TOKYO (Reuters) - Sony Corp. (6758.T), the maker of Playstation game consoles, may lose its iron grip on the market for game machines as rival Microsoft Corp. (Nasdaq:MSFT - news) launches a new model just in time for the holiday season.
Microsoft's new Xbox 360 will debut in the United States on Tuesday and in Europe and Japan in December, while Sony is not expected to launch its upgraded Playstation, PS3, until next spring.
Analysts and game fans say PS3 is the sexier game machine with twice the processing speed of Xbox 360, next-generation DVD technology Blu-ray, and seven control pads that can connect wirelessly to the console.
But Xbox 360 will have the advantage of being in time for the holidays with an initial line-up of 18 games including surefire hits like "Need for Speed Most Wanted," "Ridge Racer 6" and "Madden NFL 06."
Sony, the world's second-largest consumer electronics maker that dominates the console market with its Playstation 2 (PS2), may lose more than 20 percentage points of its 70 percent market share with much of that going to Microsoft.
"The risks are surprisingly higher than people think because unless they can replicate its 70 percent dominant market position, things are going to be very difficult for them going forward," said Hiroshi Kamide, a Tokyo-based game analyst for KBC Securities.
Sony has a market share of roughly 70 percent and Microsoft and Nintendo Co. Ltd. (7974.OS), which plans to launch its upgraded version some time next year, each hold 15 percent each.
The risks to the company's healthiest business would come at a time when the overall group is struggling to turn itself around after its mainstay consumer electronics business stumbled.
Wedbush Morgan Securities said in an industry report in July that it expected worldwide PS3 and Xbox 360 sales to be tied at 23 million units each in 2007.
Sony said it was not concerned.
"We will launch according to our own agenda and strategy," said a spokeswoman for Sony Computer Entertainment, adding that it planned to compete this year with a diverse line-up of PS2 and Playstation portable games.
PS3 SEXIER BUT PRICIER
Sony has not disclosed the price of its PS3, but analysts expect it to be the most expensive console ever, costing as much as $500 versus PS1 and PS2's $300 price tag when they debuted in the United States in 1995 and 2000.
Microsoft, which aims to get its consoles into living rooms around the world this holiday season and build momentum by Christmas 2006, is offering a $300 and $400 package for Xbox 360.
A year from now, Microsoft is likely to be hitting its stride with even more games that take fuller advantage of the new machine's fast speed while Sony is still working on gaining momentum, analysts say.
"PS3 will do very well, but it's said that development costs will be high and it'll take longer to make games, so it's likely that it won't have a full line-up of games until the end of 2006 or the beginning of 2007," said Hirokazu Hamamura, president of Enterbrain, the publisher of leading game magazine Famitsu.
The quality of the game line-up can make or break a console's popularity.
The Playstation series have remained at the top of the market because of the high quality of games whereas the first Xbox is said to have failed in Japan when it launched in February 2002 because of the lack of appealing games.
"CELL" ADOPTION KEY TO GROUP
Despite the possibility of losing market share, analysts say not all is bad for Sony which plans to introduce its advanced "cell chip" in the console. The cell chip is significantly more powerful than Intel Corp.'s (Nasdaq:INTC - news) Pentium 4, the most common chips for PCs and game machines.
Sony plans to use the chip in other electronics such as home servers and flat televisions. The company could also sell its chip to other manufacturers.
Sony's game unit reported a 79 percent rise in revenues to 214.2 billion yen in the July to September quarter, outpacing the financial unit, whose revenues rose by 40 percent.
Sony's game business accounts for about 12.6 percent of the group's total revenues, and it has sold 102.5 million Playstations and 96 million PS2 machines to date.
"Sony has to launch a new game machine every four, five or six years to maintain the game division's strength," said Koichi Hariya, senior analyst at Mizuho Securities, adding that PS3 is likely to be less profitable than the earlier versions because it is pricier to make and the price will make it less affordable for some consumers.
"One of Sony's strengths is that it has an operation like the game business where, at the peak, it can sell 20 million units per year," said Hariya.
http://news.yahoo.com/s/nm/20051121/tc_nm/japan_sony_dc;_ylt=AlFI9ecd1cfhAEYcQTZho8ojtBAF;_ylu=X3oDMTA5aHJvMDdwBHNlYwN5bmNhdA--
Microsoft's new Xbox 360 will debut in the United States on Tuesday and in Europe and Japan in December, while Sony is not expected to launch its upgraded Playstation, PS3, until next spring.
Analysts and game fans say PS3 is the sexier game machine with twice the processing speed of Xbox 360, next-generation DVD technology Blu-ray, and seven control pads that can connect wirelessly to the console.
But Xbox 360 will have the advantage of being in time for the holidays with an initial line-up of 18 games including surefire hits like "Need for Speed Most Wanted," "Ridge Racer 6" and "Madden NFL 06."
Sony, the world's second-largest consumer electronics maker that dominates the console market with its Playstation 2 (PS2), may lose more than 20 percentage points of its 70 percent market share with much of that going to Microsoft.
"The risks are surprisingly higher than people think because unless they can replicate its 70 percent dominant market position, things are going to be very difficult for them going forward," said Hiroshi Kamide, a Tokyo-based game analyst for KBC Securities.
Sony has a market share of roughly 70 percent and Microsoft and Nintendo Co. Ltd. (7974.OS), which plans to launch its upgraded version some time next year, each hold 15 percent each.
The risks to the company's healthiest business would come at a time when the overall group is struggling to turn itself around after its mainstay consumer electronics business stumbled.
Wedbush Morgan Securities said in an industry report in July that it expected worldwide PS3 and Xbox 360 sales to be tied at 23 million units each in 2007.
Sony said it was not concerned.
"We will launch according to our own agenda and strategy," said a spokeswoman for Sony Computer Entertainment, adding that it planned to compete this year with a diverse line-up of PS2 and Playstation portable games.
PS3 SEXIER BUT PRICIER
Sony has not disclosed the price of its PS3, but analysts expect it to be the most expensive console ever, costing as much as $500 versus PS1 and PS2's $300 price tag when they debuted in the United States in 1995 and 2000.
Microsoft, which aims to get its consoles into living rooms around the world this holiday season and build momentum by Christmas 2006, is offering a $300 and $400 package for Xbox 360.
A year from now, Microsoft is likely to be hitting its stride with even more games that take fuller advantage of the new machine's fast speed while Sony is still working on gaining momentum, analysts say.
"PS3 will do very well, but it's said that development costs will be high and it'll take longer to make games, so it's likely that it won't have a full line-up of games until the end of 2006 or the beginning of 2007," said Hirokazu Hamamura, president of Enterbrain, the publisher of leading game magazine Famitsu.
The quality of the game line-up can make or break a console's popularity.
The Playstation series have remained at the top of the market because of the high quality of games whereas the first Xbox is said to have failed in Japan when it launched in February 2002 because of the lack of appealing games.
"CELL" ADOPTION KEY TO GROUP
Despite the possibility of losing market share, analysts say not all is bad for Sony which plans to introduce its advanced "cell chip" in the console. The cell chip is significantly more powerful than Intel Corp.'s (Nasdaq:INTC - news) Pentium 4, the most common chips for PCs and game machines.
Sony plans to use the chip in other electronics such as home servers and flat televisions. The company could also sell its chip to other manufacturers.
Sony's game unit reported a 79 percent rise in revenues to 214.2 billion yen in the July to September quarter, outpacing the financial unit, whose revenues rose by 40 percent.
Sony's game business accounts for about 12.6 percent of the group's total revenues, and it has sold 102.5 million Playstations and 96 million PS2 machines to date.
"Sony has to launch a new game machine every four, five or six years to maintain the game division's strength," said Koichi Hariya, senior analyst at Mizuho Securities, adding that PS3 is likely to be less profitable than the earlier versions because it is pricier to make and the price will make it less affordable for some consumers.
"One of Sony's strengths is that it has an operation like the game business where, at the peak, it can sell 20 million units per year," said Hariya.
http://news.yahoo.com/s/nm/20051121/tc_nm/japan_sony_dc;_ylt=AlFI9ecd1cfhAEYcQTZho8ojtBAF;_ylu=X3oDMTA5aHJvMDdwBHNlYwN5bmNhdA--
