Sony's PS3 pinch

Posted by: Kenji Hall on February 21, 2006

Sony says it’s still aiming for a spring launch for its PlayStation 3 but also admits that a delay is possible. That acknowledgement comes after a Feb. 17 Merrill Lynch report that the video game console will face delays of between six and 12 months. Merrill suggested the machine would be ready in Japan in autumn, at the earliest, and that delays to production of the high-def Blu-ray DVD player and the Cell multimedia chip were primarily to blame. Sony admits that undecided specs for Blu-ray and the high-def multimedia interface (the audio-video connection between the console and a high-def TV or other display) might hold up the launch. “If both specifications are not confirmed, they may affect PS3,” says a spokeswoman at Sony Computer Entertainment, Sony’s games unit.
This is hardly news. Just a few weeks ago a Sony Online Entertainment programmer wrote in a blog on a Web site called DownInFront (www.downinfront.tv) that he didn’t see how Sony was going to meet its self-imposed deadline and that none of the games he was working on appeared to raise the bar in video games. He was later fired for writing: “Everything I’ve developed or seen developed has yet to be ‘next gen’ … I suspect that you’ll be able to have more dynamic objects in a scene than before. But I’m not seeing games doing this yet. We don’t have a controller, there is no network code and there is no box.” (See BW, 9/2/06, “This PlayStation May Play Too Much”)
Sony hasn’t set a definite launch date and there’s still no word on the regional roll out. Analysts think the PS3 will be available in Japan first and that Sony will rush to have it ready for the U.S. before the crucial year-end holiday. Europe should follow in early to mid-2007. Since Microsoft got its Xbox 360 to U.S. stores just before the 2005 holiday shopping season, Sony won’t want to let another year-end holiday pass without selling PS3 in its biggest market. Generally, analysts think a few months’ delay could hurt the game unit’s profits in the fiscal year starting April 2007 (next fiscal year is widely expected to be a loss) but won’t affect Sony’s chances of catching up to Microsoft’s Xbox 360 two or three years down the line. That is, as long as Sony can get four things right: limit any hardware/software glitches early on (remember, the key components are getting their first commercial run); beef up the PS3’s online gaming to rival Microsoft’s superior Xbox Live service (rumors have it that Sony is already working on this); within six months of the launch, start selling must-have games that utilize the console’s computing power; and cap the PS3’s price. Merrill had estimated that the machine would initially cost Sony up to $900 per unit to produce. Analysts think Sony will absorb much of the cost to offer the console at between $400 and $500 to stay competitive with the Xbox’s $300 to $400 price tag. One thing’s certain. If PS3 lives up to expectations, the speculative frenzy will have built a critical mass of pre-release hype for the machine; if it disappoints, Sony will have a huge red-ink problem on its hands.

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