Over the past month, two pieces of news have caught my attention. The first was Sony’s purchase of Gaikai, a cloud-based video game site that allows big-named game titles to be played through an Internet browser. The second was that Ouya, an inexpensive game console that runs the Android operating system and Android-based games, is teaming up with OnLive to allow cloud gaming of some AAA content.

These moves have exciting and curious implications for the market. It’s exciting to see the industry rumbling towards digital, which will lead to the instant ability to play and be simple to use.

But how will the existing brands transition?

It will be interesting to see what, if any, integration Sony has planned between Gaikai and its next Playstation. Sony puts a lot of weight behind its high-priced hardware, using it to push new technologies. But streaming services, like Gaikai, don’t require much in the way of hardware. The Ouya is set to sell for $109 and that includes the processor chips, storage, etc.,needed to run Android-based games that would be downloaded to the unit. That $109 ticket price is quite a bit less then the $599 pricetag Sony slapped on the original 60GB PS3 in 2006.

Because of Ouya’s marriage with OnLive, Sony will have to think very strategically about how it utilizes Gaikai. If the company is too soft in its approach, Ouya has an opportunity to take market share. Sony needs to be aggressive, which means stepping out of its comfort zone and leaning more towards software than hardware.

There is a happy medium. Sony can achieve profits for its system and still retain preference for its brand, but if OnLive is successful at acquiring larger amounts of AAA content, Ouya’s existence will eat away at Sony’s margins.

Sony’s best bet is to champion the digital change rather than react to it.

OnLive is no longer new to the world of gaming. Yet, almost three years after its release, I am still not sure the brand will be a success unless the company quickly re-evaluates its focus.

Both my interest in OnLive as well as my frustration with the brand is rooted in a desire to see it succeed. I have talked many times about the natural progression toward digital formats and OnLive alone is carrying the flag for this transition within the console gaming market.

My frustration with the value of OnLive’s brand is that the value has been placed too heavily on technology. The technology is impressive, but when it comes to content, OnLive is lacking.

Sony had a similar problem when it pioneered e-book readers that used the e-ink technology that is still used in some circles today. Sony may have been first but today Amazon’s Kindle easily eats Sony’s lunch in e-reader sales. In the world of e-books – and video games – content is king.

Amazon understood that. Sony didn’t.

I first tried OnLive to see if the technology worked. Did it ever. That was all I needed to be sold on the idea of a purely digital transition for the market.

But then I looked beyond OnLive’s technology to the content and was disappointed.

In the video game market, brand and content are the two biggest points of differentiation. PlayStation 2 was a huge success because it commanded both. PlayStation 3 had a rocky run because it commanded neither. OnLive is new to the market and still trying to develop a brand. That won’t be easy with its content so weak.

This is not to say that OnLive is not making some smart moves. There is a push that could increase OnLive’s visibility, with rumors that Sony is looking to partner with a digital game service like OnLive that would run on Sony’s PS Vita and news that OnLive is teaming with Vizio on a new set-top box. Yet, due to its limited content library, it might be putting the cart before the horse.

Technology cannot drive preference all by itself. Technology must be driven by purpose. Content provides that purpose. As it stands, OnLive has no exclusive IPO, no big deals in the works with developers, no massive additions of current generation content to its digital library, and above all else, no brand message that defines who the OnLive customers are and why they should prefer OnLive.

It’s not too late. OnLive has the ability to turn this industry on its head. From how the market views content ownership and distribution of that content to how it can increase profits to developers, OnLive could change everything.

If OnLive fails, there will be at least one more console cycle stuck with the status quo. With or without OnLive, I believe the market will eventually make this shift. It just might take longer.

To no one’s surprise, Microsoft will be releasing its own line of tablets, called Surface, and, while its tablet cover/keyboard is a pretty darn cool spin on things, I am not sure how the actual tablet will do. My issue with tablets is that Apple has, for all intents and purposes, done so well on its first go-around that the iPad has become synonymous with the category. The same can be said for the likes of Thermos or Kleenex, the brands so engrained in the markets their brand is often interchanged as the product itself.

So far, some manufacturers have tried their hand in the tablet market, but they seem to fight over the scraps and never make up ground against Apple. So far, there has been Sony, Samsung, Amazon, Dell and a few others. Some of them are better suited and have more brand permission releasing a tablet than Microsoft.

The tablet comes at a time when Microsoft is making some nice strides that can set it apart. It new Smart Glass is one of those things. It is fresh and, with additional “like” offerings, Microsoft is setting a foundation on which it can create a rebranded image for the company.

Tablets, however, are another story. This late in the game, you aren’t seen as being terribly innovative if you come out with only slight modifications (especially by one considered to be a software manufacturer that often makes things complex or, to be snarky, came out with Zune). You have to defend your product against an overwhelming category leader that has the best brand in the industry (in the world, really).

For Microsoft, there is some opportunity in the tablet market if it can find the highest emotional intensity and align itself with it it to give consumers the switching trigger they need to make the jump. Unfortunately, I think the market leader already has it.

There are a lot of things I see Microsoft doing that feel right, but tablets feel wrong. To regain some of the clout, it needs a game-changer.

Even though there are aspects if it that are cool, this ain’t it.

There are many signs that a company doesn’t know what it is doing with its brand, but one is a lack of willingness to let things go that are not working. While this might seem like simply an operational decision, predicated by a steadily declining financial sheet, it is actually one connected to brand. Often, what often performs poorly financially is also not correctly aligned with a brand strategy. They work hand in hand, which means by living to your brand promise, you can make the right decision on what products to keep and which ones to lose.

If you consider brands that are struggling lately (Sony, Best Buy), it is part and parcel to the fact that they lose sight of the brand. For instance, consider Sony, which has a hand in about every possible tech pot it can. From TVs to MP3 players, to Ereaders to tablets, to alarm clocks to cameras to laptops, Sony has just about everything. There might be some products that ring resoundingly clear to its themeline of “Make. Believe,” but the ones that are not ringing true take with it some of the clout that other products might deserve.  The Walkman might have still be bringing in dollars to Sony, but why did it take so long for it to pull old technology that detracted from the power and meaning of its brand?

Or take Best Buy, which has created a store that offers product solutions to satisfy an oven customer and a CD customer (whoever that is, anymore), providing less meaning to the whole group rather than more intensive meaning to a smaller group. What you sell and your willingness to scrap what is not in synch is an important part of staying relevant and resonant.

Clarity of message is not simply dependent upon the message itself, but how it is made real to the customer. Sony’s “Make. Believe” could have a real profound effect on the market if it meant a culture shift within Sony. Imagine the impact drawing a line in the sand and saying “from this point forward, absolutely nothing we do will be ordinary” might have. No more AM/FM alarm clocks, no more set-top boxes, no more DVD players, Only products that were true to “Make. Believe.”

There is a reason Ping is set to vanish from Apple’s repertoire. Its social network-angle was never about “Think Different” and has become more of a hindrance to its brand then a help. A brand is constantly being examined critically by potential customers looking for a meaningful connection to their purchase. Make it easy for them and get rid of the clutter.

The gaming industry seems to be split up into two audiences: The serious gamers and those of us who play on less intensive platforms such as an iPad where Angry Birds and Plants vs. Zombies is enough to give you your fix.

Bridging those two audiences is a delicate achievement and is fraught with potential failure if your attempt is simply to copy what others are doing. Nintendo is in that spot, especially when it comes to its upcoming Wii U system.

Just ask yourself this: If you had an iPad in one hand and the Wii U in the other, which one would you choose? This is the position Nintendo is steering its new game console toward. Gaming on consoles and gaming on tablets, however, are different beasts with two different audiences.

If you ask most people who play videogames, they do not confuse blockbuster console games with the arcade style mini games the iPad has made popular. There are certainly markets for both, but they are not the same. Pricing structure is different, required resources are different, marketing is different, user interaction is different, and visuals are different. Most of all, the complexity is different. The audiences for these are serious about gaming. The audiences for the iPad games usually aren’t.

Nintendo is also considering a new social network it calls Wiiverse. The problem is that the market has already demonstrated that people don’t want more than one social network. Just look at Google+, Ping, or MySpace. I greatly doubt if people looking for consolidation of their social network experience would choose Wiiverse in place of Facebook.

Nintendo’s system will still make a splash. It has enough loyal fans that will want their exclusive titles. But its attempt to create “broad appeal” is not the most competitive approach, not when competitors within each specific market are doing “specific” very well.

I expected more from Nintendo. It needs to think again like a true innovator, then wii-ed like to play.

Good news for all you Sony tablet oglers out there who just couldn’t bring yourself to make the purchase because its pricing was just too high: Sony just announced that it is dropping its price on its Android-based tablet base unit from $499 down to $399.

The misconception by many manufacturers releasing tablets priced at $499 is that consumers are willing to spend that $499 on a tablet since they purchase iPads so readily. This however is not true. Consumers are, in fact, willing to pay $499 for a tablet from Apple. Another tablet and an Apple tablet are not the same. With the latter, you have the ability to charge a premium because it matches a premium brand.

This pricing issue is not a first for Sony. The pricing teams still believe in the equity and clout its brand once carried, even though consumers don’t. From the P3S to the recently released Vita to its tablet to the upcoming release of its personal 3D viewer, Sony believes its brand justifies the premium pricing. It is not until sales figures begin rolling in and the over-forecasting of consumer interest becomes apparent that Sony’s prices find a more realistic level.

Big news from Sony at the 2011 E3 was a new “affordable” 3D television priced at $499. Now, a few months on the market, and it is regularly priced at retail stores for $399 and as low as $299 leading up to the holiday.

The point here is that only premium brands can justify premium prices. The power of a meaningful brand is that consumers will pay more for it and even inconvenience themselves for it. The fact that you are overpriced only becomes that much more apparent when the power of the brand doesn’t match it.

All hope for Sony is not lost. It just needs to get back in touch with the highest emotional intensities that exist in the market. Until then, expect more disappointing sales figures – and dropping prices.

I have been following news about the upcoming PlayStation Vita handheld gaming system and, as its release date nears, I wonder more and more if its success will receive a similar lackluster release as the Nintendo 3DS.

The Vita is quite a technical powerhouse and looks like what the PSP should have been. And while it has an ample software lineup on release to avoid a lack of interest due of content, this new iteration is too little too late. The handheld gaming market has now expanded to include mobile phones in a very big way and the market that the Sony PSP and Nintendo DS once competed in has become vastly different.

The issues jeopardizing success are not due to a nonexistant market, but rather due to a nuanced market. In fact, the market for video games, is evident by the 24 hour, $400 million profit, Call of Duty: Modern Warfare 3 just raked in. The obstacle instead, is due to the advent of smartphones, causing the market for a standalone handheld gaming devices to become a bit redundant.

Adding to this hurdle is the young adult demographic the Vita caters to. It’s not that it doesn’t have titles for the younger audience, but with enhanced graphics, 3G connectivity, dual analog sticks, and multiple touchscreens it is certainly selling specs that an older market tends to care about. But this is a demographic that is already connected and invested in their smartphone. The key value of that last sentence being “connected.”

Take the recent success of Call of Duty. This was not a result of it having a profound story– in fact, the story is so fragmented and schizophrenic it’s sometimes hard to even get into. It did not sell so well because of groundbreaking graphics– it uses the same engine as the last Call of Duty and is certainly not the most visually stimulating game available in the market. No, Call of Duty sells because of its multiplayer. It is a game that breaks sales records and moves consoles because it offers a connected experience—an attribute that is very much an identifier of the mobile market.

Often, in both messaging and product development, companies miss the vital fact that no one switches for something they believe they already have. Sony might soon experience, as Nintendo’s 3DS has been experiencing, that the market might not have been pining for a new generation of handheld gaming systems, but instead might believe the phone that they own is the only handheld gaming device they need.

Sony’s recent security nightmare that potentially let the personal data of more than 100 million customers fall into the hands of hackers is a bigger problem than I think Sony fully understands.

Sure, the immediate solution is to cull the damage from the security breach, make sure it does not happen again, and find some way to restore the confidence lost. The more critical question is where does Sony go from here? Restoring consumer confidence is difficult. In Sony’s case, restoring confidence is compounded by both by context and the promise of the brand.

Lets face it, there is the potential for a security breach or “cyber attack,” as Sony is calling it, to occur with any company. Even if Sony made their security systems 100% secure, Sony would have a very difficult time proving that to the millions of Playstation network users and other Sony customers that lost their data. You see, little will change from the perspective of the customer, other than Sony showing a splash screen saying, “We have secured your data. We promise this time.” From the user’s perspective, there will be no physical structure they can experience that will make them more comfortable.

This context hampers Sony’s ability to restore confidence. I guess Sony is really asking its customers to make.believe. Which brings me to my second point.

Sony’s brand promise is to believe “an thing you can imagine you can make real” which is summed up by its tagline, “make.believe.” With a brand statement like this, Sony is telling consumers, “Imagine what you want, we will help make it real.”  Well, for the 100 million folks who had their data stolen, I am sure they imagined Sony, being the tech company it is, had systems in place to protect the data protected in fulfillment of its promise to “make it real.” Sadly, this was not the case.

What is most troubling about this is that Sony’s damage control mode has not included “brand damage control” as well. The Sony brand may suffer irreparable damage because its brand promise doesn’t protect it from the crisis because Sony hasn’t explained how taking care of the problem is a fulfillment of the brand promise.

Remember, when a crisis hits your organization, if you really make.believe in your brand, then you must exploit it to control the damage from the crisis.  BP failed to do it, now Sony is failing to do it as well.

Building a brand without the correct permissions is like a house of cards. Inevitably, it will fall. The importance of permissions is that they determine boundaries. What does the consumer give the brand permission to say about them? What permission do consumers grant the brand when making claims about a product? These are questions that messaging must address and, if they do not, then a brand has failed to create meaning nor created preference.

I again reference the rumored Playstation Phone. I am a technology buff and, in following gadgets on the up-and-coming, I have seen an occasional article about the rumored phone from Sony that combines the Ericsson phone line and the Playstation brand.

My recent thoughts on the phone began last night when I came across an article on a tech blog that highlighted new leaked photos. I realized how inconsequential the phone was by the fact that the simple mouse click to “see more” seemed a bit too much work for the payoff. I have seen random articles float around about the Playstation phone in the blogosphere. But only once or twice have I seen them make it all the way to a news source. Juxtapose that to the iPhone coming to Verizon, a rumor that has been ongoing for over a year now and which seems to have its very own permanent section on the tech page of all news organizations.

The difference between the a Playstation phone and the iPhone is that Apple’s iPhone is backed by a powerful brand and a well-versed knowledge of their brand permissions. That is not true for Sony.  To look deeper into Sony’s permission issues, just look at the name. Would any businessmen ever buy a phone called the “Playstation Phone”? Just think of the conversation at work…

“Hi Bill, did you get my email about the recent merger figures?” ask’s Bill’s boss.

Bill pulls out his new Playstation phone. Bill’s boss eyes Bill’s new phone

“What is that?” asks Bill’s boss

“Oh, its my PLAYSTATION phone” Bill replies.

Bill might as well have said he was using a phone he built with his tinker-toys.

For any business professional, other than one working in the gaming industry, Sony does not have permission to sell a phone under the Playstation brand. It only has connotations to gaming. It could be that Sony is only interested in the gaming market. But if that is the case, its scope might be a bigger problem than the name. It could be true that professionals enjoy gaming, but image matters and perception is reality. Sony needs to be sure that, pending their rumored phone buzz being true, it takes a good look at the permissions of its target consumer to be sure its message resonates with the consumer belief system.

The primary permission issue for Sony is that it has led with the sub-brand of Playstation when it is the parent brand of Sony that has permission to release a product that speaks to a tech savvy professional. While leading with the Playstation brand might make gamers rejoice, it does little to excite the larger consumer market.

The Playstation phone would not be the first attempt at a phone focused on gaming. Just look at Nokia’s attempt with the N-Gage. Sony will need to be cog nascent of what its consumers will accept or any future realization of a Playstation phone will see the current lack interest remain.

T-Mobile is an example of a brand with absolutely no meaning whatsoever. As a result of this emotional void, T-Mobile finds itself scrambling for preference and survival.

Yesterday, it was announced that Walmart was “partnering” with T-Mobile and launching Family Mobile, a cell phone plan offering unlimited talking and texting for $45 a month.

As things are now, this plan, available at Walmart stores everywhere, is cheaper then any plan currently offered by T-Mobile through its traditional outlets. Napoeon was right, “The logical end to defensive warfare is surrender.” And the new alliance with Walmart makes sense as a last ditch effort to grab sales — even as the brand driver changes hands and we discover that Walmart is now the low-cost champion of yet another market segment.

The difference this time is that, while you might buy a SONY flat screen at Walmart and save a few bucks, you were buying a SONY. Now you are buying the Walmart cell phone and the carrier is secondary.

Will this strategy work?  I don’t know. Ask Apple.