Let’s analyze the gaming console industry Essay

We can define 2 types of supplier the hardwargon supplier and the software supplier. The hardware suppliers providing the elements needed to build the condole withs have a pitiful negotiate military force because there have truly minor switching costs and there are a lot of them. On the other hand, the software suppliers (developers) have a high bargaining power because they choose and set the conditions to work with each console. Entry Barriers Entry barriers are high because of high R&D costs and the high capital letter investment needed to start a business in the console industry.Internal Rivalry There is high internal rivalry among competitors because the heart and soul instrumentalist merchandiseplace is growing s first-class honours degreely, competitors have high exit barriers and the products highly-developed turn obsoletes in less than 5 years due to the close progress of applied science. The players in the industry are Sony, XBOX and Nintendo. Buyer Power Th e bargaining power of buyers is high because there are many options with in truth low switching costs. Substitutes Low substitute power because they are not very similar (like TV or other entertainment device) and dont fulfill the same exact purpose.Sony has few competitors due to high barriers-to-entry and inaugural costs but buyers and suppliers (game developers) have high bargaining power and low switching costs. Sony should target a naked as a jaybird market as Nintendo did. We could shoot the breeze this market the casual players market. In high society to get in this sunrise(prenominal) segment, Sony willing have to develop a more interactive focal point of using their console without dropping the numerous features to avoid losing their core out player market share.The key of success for Sony is to adapt a new technology such as Nintendo did with Wii that will enable the friendship to target a broader market and not only the males from 16-36 years old. The advantage o f entering those two markets with one console is that Sony will enter a bigger market with bigger returns and consequently bigger economies of scales. Also, entering the casual player market is important for the company to avoid falling behind its competitors in both(prenominal) markets since this new segment will enhance the brand exposure and recognition.The lay on the line associated to this option is to turn this high performing console in a low performing console (as Nintendo did) and lose the core players customers that are very important to Sony financial stability and growth. A big challenge for this new console will be to cut costs in order to make it more accessible to customers, since the casual players market will in spades be guided by price. Vis-a-vis the Five Forces, if Sony were to pursue this option, the company will be competing in the core player market and on the casual player market.On the casual player market the substitutes will have more power. Sony will co mpete with other activities such as watching TV, watching a movie and others living room activities. The briny purpose of this market is entertainment in general while the core player market is about playing video games. Update Sony and Microsoft had already implemented advanced interactive technologies. Nowadays, Microsoft has the most advanced software and hardware that dont need controllers anymore, just your body.