming One of the new major trends of the course of the last 4 or 5 years is a major increase in social networking games. This is largely due to the quickly growing web of social networks such as Facebook that have millions of members worldwide. Because of this the number of casual gamers grows steadily every day. “The social networking game industry has also followed the trend towards wireless handheld devices.” (Maginnis, 2009) Developers, through their new strategies of targeting users looking for fun more than hard core gamers seem to be paying off. Now a days you can even access you Facebook account via your Xbox 360 or PlayStation and games such as Zynga’s Farmville has more gamers then accounts on twitter. It is apparent that the future will hold more direct competition between gamers through the social media.

(Fletcher, 2010) One reason social gaming has become popular, is because it is nicer to play with your real friends then with people you do not know. On Facebook alone there are more than 5,000 games.

(Takahashi, 2009) According to (Datamonitor, 2008), another major trend is the possibility of customizable options. Such as the Sims 3 online where gamers can upload their creations and share them with other gamers. The Sudden increase in competition is making it difficult for companies to make money especially with the havoc caused by the recession in 2008. The Fact is that there are so many free games out there of which the quality is only increasing. About ninety percent of players that are using the web prefer to use free games. (Takahashi, 2009) So if mobile devices such as a PSP allow access to the internet and thus Facebook, Gamers will be able to play free games instead of buying games in the stores.

Another trend that was set in big part by Nintendo with its Wii that is likely to grow is the gesture-base control systems. This control system has completely redefined how people play their games. Sony is one of the companies that are likely to go more into this direction as well (Takahashi, 2009).

Figure 23: Trend map. (Ries, 2010)

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Technological Since the first PSP a lot has changed in the technology field of mobile electronics. Cellphones got smaller and smarter, tablets made their first successful appearance (iPad), and mobile internet connected all these new devices to each other anywhere in the world.

3g (internet focus) In the constantly growing mobile world having an internet connection on a portable screen is getting more important every day. It does not matter where you look, and you see people staring at their screen, doing something on the internet. The internet has become such an important factor in our lives that some people want to be online every moment they are not behind a computer.

The chips that provide internet access are now cheaper and smaller than ever, giving product designers the option to include one in smaller products. The coverage of networks is getting better as well, as more and more users are using 3G, and the operators are investing in new infrastructure. (Cellphone Advertising, 2009) The costs for mobile internet are cheap. There are now offers that give you unlimited connection for only € 2, 50 a month. Compared to app. € 10, - for 100 mb one year ago this is a great step forward.

(Biffen, 2008) Speed of development According to Moore’s Law the size and speed of transistors (and therefore microchips) will double every two years. If you look at the history of computers and electronics, the speed of development is going faster and faster. When a new smartphone is announced, it is already old before it is even available in stores. (Intel, 2010) The same story goes for flash memory. A few years ago, the biggest size of memory card was 64 MB. Nowadays, you can buy a flash card with 64 GB on it for about the same prize. That is a factor 1000 more than a few years ago! The file size of the most common files has not changed, which makes it possible to store 1000 times more files now than when the PSP came out. (Kay, 2010)

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Industry development (smartphone trends) In this section we discuss the development of smartphones, because there has been a revolution in mobile devices, which was caused by smartphones. Since smartphones are becoming a larger gaming platform it has become important to consider.

Since the introduction of the iPhone, the adaptation of smartphones started. Smartphones were mostly business focused and not attractive for normal consumers, the iPhone started a new trend of mobile devices. The iPhone was the first usable smartphone. (Wee, 2010)

Figure 24: Smartphone growth. (Brown, 2010)

Since 2007 smartphones are gaining market share. This revolution is in close relation to the growth of mobile internet, mobile application development (app stores), and cheaper components that make smartphones affordable for the masses.

Since the beginning of the internet there have been social networks. Years of growth have resulted in massive networks, like Facebook and Hyves with millions of members. When the revolution of mobile internet came, these networks wanted to access those users as well. People with access to mobile internet can be ‘online’ all day long, and not only when they are behind a computer. The generated page views can result in large advertising revenue’s, see Figure 25: Mobile Page view Observations.

(Shannon, 2008)

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Figure 25: Mobile Page view Observations. (Wee, 2010)

Services like Twitter and Facebook are tools to keep in touch, to be social. People without a mobile internet device like a smartphone miss out on the fun. The popularity of these mobile services gives people a reason to buy expensive smartphones, they can stay in touch. This is a radical change from before, where smartphones were only used in a professional setting, and for normal consumers it had little extra value. There is a so called ‘Social pressure to stay connected’. (Mc Lellan, 2010) Company Symbian Android iOS Research In Motion Microsoft Windows Mobile Linux Other OS Total

3Q10 Units 29,480.1 20,500.0 13,484.4 11,908.3 2,247.9 1,697.1 1,214.8 80,532.6

3Q10 Market Share (%) 36.6 25.5 16.7 14.8 2.8 2.1 1.5 100.0

3Q09 Units 18,314.8 1,424.5 7,040.4 8,522.7 3,259.9 1,918.5 612.5 41,093.3

3Q09 Market Share (%) 44.6 3.5 17.1 20.7 7.9 4.7 1.5 100.0

Figure 26: Smartphone sales comparison. (Tudor & Pettey, 2010)

Over the last year, the total unit shipment of smartphones has doubled. The rise of Android and iOS, both with an application store, is taking away market share from the PlayStation Portable and in smaller amount from the Nintendo DS. (Farago, 2010)

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Game Development App Stores The app store ecosystem, introduced by Apple, meant a big change in the way people buy and consume content. In the early days, with WAP internet services, consumer could go to a website, download a program, and pay by SMS or credit card. The whole process of paying and more important, finding applications was not easy.

With the App Store users can download a wide variety of applications, pay with their iTunes Account with a single click, and immediately start using the application. For developers, this meant that there was an easy way of distributing to users, instead of hosting a website for downloads and integrating a paying system, they could just upload it to Apple and receive money. It was now possible for everyone to make applications and earn money with it, even for students and hobbyists. More than 200.000 applications were made and submitted to the app store, all available for 80.000.000 users. (Evans, 2009) Traditional game development If you want to bring out a game via traditional media, like the CD-Rom or UMD or other proprietary media formats, it takes more effort and investment to bring it to customers. You need to make sure that your final version is ‘finished’, there is no way to add updates or extra features later on most console games. You need a game studio to create and distribute your game on the media format of the console, instead of just uploading it to the app store. At last, your game needs to be in stores all over the country in order to be seen by potential buyers, with enough in stock to sell to all customers if it is a popular game. The creation of a prototype of a PS3 Blu-Ray game costs approximately $ 4 million, and can take of a year, and than the rest of the process needs to be gone through as well. (Yoshida, 2007) For many developers, the choice between expensive console game development and relative cheap smartphone development is easy, only big gaming studios have the resources to make console games.

Many big game studios are starting to port their games to the app store for iOS, like EA Games and Gameloft. Games like the Sims 3 are not only for consoles anymore, you can play them on your iPhone as well now. There is a shift going on in the world of game-development. In the diagram you can see that iPhone development (and therefore app store development) is generating more and more revenue, and gets more interesting for developers to develop for.

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Figure 27: US Portable Game Software by Revenue. (Farago, 2010)

Trends in gaming (technological) Other distribution channels Distribution through the internet is getting more populair, which makes the developers less dependent from distributors. For example, WiiWare enables developers to distribute small Wii games directly to Wii consoles, bypassing the need for stores. (Scheepers, 2008) Different business models Microtransactions are a good example of a new trend in gaming. Connection with the internet makes it possible to offer add-ons for games for a small fee, like a special item in the Sims or World of Warcraft.

This creates an additional source of revenue, even after the game has been sold. Because of this the price of the initial game can be lower, which can persue more people to buy it. (Scheepers, 2008) Advertising has found its way in games as well. In games that simulate an environment where advertisements are shown, like racing games or football games, the advertisements on the boards can be used for varying ads. For instance, the billboards at the side of the road in GTA-San Francisco are filled with real world ads, generating views for advertisers. (Scheepers, 2008) Multiplayer online More and more games have some sort of multiplayer in it. Populair iPhone games like Flight Control now enable users to play against or with friends, by inviting them into a game and provide chat functionality as well. Gaming is becoming more social, with achievements and global highscores (Game Centre for iOS), and games where you can help each other get further in the game (farmville). (Smith & Hudson, 2010)

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Step 4: Recommendations Strengths: Wide market spread: As discovered in the organization section in step 1, Sony’s many holdings and companies offer an almost complete in-house value chain. Sony is able to make their own content for their consumer electronics; Sony BMG offersmMovies, music and video games. Another strength here is that Sony makes most of their own parts this allows them to have a high control and low cost system. It is only when necessary that Sony out-sources. All of this for a big part cancels out the dependence on suppliers and developers.

Transparency of relative advantage: As stated in the core capabilities in step 1, Sony's products are top of the line products in their individual segments. These products show through multiple means such as through their design, functionality and marketing why they are different and better than the products of a competitor. For this reason Sony's products are well known within their segments, and communicate their individual characteristics. For this reason customers perceive the relative advantage as Sony’s supremacy to competitors.

Trial ability for a wide range of products: Sony is one of few companies that actually demonstrate their products. They make them accessible by prospective customers in an electronics or game store. This technique strengthens the relative advantage by getting customers acquainted with the product. In case of the PlayStation range Sony strategically places trial possibilities in the direct environment of their target group (e.g. Cinemas, Music/Media stores and events) Control of suppliers What came out of the analysis of the powers of the supplier in step two is that a suppliers control over a company can become very dangerous and crippling. This though, is not the case with Sony. When it comes to suppliers, Sony keeps a very tight leash on their suppliers. Sony makes their suppliers fulfill several requirements such as ecological demands amongst many others. A danger when using external suppliers can be bankruptcies of the supplier, for this Sony asks the suppliers to provide information on the management and operations, including the financial activities. Sony does everything in it power to give as little power to its supplier. Sony wants to be in control which can avoid catastrophic problems.

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Weaknesses Product Segmentation According to the section about market segmentation and product in step 1, Sony has high production segmentation. Sony wants to have products that stand out in each segment, but Sony's efforts in expanding their market reduce the product-brand association. For instance, most people know a PlayStation because it is a PlayStation and not for being a Sony. This reduces brand loyalty since people will be loyal to their product like the VAIO, but might not relate this with the Bravia televisions which are in fact two Sony products. When coming out with a new product because this, the new products needs to in itself already give the consumer enough reasons to buy it. If the product/ brand name were more linked like for Apple, people might be, more inclined to buy a new product of Sony because they know it is a product of Sony, and know of Sony’s high quality.

Opportunities Wireless gaming platform In step 3 the development of social and online gaming is discussed. These new games are a threat for Sony, more and more users are playing these small and often cheap games, which leaves less time for serious gaming.

Offering more than just gameplay, but also some social aspects, can make a game more populair, your users advertise for you by their friends by telling them to join the game (like Farmville). The role of Sony could be that they host a platform and enable developers to easily integrate this into their games.

Apple’s Game Centre for iOS is a good example of this.

Integration of technology/ compatibility New technologies can offer new gaming oppurtunities. The Wii uses gesture based controls and infrared tracking, which makes it possible for people to be actively involved in games. The iPhone uses a gyroscope and accelometer to control (parts of) the game. The tight integration of motion with gameplay combines the physical world with the virtual world, and creates a connection between them.

(Juneja, 2010) Motion gaming is not suitable for all types of games, and sometimes hardcore gamers just want buttons to play with. But Sony could integrate motion sensing in their new products, just like with the PlayStation Move.

Update ability One strength of app stores and digital distribution is that features can be added later, to keep the game interesting. For instance, the immensely populair game Angry Birds for iPhone is updated once a month, and users get new levels each time they update (free). This keeps the game interesting, and prevents a game for offering everything at once. People have to wait for new updates, wich makes them exited when there is an update. In contradiction, once you finish your game of Tomb Raider, you’re finished.

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Cheaper wireless (3G) The costs of wireless internet are getting lower and lower, and the bandwidth is getting better and better. Following the trend of social gaming and online multiplayer, the integration of internet based services in games is now fully possible. A game does not have to be static anymore, it can update itself and offer more content in addition of what is on the game disk. Users could create things for each other, or work together to get achievements.

App stores App stores can adapt more quickly to trends, offer new updates and make all games easily reachable in one place. In the growing digital world having a game on disk is old-fashioned, and adds a lot of cost for the developer (distribution).

Sony could combine the advantages of an app store with their current system of retail, by offering additonal features in an app store, or offer minigames to attrack a broader audience.

Threats New entrances When looking back at chapter 2, it has become clear that difficult factors to hold in account for companies are the new entrances. As a company you can never be sure of what the competition is doing. What is certain is that technology is getting smaller faster and more advanced. This is a danger for Sony as their products can be surfaced or equaled fast by the new entrances. These threats in the case of a product such as the PSP, a hand held gaming and entertainment platform are new entrances such as IPhone 3gs and similar mobile devices with Wi-Fi and mobile games.

Dependency on suppliers As the inbound logistics section of the first step says, Sony pay’s for finished parts and also pay’s the end prize for some components. This creates a certain dependency on suppliers which they try to avoid. So, even though Sony pays allot of attention to their supply chain and controls most of it, there will always be the threat of suppliers. When depending on external supplier’s threats can be found when it comes to the financial state and resources of a supplier.

Mobile phone competition The advantage of the PSP, advanced games, is fading. A few weeks ago, the game Grand Theft Auto Chinatown Wars was introduced for the iPad, and this was an exact copy of the PlayStation version. Big game developers are started to develop for mobile phones and tablets, which means that even hardcore gamers can satisfy their needs with a more versatile device, and don’t need a dedicated gaming device anymore.

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Figure 28: Firemint’s Real Racing HD. (Firemint, 2010)

For example, the game Real Racing HD offers a gameplay similar to racing games on the PSP, but adds online multiplayer via Game Center. Racing game fans can now use an iPad as well.

Consumer confidence In the economical section of step 3, it became clear that the average person significantly cut back on their purchases. This happened even more in the electronics sector as that was seen as leisure and often too expensive since the credit financial crisis of 2007. So people are not buying the products that Sony is selling. Also because there are so many games with an increase of quality and decrease in price, there is an increase of competition for Sony. As people do not want to spend a lot of money, they will buy a cheap application or play a free social game faster then buy an expensive game or product.

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Recommendations: The SWOT analyses shows various threats and oppurtunities, which Sony can combine into a new strong product. They have all the resources, the brand naming, the big game developers, and the user base.

They can now step up their game and introduce a new device, which integrates more with current trends, but still keeps the strengths of the Sony PlayStation.

In order to keep up with competitors and new entrances Sony needs to expand the functions of their PSP. Doing so will expand their customer range from power gamers to all types of gamers that appreciate game quality.

We suggest Sony should take a look at Apple's iPhone, but from a strong PlayStation point of view. Sony can minimize the competitor’s relative advantage and preserve the PSP's relative advantage which is essentially uniqueness. To reduce the advantage of other companies Sony needs to take part in the application trend.

Using a PSPhone Sony can implement cheap social games that are a big hit at the moment and still let gamers use the platform to play advanced PlayStation games. They can offer 3G wireless for multiplayer, live chat or even augmented reality gaming. The PSPhone should be considered as a game console that can be used for phone calls instead of a phone that is the base of a multimedia.

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Task devision Introductions:    

General introduction: first by Sharon, re-writen by Sophie Chapter 1: Sophie Chapter 2: Sophie Chapter 3: Sophie

Step 1.1: Company Background  

Initial research: Sophie, Glenn & Edwin Writing: Edwin

Step 1.2: The Current Product     

Initial research: Sophie and Tijmen Re-writing: Target group: Sophie Target Geography: Tijmen Product Characteristics: Sophie

1.3 Means-end analysis    

Interviews: Tijmen, Glenn, Edwin, Sophie, Sharon Initial analysis of individual interviewees: Tijmen, Glenn, Edwin, Sophie General value chain: Glenn and Tijmen Conclusions: written by Glenn, analyzed first by Glenn and Tijmen

1.4 Innovation success factors           

General reasearch: Relative Advantage: Glenn Trial Ability:Glenn Observability:Glenn Communication Channels: Glenn Homogeneous Groups: Glenn Pace of Innovation/Reinventions: Glenn Norms, Roles and Social Networks: Glenn Opinion Leaders: Glenn, Sophie, Tijmen Compatibility: Glenn Infrastructure: Glenn

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Re-writing           

Relative Advantage: Glenn Trial Ability:Glenn Observability:Tijmen Communication Channels: Glenn Homogeneous Groups: Glenn Pace of Innovation/Reinventions: Sophie Norms, Roles and Social Networks: Sophie Opinion Leaders: Glenn Compatibility: Glenn 10: Infrastructure: Glenn Conclusions: Glenn, Sophie

Micro buisness analysis General research    

Suppliers of Sony: Sophie, Tijmen Substitutes/ Inudustry rivals: Sophie New Entrances: Sophie Buyers: Tijmen

Re-writing:       

Suppliers of Sony: Sharon, Sophie Substitutes: Glenn, Sophie New Entrances: Sophie Buyers: Tijmen Industry Rivals: Sophie Conclusions: started Tijmen, Glenn helped with English Step 2 diagramme: Sophie

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Macro buisness analysis Initial research   

Economie: Glenn Socio-cultural: Sophie, Sharon, Tijmen Technological: Tijmen

Re-writing:   

Economie: Glenn Socio-cultural: Sophie Technological: Edwin

Conclusions and recommendations     

Initial discussion: Tijmen, Glenn, Edwin, Sophie Going through the report for relevant info: Glenn, Tijmen and Sophie (seperatly) Placing them in the SWOT table: Tijmen Finilazation: Glenn, Sophie, Tijmen, Edwin, Sharon Initial writing: Glenn

Re-writing                

Control of suppliers: Sophie Trial ability for a wide range of products: Sophie Transparency of relative advantage: Sophie Wide market spread: Sophie Weaknesses: Sophie Wireless gaming platform : Edwin Intergration of technology/ compatibility: Edwin Update abilitity: Edwin Wirless cheaper (3G): Edwin App stores: Edwin Customizable product: Sophie New entrances: Sophie Deependency on suppliers: Sophie Mobile phone competition: Edwin Consumer confidence: Sophie Reconmmendations: Glenn,Edwin, Sophie

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Finalization   

Going through the report for English and small feedback comments: Sophie Going through report second time for English and sentence-constructions: Edwin Combining report and making everything the same: Edwin

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Table of Figures Figure 1: Sony Group Organizational Chart. (Sony Corporation, 2010-e) Figure 2: Governance Structure. (Sony Corporation, 2010-e) Figure 3: Disassembled Sony PSP. (Talic, 2010) Figure 4: PSP in hand (Marianna, 2005) Figure 5: Value Chain. (Porter, 1985) Figure 6: Disassembled PSP. (Talic, 2010) Figure 7: Value Map Figure 8: PSP tryout stand in retail stores. (Kennedy, 2005) Figure 9: Basic Structure of the Supply Chain. (Sony Corporation, 2010-l) Figure 10: Supplier selection process. (Sony Corporation, 2010-c) Figure 11: Sony retail store locations. (Sony Style, 2010) Figure 12: Sony store. (Sony Style, 2010) Figure 13: Where does the money go? (U.S. Departement of Labor, 2009) Figure 14: Annual Gross and Disposable Income (Euromonitor, 2010) Figure 15: Annual Gross and Disposable Income (Euromonitor, 2010) Figure 16: Economic Projection. (FOMC, 2009) Figure 17: Consumer data. (Euromonitor, 2010) Figure 18: Unemployment numbers. (Klemmer, 2010) Figure 19: How Americans Shop. (Visual Economics, 2010) Figure 20: Paid vacation and paid holidays. (Mark, 2010) Figure 21: National Health Spending. (Rampell, 2009) Figure 22: Gamers from different Segments. (Hanlon, 2006) Figure 23: Trend map. (Ries, 2010) Figure 24: Smartphone growth. (Brown, 2010) Figure 25: Mobile Page view Observations. (Wee, 2010) Figure 26: Smartphone sales comparison. (Tudor & Pettey, 2010) Figure 27: US Portable Game Software by Revenue. (Farago, 2010) Figure 28: Firemint’s Real Racing HD. (Firemint, 2010)

6 7 9 10 12 13 17 19 22 23 27 28 30 31 31 31 32 33 34 35 35 37 38 40 41 41 43 47

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Appendixes Appendix A: Hierarchical Value Map Appendix B:Step 1: PSP Innovation Appendix C: Interviews Appendix D: STEP Diagram

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Threat of New Entrants

In the case of Sony, the power of suppliers lies in their outsourcing of certain aspects such as the assembly of the PSP to other countries.

By doing this they risk losing the know-how themselves giving the supplier a substantial bargaining power.

Bargaining Power of Suppliers

Bargaining Power of Buyers

Threat of Substitues Products or Service

Appendix C The people interviewed Name: Alexander van Dam Age: 19 Study: ID student Power gamer?: Yes he can be considered as a power gamer Name: Thom Westhovens Age: 20 Study: Studying to be a Physics teacher Power gamer?: No, he could be considered as a recreational gamer Name: Tessa Steenkamp Age: 19 Studie: ID student Power gamer?: She is a recreational gamer when her study allows it.

Name: Martijn Veenstra Age: 19 Study: ID student Power gamer? : No he is an occasional gamer Name: Mike Wilmer Age: 22 Studie: Electrical ngineering Power gamer? Can be considered as a recreational gamer, he used to be a power gamer when he had more time.

Name: Harm Bakker Age: 27 Work: Project employee at OGD Power gamer?: No he is to busy working, he used to be more active.

Name : Pascal Vijgen Age : 24 Study : Tax Lawyer Power gamer? : No, he could be considered as an occasional gamer Name : Joeri Heijnen Age : 22 Studie : Student Power gamer? : No, he could be considered as a recreational gamer Name: Marcel Meijne

Age: 26 Study: almost finished Power gamer?: Is waiting for an internship, he is almost ready with his study. He can now play much in the evenings and does so whenever he can.

Name:Niels Kolgen Age: 22 Studie: Studying Power gamer?: No, more of an occasional gamer

Interviews by Sophie Brenny Interview 1 with Alexander van Dam Q: What is your favorite game? (Board game, computer game....ect) A: Probably 'Nexuiz' or 'Super smash bros melee', the first one is a pc shooter; the other

is a fighting game on the GameCube. (Virtual games) Q: Choose one A: I like them equally, but I'll choose Nexuiz because I have played it more recently.

(Attribute: played most recently & virtual game) Q: Why do you like it?

A: Because it's fast and free in the character movement, the game is free, it is easy to create and use custom content like maps and the community is nice. (Consequence: freedom of the virtual world, the cost, customizable, community) Q: Why is all of that important for you?

A: First of all, I'm kind of obsessed by making stuff in general, so that is why I like modifying possibilities in games. As for the character movement, it just gives the feeling of freedom in a way that cannot be matched in real life. And nice people to share good moments with are always a plus. (Consequence: creative accomplishment, freedom, socialize/meet people.)

Q: Why is the feeling of freedom in a game important to you, why do you like making stuff and why do you find it nice to share good moments with people you do not always know in real?

A: I don't really know why I find this kind of freedom important, I guess it just adds more to the experience for me than when there are more constraints.

I find it nice to make and share content to improve on the game and enrich the experience for everyone and inspire others so I can see what kind of nice stuff they can come up with.

And for sharing good moments with people I don't know, it’s better to share good moments with those I don't know than not sharing moments with those I do know.

(Consequence: creative accomplishment to inspire others, distancing from real life situation)

Q: Why do you like inspiring people? Why do you think there are constraints in the real world?

A: I like new stuff as much as any other person, so if I can get someone to make something to make something by making something myself, it is a win-win situation.

The real world is full of constraints, physics, social, economical, ethical, and so on. In a game there is simply a lot less to worry about any of that. (Except maybe the social aspect when playing online since it is lessened by the anonymity). (Consequence: freedom of self; Inspiring creativity for advance in the game, total immersion in virtual world Value: total immersion of virtual world, replacing the real world)

Interview 2 with Thom Westhovens Q: What is your favorite game? (Board game, computer game....act)

A: Xbox 360: assassins creed 2 (Virtual games) Q: why is that your favorite game?

A: I like the setting, and the gameplay. (Consequences: Setting and the way the game is played) Q: Why do you like that?

A: I like the story of the game, the historical setting appeals to me and how the game links to reality is done in such a good way that it even makes you reconsider certain historical events. It’s an awesome game to play but it also questions you.

(Consequences: Links to reality, questions you) Q: Why is all of that important to you?

A: Because a good game is not just random entertainment. Multiplayer games are meant to be just entertaining. When I play a pure single player game i like it when it not only challenges my games skills but also my cognitive skills. (Consequences: challenging cognitive skills) Q: Why is the fact that it is a single player game and the fact that it challenges your cognitive skills add for you?

A: Because mindless gaming is not something you do on your own. (Consequence: it is challenging, non-challenging games are made for group fun) Q: Why do you find it important to be challenged in a / by this game?

A: I think it's because i like to be challenged in that way. Because it adds to the completeness of the game if the game is difficult I won't finish it too soon.

(Consequence: add completeness in the game, make it last longer) Q: So complexity is why you play this game and enjoy it?

A: Yes that, the genre and the story of the game. (Value: challenge, and complexity of the

game)

Interviews by Sharon van der Geest Interview 1 with Tessa Steenkamp Q: What is your favorite game?

A: Hide and seek Q: Why is this your favorite game?

A: It’s fun.

Q: Why do you think it’s fun?

A: It’s exciting to do.

Q: Why do you think it’s exciting?

A: You’re all alone. No one sees you. When they see you you’re out.

Q: Why do you like the excitement?

A: Otherwise it’s boring.

Value: Fun and Excitement.

Interview 2 with Martijn Veenstra Q: What is your favorite game?

A: werewolves Q: What is this game about?

A: You’re in a group of at least eight people. A few people are wolves. There’s day and night, and in the night the wolves kill people by pointing at them, and at the day the rest discovers who has been killed. Then those people, the normal people, try to find out who the werewolves are.

Q: Why do you like it?

A: You have to think about how to say it. It’s awesome. It’s a sort of detective.

Q: Why do you like these things?

A: It’s exciting, more and more people day and less stay over to play the game.

Q: Why do you like to think about how to say things?

A: It’s awesome to think about how to influence people.

Q: Why do you like playing a detective?

A: It’s just fun.

Q: So what’s your drive to keep on playing this game?

A: Rhetoric and the excitement.

Value: Excitement.

Interviews by Tijmen van Gurp Interview 1 with Mike Wilmer Q: What is your favorite video game?

A: Difficult‌.. Secret of Mana (Virtual game) Q: Why do you like this game so much?

A: It is old fashion, 2D RPG, Real-time killing monsters, and very adventurous.

(Consequence: very adventurous, Attribute: old fashion, 2D, RPG, Real-time killing monsters) Q: Why is Adventurous important for you?

A: I like it to explore new things. (Consequence: Exploring new things) Q: Why do you like to explore?

A: It ensures that you not get stuck in the things you always do, and it has the effect that I keep seeing things with a fresh look. (Consequence: Keep a fresh look) Q: Why is it important that you keep seeing things with a fresh look?

A: It gives the feeling that you learn more, and that you go along with the story, you can start where you left of. (Value: Learning) Q: Why do you think the real-time side of the game is important?

A: You don’t need only strategy but also a bit of timing is important, and that makes it extra exiting. (Consequence: Exiting) Q: Why is the excitement for you important?

A: It keeps the dynamic in the game, and it has the effect that you really go in the game.

(Consequence: Mind in another place) Q: Why do you like it to go in to the game?

A: It provides distraction from the world around you. (Consequence: Distractions) Q: Why is distraction for you important?

A: Ensured that I could start with renewed creativity, and that I could reset my brain.

(Consequence: Fresh and cleared mind, renewed creativity)

Interview 2 with Harm Bakker Q: What is your favorite video game?

A: Enemy territory (virtual game) Q: Why is Enemy territory your favorite video game?

A: I played it in a group of people (consequence: Teamwork) Q: why is playing in a group for you important?

A: It gives a good feeling to be able to do something together, exhort one other, and get better in the game. (Consequence: Socialize)

Q: Why is this together feeling important for you?

A: I played together with people who I knew from real life, it strengthened our relationship.

(Consequence: strengthened relationships) Q: Why is it important for you to play with people you know?

A: The game has more value in this way than when I would with play with fictive people.

(Consequence: play with known people) Q: why is this important to you?

A: Social contact is very important for me I don’t want to get separated from society.

(Consequence: place in society) Q: why don’t you want to get separated?

A: Every human has social needs (value: social needs)

Interviews by Glenn Jacobs Interview 1 with Pascal Vijgen Q: What is your favorite video game?

A: I like all sorts of Nintendo WII games but my favorite is definitely solitaire on my work computer. (Computer card game) Q: Why do you like it that much?

A: It is a simple but challenging game that during the day is a mean for me to switch off from work and clear my mind. I like to concentrate on something else for a change.

(Consequence: challenge, concentration level, Attribute: simple game) Q: Why is it important for you to clear your mind from work?

A: During my job as a tax lawyer I am constantly under pressure from documents piling up to approaching deadlines. Due to this workpressure I need some breathing space once in a while. (Consequence: stress and pressure relief) Q: Why is it important for you to have this breathing space?

A: It helps to keep me fresh on focussed on my current work, it allows me to see matters from a fresh new perspective. (Consequence: Fresh and cleared mind, maintenance of focus, new perspective on work) Q: Why does this game give you this breathing space?

A: Due to the fact I actually have to focus on the game and have to think about the moves I am making. In contrary to the Nintendo WII where it is all about doing, this game makes me think. (Consequence: active thinking) Q: Why do you want to keep on concentrating on thinking instead of doing something irrelevant?

A: I think this keeps me active during the day, a WII game would make me lazy in such a way I switch of from thinking instead of work.(Consequence: active) Interview 2 with Joeri Heijnen Q: What is your favorite video game?

A: I am not really a gamer but I like quit a few iPhone games. (Phone games) Q: Which one do you like the best?

A: In this case I like doodle jump the best since this is the game I play the most. (iPhone motor skill game, Attribute: highest frequency of play) Q: Why do you like to play this game?

A: It is a fun game that doesn't require allot of energy to play. Plus the online challenge between me and my friends is kind of addictive. (Consequence: fun, competition, addiction)

Q: When do you play this game and how much time do you spend doing this?

A: Mostly in public transport since the game is so quick and easy to do I can spend an hour playing it. (Consequence: time consuming) Q: Why do you play it in public transport?

A: Basically to kill time between my stops, since I don't have much else to do in the train I can relax and try to beat my friends. (Consequence: kill time, compete with friends) Q: Why do you like to compete with your friends?

A: Because I am better than them in everything and I want to show them. Besides this it keeps a social bond even though they aren't around. (Consequence: Socialize, show off) Q: So you see this game as a mean to stay in tough with your friends?

A: Well I use it to stay in tough with them, but it isn't the only method of our communication. You can better see it as a quick hello. (Consequence: communication) Q: So why do you say "hello" through this game?

A: Since we are all playing it, and associate it with a challenge among us it saves boring and time consuming phone calls. (Cosequence: time saving, Value: Social challenge)

Interviews by Edwin Meijne Interview 1 with Marcel Meijne Q: What games do you play?

A: Battle Field 2 Modern Warfare Q: Why do you game?

A: I think it's a good use of my time.

Q: What's so interesting?

A: The competition and try to improve constantly, make nice kills, playing together with others Q: Why do you want to get better?

A: This is a great challenge and I can be happy with myself.

Q: Why do you necessarily better in games and not anything else?

A: Gaming is also a way to relax / pastime, when I'm bored.

Q: What happened to relaxing?

A: You become totally engrossed in the game and you do not need to think of anything.

Q: Why do you think of nothing else?

A: If I'm bored or just feel not so good then play a good way to escape the daily reality.

Q: Are there other ways to get your relaxation?

A: I also like driving a motor cycle, which is similar.

Q: Why is that comparable?

A: It's exciting, you're alone with your thoughts but whiledriving, and it is a kind of 'trance'.

Interview 2 with Niels Kolgen Q: Do you ever game?

A: Occasionally Q: Why you game?

A: For entertainment Q: What exactly do you like?

A: Pff busy when you are with the game, nothing goes on your mind, it is a healthy form of escapism. Mostly when I came it is to relax.

Q: What do you find relaxing when gaming?

A: Nothing goes on in your mind, the distraction of being buzy with something els, just like when playing a board game.

Q: Why then such a game and not another relaxing activity?

A: I hardly game because at the time I do not feel like doing other activities.

Appendix B PSP 2000: The first redesign of the PSP was unveiled in 2007 with the PSP 2000. This PSP was marketed as “PSP Slim & lite”. This second generation of PSP was 33% lighter and also 19% slimmer then in predecessor the PSP 1000.

Later in 2008, a new features where added to the PSP 2000 through means of firmware updates. The Internet phone service, Skype was now downloadable onto the PSP for use when in proximity to Wi-Fi PSP 3000: The PSP 3000 is a third generation PSP. This version of the PSP has a new LCD screen that has more color range and a higher contrast ratio. This LCD screen also has a shorter pixel response time which allows the PSP 3000 to reduce and avoid ghosting and blurring. A new feature in this PSP is a built in microphone and a new disc tray design. The buttons and the logo also had a redesign. The outdoor playability was also improved by an advance in the anti-reflective technology of the screen. This PSP 3rd generation also has the capability to output all games by component and can also composite them when using a video out cable.

PSP Go: Between the new PSP go and the original PSP there are some differences.

Unlike the previous models of the PSP, the PSP go does not have a UMD drive but has 16GB of internal flash memory that is used to stores games, films, pictures and music. This amount of flash memory is adjustable if you please so to up to 32GB. Another difference between the PSP go and its original PSP 1000, is that the rechargeable batteries included are not removable by the user or replaceable. If you compare the weight and the size of the PSP Go is approximately 43% lighter and also 56% smaller than the original. This new generation of PSP is also 16% lighter and 35% smaller than the one that came before it, the PSP 3000. Sony also, for the first time has changed the screen of this new generation PSP. The PSP Go has a 3.8 inch with 480 × 272 pixel LCD screen. The previous models had a 4.3 inch screen with the same pixel LCD amount.

An innovation of the PSP Go is the sliding of the screen to revel the controls. The previous version all had the controls on either side of the PSP screen. This version of the PSP also has Bluetooth