While it views Sony's PSP successor as a "compelling device" with potential for a strong launch, Lazard Capital Markets says pricing and the lack of non-game applications could limit the NGP's mass market adoption.
The group's senior analyst Colin Sebastian describes the NGP's hardware, which includes unique features like a rear-facing motion touchpad and dual analog controls, as impressive, and says the portable's upcoming Uncharted
game display the kind of differentiation that was missing in early PSP titles.
But cost for the system, which is expected to exceed the $250 MSRP of rival portable Nintendo 3DS, remains a concern. "An initially high price point could limit the market opportunity for NGP, since Sony continues to balance profitability goals with unit sales," says Sebastian.
"Nonetheless, [Sony's] management indicated that it is mindful of pricing lessons learned from the PS3 launch (high price limited sales)," he adds. "However, the company is committed to both overall profitability and market share."
Sony Computer Entertainment America's president and CEO Jack Tretton, though, recently argued
that consumers are now used to paying hundreds of dollars for portable gadgets, and that high prices will not doom a platform: "Something that's pricey will ultimately find its audience if there's enough value there."
Beyond pricing, LCM sees other obstacles for the NGP's launch. "We still have some concern over the non-gaming app deficit (e.g. portable navigation apps) vs. smartphones, which could limit mass market adoption of a high-end game centric device," says Sebastian.
He continues, "We also believe that the longer term refresh rates for the NGP, as well as the 3DS, are likely to lead to hardware deficits when compared with smartphones which have more rapid innovation and release cycles and also benefit from economies of scale".
Looking to Sony's portable strategy with PlayStation Suite, the analyst predicts that if more devices like the Xperia Play are made available with support for the new framework, and if the title selection expands in size and has differentiated quality, it could offer "a unique gaming proposition on smartphones."
"Some of [the Xperia Play's] success might conceivably come at the expense of an NGP," warns Sebastian. "One noted criticism of the Xperia Play is that as the first product of its kind, it launched with only mid-range hardware specs. The NGP, on the other hand, should launch with industry-leading hardware."
He also reviewed Sony's home console and online business at the company's "analyst day" yesterday, and learned that PlayStation Network has reached 75 million registered accounts (half of which are in North America). Those accounts have downloaded over 1.4 billion pieces of content from the service.
"PSN is also seeing good success with freemium/microtransaction models," says Sebastian. "We think this could be a significant move for PSN because it can allow casual game publishers, in addition to traditional game publishers, to leverage the PS3 as a gaming platform."
As for the PS3 and plans for a successor to that platform, Sony told LCM that it remains confident in the 10-year console life cycle. Sebastian believes that this delay in releasing a PS3 replacement could open the door for companies like Apple to set up an App Store-style home console.
"We think this might, over the duration of the remaining life of the PS3, provide a window of opportunity for new gaming platforms such as an Apple TV, which could simply utilize an SDK and App Store to deliver games to television sets," says the analyst.
He notes that Sony could pursue this strategy itself, though: "Given Sony's strong position in the TV market, the company is in a somewhat strong position regarding the inevitable rollout of gaming 'app stores' on Internet-connected TVs."