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2.2 Sony
Compared with Nintendo, Sony gets involved in more industries. It invented the Trinitron technology and utilizes it in developing new television. It has gorgeous product like Walkman, and also shock the world with the PS series. From these histories we may found that, the soul of this company is “dream” and “technology”. To the opposite of Nintendo, in the video game industry, Sony chose to share the profit with its vendors and retailers in the very beginning, and while the PS series was already a “cash cow”, it kept on investing in enhancing the technical quality of the game products. Just because Sony’s pursuit of perfection on technical, its video game products, no matter the hardware or the software, are unparalleled and magnificent, but the cost overrun is always the problem.

3. Competitive advantages
After the introduction of these two companies, we know they have diverse cultures and visions. Thus, in the video game industry, they have their own strategies and competitive advantages. As the competitive advantages would change with the time, so I would like to divide it into several phases.

3.1 Phase one (1983~1994)
Nintendo is the first mover of the video game console industry. With its huge success on the 8-bit processor based video game console (the NES), it set up the industry standard and got the support of many vendors. At that time, the 8-bit video game console is the dominant design, and also Nintendo’s precious strength. The market environment is very good; the market is full of Nintendo’s consoles, thus, Nintendo chose a “growth strategy” to expand its competitive advantage.

In this period of time, Sony had just entered the video game market and chose to cooperate with Nintendo, in order to draw support from Nintendo’s massive market share and learn how to develop in the video game industry. As Sony’s learning cures going down, Nintendo worried about that Sony would master its business strategy one day, so it suspended the cooperation with Sony, left Sony in a helpless situation. Though Sony was inferior in this phase, it has its own strength, which is the technical strength on producing expendable electric products and semiconductor devices. In consideration of Nintendo’s threat, Sony chose the “stability strategy”. Under this strategy, Sony gradually increased its popularity and developed stably, and finally got brilliant performance in the next phase.

3.2 Phase two (1995~2005)-BCG Matrix
In this period of time, Nintendo was satisfied with its old technical power and performance of consoles, did not note that the customers’ interests have changed. Now people are more sensible on technology and hope the console could have a better output effect.

We can use the BCG Matrix to help analyze the strategies of these two companies. No doubt that, at this time, the 8-bit console is the “dog”, it did not have the potential to grow and was not attractive to the developers and retailers, but Nintendo still clings to this business. This action heavily influenced its cash flow. And as mentioned above, Nintendo focus too much on the profit, it exploit the retailers and developers, press the strategic partners, such as Sony, reap excessive portion of industry’s profit, so the developers and retailers are more willing to turn to its competitors. This is just the opportunity that Sony was waiting for.

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