Launch of Sony’s PlayStation 3 could be delayed

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Launch of Sony’s PlayStation 3 could be delayed
Next-generation video game console must meet certain industry provisions

Reuters
Updated: 9:35 a.m. ET Feb. 20, 2006


TOKYO - Sony Corp.’s launch of its next-generation PlayStation 3 video game console could be delayed if industry specifications for some of its technology are not finalized soon, although it is still aiming for a spring rollout, it said on Monday.

The launch of PlayStation 3 (PS3) has been the subject of heavy speculation in the industry as expectations are high for the powerful machine, which will feature cutting-edge technology in its DVD player, processors and graphics.

PS3 will be competing with Microsoft Corp.’s Xbox 360, which went on sale last November, and Nintendo Co. Ltd.’s Revolution, which is expected later this year.

“We’re aiming for spring, but we haven’t announced specific regions,” a spokeswoman for Sony Computer Entertainment said, adding that it was waiting for the final specifications on some of the technology it is using in the PS3, such as that related to the Blu-ray DVD drive and to input and output video and sound.

The specifications are decided by industry consortiums.

“We’re waiting for them until the last possible minute, but the launch could be pushed back if they’re not decided soon,” the spokeswoman said. If the PS3 is not ready in time, the company will choose the next best timing for the launch, she said.

Sony has been promising a spring launch but has been deliberately vague about exactly when that would be. Analysts have said it could mean anytime between March and the end of Japan’s rainy season in June.

Sony’s shares fell as much as 4.4 percent on Monday after Merrill Lynch said in a research note last week that the PS3’s launch might be delayed by six to 12 months and the cost of production could initially approach $900 per unit.

The shares closed down 3.6 percent at 5,300 yen, underperforming the Tokyo stock market’s electrical machinery index IELEC, which fell 1.85 percent.

Manufacturers typically sell new game consoles at a loss initially to gain market share so they can later make money by selling software -- a $25 billion global market.

But the higher-than-expected cost estimate by Merrill means Sony will have to take a much larger loss on each PS3 unit it sells or sacrifice market share to Microsoft, which is selling its Xbox 360 for about $400.

Sony currently has about 70 percent of the global market for game consoles, but some analysts have said it could lose as much as 20 percentage points to Microsoft, which is making an aggressive push to increase its 15 percent share.

Nintendo, which also has a 15 percent market share, is taking a different strategy as it aims to increase the number of game players with a unique console and original games.

Merrill Lynch also downgraded its rating on Sony to “sell” from “neutral,” saying in its note that Sony could see its earnings decline in the business year from April.

Most analysts took the report in stride as they already expected Sony to launch the PS3 this summer in Japan, followed by a U.S. launch before the Thanksgiving holiday in November. They expect a launch in Europe in early 2007.

“No one is seriously thinking a spring release is realistic any more,” said Hiroshi Kamide, an analyst at KBC Securities. “If I were Sony, I wouldn’t be that worried about releasing as soon as I possibly could.”


Kamide said Sony may wait until it is fully prepared, especially after seeing slow initial sales of Microsoft’s Xbox 360 even though it was launched in time for the holidays.

Having led the worldwide console gaming market for the last decade, Sony is counting on the new machine to dominate in all aspects of networked home entertainment -- games, movies, music and more.

Yuta Sakurai, a senior analyst at Nomura Securities, said the price of the PS3 was more important than its timing.

“I don’t think it matters when Sony launches in the U.S. as long as it’s in time for Christmas,” Sakurai said. He expects Sony to try to launch the PS3 in Japan in early summer, in time for the big selling season when schools go on holiday in July.

Sakurai estimated that Sony could charge at most 50,000 yen ($420) for the console.

Retail price estimates by analysts in Japan vary widely from about 40,000 yen to several times that much, primarily because of all of the technology that is packed into the machine, which is expected to be the size of a laptop computer.

The PS3, which can be played simultaneously by up to seven people, will be powered by the “Cell” chip, which is significantly more powerful than Intel Corp.’s Pentium 4, the most common chip for today’s PCs and existing game machine processors.

It will also feature a super-powerful graphics chip, a built-in Ethernet port for high-speed Internet access, and Blu-ray, a next-generation DVD format backed by Sony.

Analysts generally agree that Sony will do whatever it can to avoid missing the key year-end holiday season this year, but many believe it will be unable to make the PS3 in great volumes.

Game development for the PS3 is also seen being delayed because the technology specifications have not been finalized.

“Game makers are developing games according to their guesses on what the final specifications might be,” said Takeshi Tajima, a BNP Paribas analyst.

Copyright 2006 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters.

© 2006 MSNBC.com

URL: http://msnbc.msn.com/id/11458047/
 
That's only the price it would cost Sony to make each console. It's not the price that you, or I, would be paying at Best Buy, Wal-mart or EB.
 
Sony isn't going to take a $400 loss on every unit!

The PS2 is their only product that is keeping them alive right now.

I'm saying the PS3 will cost $600-700 and the 360 will trounce it this coming Christmas.

Sony has screwed up BIG TIME!
 
they shouldnt have opened their mouth about the PS3 last E3. The only reason they did it was because MS was announcing the 360 and Sony wanted to announce something too so they wouldnt lose their playerbase to MS. Obviously they had no faith in their Playstation owners. Will the PS3 last 10 years like Sony wants? Its hard to say. They showed the same ducks graphic when they announced the PS2, but we got graphics nowhere near what we saw. Its going to be interesting to see if Sony will take a $400 loss.

They dug their own grave.
 
Latest spin:

Kei Sakaguchi, a Sony spokesman in Tokyo said, "There is no change in our original plan to release the console in spring 2006 in Japan." while the Merrill Lynch report by Joe Osha stated that Sony may start selling the PlayStation 3 in Japan in autumn and by late 2006 or early 2007 in the U.S.
 
Analysts projections of loss per unit are not necessarily accurate.

Sony will have ample resources and contacts to get their parts as cheaply as possible.

Also remember it is a Blu-Ray player, and even if they went as high as $500 per unit, the PS3 would be cheap for what you get.

Xbox 360 is, for the moment, just a game machine. The DVD capabilities of the PS2 were integral to their success in Japan, and the PSP is running mostly on movie sales now it seems.

I wouldn't blink about paying $500 for a pS3...it would be a great bargain at that price.

But I actually expect it to be around $450.
 
Sony fails yet again!! Think BetaMax, Video CD, MMCD - Multimedia Compact Disk, MiniDisk, MicroMV, MemoryStick-just use SD sony!,DRMd CDs, Blu-Ray - whats next?

Microsoft has the capital plus CASH on hand to take a loss on every unit made, as they did with the 1st Xbox.

Why would you put all your eggs in the Blu-Ray basket when it hasn't been perfected or even shown to work on mass production as advertised.
 
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dwcobb said:
Analysts projections of loss per unit are not necessarily accurate.

Sony will have ample resources and contacts to get their parts as cheaply as possible.

Also remember it is a Blu-Ray player, and even if they went as high as $500 per unit, the PS3 would be cheap for what you get.

Xbox 360 is, for the moment, just a game machine. The DVD capabilities of the PS2 were integral to their success in Japan, and the PSP is running mostly on movie sales now it seems.

I wouldn't blink about paying $500 for a pS3...it would be a great bargain at that price.

But I actually expect it to be around $450.

I watched one of Gamespot.com's webcasts and they said that UMD movie support is greatly slowed down especially since Sony is slowing it down to slow UMD movie sales. I think I will take a wait and see approach when it comes to the PS3. Meanwhile I will enjoy my 360.
 
Difference is that UMD is a custom format for just the PSP. Blu-Ray is the tech platform Sony is pushing for all movies. They will have a great vested interest in getting a lot of Blu-Ray players out in the marketplace...bigger than when they did the PS2 as a DVD player.

They will win on many fronts with the PS3 if the launch goes right...eventually the hardware WILL be profitable, but they will have both the software AND their extensive movie portfolio to help cover their upfront hardware costs.

I am willing to bet that PS3 sales if the price is in the $400 - $500 range will vastly outstrip the combined total of HD-DVD and Blu-Ray standalone players worldwide. Probably several times over.

Sony will be highly motivated to cross market its technologies with a successful PS3 launch and they won't screw it up for an extra $100 or so.
 
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The Xbox 360 could offer a HD-DVD or BlueRay DVD option that would make the Xbox 360 far more expensive than it is now, and possibly more expensive than the PS3.

I own the original Xbox, and I hope Microsoft does well with its sales...we all benefit from the competition. However, the Xbox 360 will have 3 different versions and capabilities out there if and when a HD DVD is offered. That will have to make it tough for game developers to make games, and they most likely will make their games work on the lowest common denominator...a stripped down Xbox 360. The PS3 most likely will have only one version to support, so the games, I suspect, will offer more.

Whatever happens, I will be all good for us. The PS3 will release, and the Xbox 360 will most likely drop in price soon after PS3 launch or offer the HD DVD boxed version for a similar price.
 
The Big Wood said:
The Xbox 360 could offer a HD-DVD or BlueRay DVD option that would make the Xbox 360 far more expensive than it is now, and possibly more expensive than the PS3.
Unfortunatly we all know well add-ons work, ala PS2 HDD and Sega CD.
 
As far as I have heard, it is an HD-DVD add on for Xbox360, and they are swearing it will ONLY work for movies to address the games issue.

But I can't imagine it will work that way over time. The Xbox 360 version thing is just messy.

I also approve of the benefits of competition, but I am definitely a playstation guy.
 

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