A new competitor to traditional wireless phones could be lurking in your kid's room – offering not only a portable version of Spider-Man 2, but also a compelling new way to package wireless communications services.
Although it's early in the game, some telecommunications analysts are watching Sony Electronics' PlayStation Portable (PSP) device with interest. The latest and highly anticipated handheld gaming system, introduced in Japan last year and in the United States in March, comes with a standard Wi-Fi connection. While it may be seen only as a way to let video-game obsessed teens play more NFL football, it also puts the device in play as a potential competitor to other wireless communications devices, although not immediately.
Consumers are snapping up the $300-$400 system – depending on configuration, add-ons and game packages – so quickly in the United States since its debut that Sony delayed the device's introduction in Europe, channeling units that had been earmarked for that introduction to meet demand in the States, says Tim Bajarin, president of Creative Strategies. Bajarin's company, a California-based consultancy, watches consumer electronics markets, as well as telecommunications markets. Sony has sold virtually all of the 1 million PSP units it earmarked for the U.S. and European markets in the United States since the introduction only a few weeks ago, he says. The company easily could have a base of 15 million to 20 million units in the United States by the end of next year, he adds.
Sony included the Wi-Fi connection as a way for gamers to play each other wirelessly in Wi-Fi hot spots and nothing more, according to Bajarin. Future plans to expand the device's capabilities to include voice applications probably aren't a primary concern at Sony, but that doesn't mean the company isn't thinking about the possibilities, he says. "It's unclear whether Sony will take it beyond gaming," he says. "It's leaving it up to others" to do that, at least for now, through add-on programs that run on the device.
A spokesman for Sony Computer Entertainment America confirmed Sony currently has no plans to include a voice capability for the device's Wi-Fi link. The PSP's primary applications lie in gaming, music, video and photos, he said, declining further comment.
According to Bajarin, third-party applications developers already are hard at work coming up with software and capabilities that can turn the device into a downloadable music device, high-definition movie player and other applications. "With the Wi-Fi capability, there's a wireless VoIP connection coming. I just haven't seen it yet," he says.
Other analysts agree that third parties probably will hammer the device into a communications tool, adding yet another competing device to the slew of wireless communications devices out there battling for supremacy. "Wireless phones have beaten PDAs and notebook computers because [those devices] are big and boring," says Mark Teitell, principal at Mercer Management Consulting in Boston. Big wireless device manufacturers and service providers should take note, he adds. "Samsung, Nokia and Verizon Wireless should be worried about this small device that can entertain you," as well as provide communications, he says.
A voice-capable PSP would appeal initially to specific audiences, primarily teenage gamers, Teitell says. Teens are a lucrative target market for wireless, where the latest phones are must-have items. Chicago-based researcher Teenage Research Unlimited found that half of teens own a wireless phone and estimates teens spent $169 billion in 2004. Wireless carriers and device makers are moving to get a share of even the pre-teen market. Firefly Mobile, for instance, is marketing a GPS-capable wireless phone for children 8 to 12 years old, which makes them easier to locate. Wireless carriers' family service plans also have driven the use of wireless phones, Teitell says.
PSP, which offers a lot of the niche appeal that runs those markets, could be ripe pickings for MVNOs, in concert with, say, a gaming company. The MVNO could use the game's images and logos to sell the device and service through the gaming company or a content aggregator.
ESPN's MVNO plan, with which it expects to sell packages of sports-oriented services tagged with the ESPN name, exemplifies how similar packages could be assembled around a game company or even game titles, Teitell says.
With its heavy emphasis on high-quality video, the PSP could become an even more important player as advanced 3G networks roll out. "Content is key with 3G. Content becomes more important in selling" as similar data-capable networks are rolled out, Teitell says.
The device still has limitations, however. Its memory limits real-time video capabilities, as does the ability to store other data, Bajarin says. Bajarin agrees that the PSP offers some tantalizing glimpses of how wireless phones and traditionally unrelated technologies are converging in unexpected ways to a central theme of multipurpose devices.