The Playstation 3’s late entry into the game console wars seriously hampered Sony’s ability to take on Microsoft’s well-established X-Box. Amid all the me-too features, its one distinguishing characteristic: a Blu-ray high-definition drive, against Microsoft’s HD-DVD.

Now that Toshiba’s exit from HD-DVD leaves the format officially dead, PS3 is reaping the benefits. The 40GB, $399 PS3 SKU, which comes packed with Spider-Man 3 in Blu-ray, has jumped from No. 10 to No. 6 among Amazon’s most popular videogame products, according to Punch Jump, an interactive news website.

Meanwhile, retailers like Amazon, Best Buy and Target are slashing prices on HD-DVD players to get the dead weight off their shelves.

Now consider that 83% of PS3 owners already watch Blu-ray movies on their consoles, according to Punch Jump.

If you were a consumer contemplating buying a Blu-ray player, would you be more likely to pay $749 for a Panasonic player, or $399 for a PS3, packaged with movies and games?

Sony has a rare opportunity to finally cash in on the long-promised synergy between its film division and its hardware division. It now can choose between dozens of Blu-ray films and games to package with its PS3s.

Now its Microsoft’s turn to play catchup. If consumers start demanding consoles that play DVDs, X-boxes will start looking like yesterday’s game.

See Also

• Toshiba Throws in the Towel in DVD-Format War
• Blu-ray titles see sales gains at Amazon

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Google’s China plans could end up having a big impact on the music industry.
    The search giant is reportedly planning to join with China’s Top100.cn to provide free, licensed music to the Chinese masses – a direct swipe at home-grown competitor Baidu, which controls more than 60 percent of China’s search market and turns a blind eye toward the millions of users who download pirated content.
    Google would cover labels’ royalty fees by selling advertising and offering premium services such as tickets or ringtones through Top100.cn, according to the Wall Street Journal.

    Google’s goal, of course, is to increase its meager 66 percent share of China’s search market. But it could also the biggest test yet of whether ad-supported music can be profitable.
    Pay-per-download’s future is dim at best for a simple reason: no one has to do it. Even if every pirate in the world were shut down, you’d still have upstanding citizens trading their music libraries freely over the Internet and using every imaginable storage medium. The halcyon days of CDs are over for good.
    So the old music industry arguments that free or low-priced songs “devalue” their best product just don’t hold water. It’s hard to see how free songs that make the labels money devalue the product more than overpriced CDs and downloads that are slowly driving them out of business.
    Google will be able to amass invaluable information about the Chinese public by the music they download and tailor its search ads accordingly. That could finally make music a profitable endeavor in China. More importantly for Google, it gives consumers a reason to hang out on Google instead of Baidu.
It’s the same logic that drove Target and Wal-Mart to start selling CDs. They certainly don’t make much of their money from selling the discs (although it was enough to bankrupt the record stores). But people browsing for music are likely to buy something else on the way out.
That’s not devaluing music, anymore than listening to jazz while catching brunch at a restaurant devalues jazz.
Universal, Sony BMG and EMI – the three big labels that will probably accompany Google on its Chinese adventure – have a low-risk opportunity to test the feasibility of ad-supported, free music in a market that’s already stealing their product anyway. How ironic if the country most vilified for music piracy helped validate a system for making money from free music at home.

See Also

• Google Aims to Crack China With Music Push

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Microsoft’s $44.6 billion bid for Yahoo! is as much about its software business as its Internet business.

 

Microsoft is ill-prepared to counteract Google’s assault on its Office monopoly.. Instead of fighting Microsoft in the PC software market, Google has taken word processing, spreadsheets and calendars to the web – creating a free, ad-supported, collaborative service-as-software  business that threatens Microsoft’s  bread-and-butter.

 

At the same time, Google’s search strategy has essentially made it the Internet’s operating system. You go to Google to search. But you stay for the other cool applications. Just like you get all kinds of great extras like Internet Explorer and Media Player when you install Windows.

 

Google’s software-as-service approach – nascent as it is – bears an ironic similarity to Microsoft’s own clandestine assault on IBM, DEC and other big iron companies in the 1980s.  The giants were slow to retool their seemingly dominant  mainframe businesses to account for the rising profile of PCs. IBM virtually handed Microsoft a monopoly for MS-DOS and paved the way for cheap PC clones that threatened its survival.

 

Now Microsoft is watching from the sidelines while Google pulls a similar ploy.  As broadband penetrates everywhere, Google is betting that consumers will favor options that reflect the  ethos of the Web – free and community-based. Why install Office if you can get the same functionality from an always-on, super-fast connection that lets you collaborate with your friends and colleagues?

 

Microsoft’s own attempts to cash in on the Internet have been relatively feeble thus far. Its search business only commands a roughly 6% market share, compared  with about 77% for Google and 17% for Yahoo. Small wonder that it’s bidding for Yahoo!  It has little choice.

 

The software-as-service  business model has interesting implications for the entertainment business. What are DVDs , CDs and games if not software?  As consumers become more comfortable with low or no-cost server-based applications, might they become more open to video-on-demand and streaming music? It’s a question that has important implications for Time Warner, which which faces the specter of growing irrelevance for AOL in a search universe dominated by Google and Microsoft.

 

Microsoft  still has plenty of life. Profits are bountiful. No software competitors seriously threaten Office’s dominance. But then, IBM dominated computers in the 1980s, too.

 

 

 

See Also

• Ballmer Makes Big Bet to Get to ‘Next Level’

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