Sony is in big trouble

[Muscletang]

SOURCE

TOKYO (Reuters) - Sony Corp (NYSE:SNE - news).'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.

SPRING LAUNCH 'UNREALISTIC'

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 finalised.

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

Sony has really dug themselves a hole.

They better get this thing out before the holiday season. If they wait until next year they're finished and will no longer be the leader in the game industry and the PS3 might take the same direction of the PSP.

I knew that Blue-ray would bite them in the ass and it seems that I was right. The Cell being built at $210 a chip isn't helping things either.

[BP2K2Max]

xbox360, here i come.

[longlivetheZ]

I can't believe they've waited as long as they have, really. I hope they don't screw themselves over cuz I have a PSP and I think it is one of, if not THE, most powerful unit out now...handheld or not. I think the options and things they can do with this thing are endless if they do it right.

[alphalanos]

Theyre too expensive. $400 plus? There are a hundred things Id rather use the money for. I guess im just growing out of consoles.

[Muscletang]

Originally Posted by longlivetheZ

if they do it right.

Those are the big words right there. I think with the PSP they tried to do too much.

For kids and parents it looks like a game system. Why get it when a Nintendo DS is cheaper and has better games?

For older people why get it when you can get an iPod?

If I remember hearing correctly, Sony wanted to really take on the iPod for Christmas and it got destroyed by it. So far Nintendo's DS is ripping it a new one as well.

With the PS3 they're trying to get a good system AND an advanced Cell AND a Blue-ray player. If they pull it off right it'll do very well. I don't think they can though and I believe it's starting to show.

[longlivetheZ]

Originally Posted by Muscletang

Those are the big words right there. I think with the PSP they tried to do too much.

For kids and parents it looks like a game system. Why get it when a Nintendo DS is cheaper and has better games?

For older people why get it when you can get an iPod?

But why get either/both of those when you can get a PSP and have both? The iPod alone costs at least as much as the PSP and the DS sucks, imo. I plan on gettin an iPod anyway to use in my car cuz my Alpine suports it, but the DS is just waaaaaay over shadowed by the PSP. I've played my ex-girlfriend's DS and it was fun, but limited. The PSP plays movies, music, video, games and views pics...the DS does less than half this yet it's better? The DS is far overshadowed by the PSP, imo. You're going to have to embellish on your statement a bit...

Oh...and the PSP isn't $400. I too really don't play many games any more, but this thing is fun. I only paid ~240 bucks for mine at Best Buy. It starts to get expensive when you get packs with games included and what not. I got the PSP regular, simple pack and SOCOM Navy Seals (which kicks ass) for under $300.

[Muscletang]

Originally Posted by longlivetheZ

But why get either/both of those when you can get a PSP and have both? The iPod alone costs at least as much as the PSP and the DS sucks, imo. I plan on gettin an iPod anyway to use in my car cuz my Alpine suports it

1GB iPod from Best Buy $99.99

Originally Posted by longlivetheZ

the DS is just waaaaaay over shadowed by the PSP. I've played my ex-girlfriend's DS and it was fun, but limited. The PSP plays movies, music, video, games and views pics...the DS does less than half this yet it's better? The DS is far overshadowed by the PSP, imo. You're going to have to embellish on your statement a bit...

I think it's the other way around.

http://in.tech.yahoo.com/060103/137/61u6t.html

Also the DS is outselling the PSP 2:1 worldwide and I think the number has jumped to 13 million worldwide since that article.

I couldn't find anything from Sony because they only tell you how many they "ship" and not sell. They have "shipped" 10 million PSPs but how many have they sold? I don't know because I couldn't find any numbers from them.

PSP $249.99 DS $129.99

Now what you said is true, the PSP offers you more. Do you think though this applies to parents getting their kids a handheld gaming system? No, they're going to get the cheaper system which also has the larger game library.

Anyway, as I've just shown, you can get an iPod and a DS for the same price as a PSP. All of those prices were found at Best Buy as well.

Now, I'm not knocking the PSP or anything. I think it's rather interesting and not a bad little thing. As I said though, Sony tried to do too much with it and it's costing them.

The DS has it beat in the handheld gaming area in price and the number of games, the iPod and other players have it beat, and you have to RE-BUY your video library to watch anything on it.

I think they would have done better using a standard disk so you could play any DVD you want and some PS1/PS2 games on there as well.

[harrymay]

the playstation 3 will be a flop for sony, though it has a good deal of specs, the actual cost of the PS3 to produce is around $800. Unless sony can come up with a way to lower the component costs or justify spending more, this could be the last console we see from sony.

[BP2K2Max]

like muscletang said, the only reason the nintendo DS is outselling the PSP because it's cheap. videogames are supposed to be for kids and i don't know of any 13-14 year olds that have the funds to buy a $300 hand held and i don't think most parents are willing to spend that much on their kids as presents so most get the nintendo DS. that doesn't make it the better hand held. the PSP is leaps and bounds better than the DS is as far as things like the processor, the display(# of colors and resolution, and FPS), and the sound are concerned.
i don't think it matters that the DS has more games. As the saying goes it's quality not quantity. i mean, look at the DS's best selling game Nintendogs, can you honestly tell me that nyone over 12 ears old is going to enjoy such a game? between all the EA sports games, and games like Socom, GTA, Dynasty warriors, Tony Hawk and all the other games that made the PS2 a success, i can't see anyone getting bored of their PSP games, especially since they look about as good as PS2 games do, compared to the DS which looks more like N64 graphics. not to mention that the UMD's hold more info than the DS cartridges are capable of, meaning you'll get more game for the money whcih is important since most fo the games are in the $40 range. i played both systems before i decided to buy one and i was just way more impressed with the PSP which is why i got one.

[Muscletang]

Originally Posted by BP2K2Max

i don't think it matters that the DS has more games. As the saying goes it's quality not quantity.

This is where you can argue forever and forever. Some argue that the X-box's games like Halo have a "quality" to them unlike a PS2. While the other side says the PS2 has a better "quantity" with their system.

Getting back to the orignial topic this could hurt Sony in that area. Sony really opened their arms to 3rd party developers for the PS1 and its game library shot above the N64. They did the same thing for the PS2 which gives them the huge game library and special support of the system (GTA, MGS, FF).

Mircrosoft has started to do this but they're not even close to Sony. Microsoft has Halo, that's it really. Sony still has MGS and Grand Turismo.

BUT

If Sony wants to wait their 3rd party support might not want to wait around and may go to Microsoft who has their system out which is also easier to program for. The Finale Fantasy games will be on both systems from now on if I'm not mistaken. It might be for just the new one but I think it's for all of them.

If Sony waits Rockstar could decide to open their new GTA on the 360. The best selling game on the PS2 is GTA: SA and GTA: VC. If the newest one opens on the 360 then their goes their biggest seller.

[directory]

it's all a waste of money...

[Muscletang]

Originally Posted by directory

it's all a waste of money...

That may be your opinion but it sounds a little silly to me just to say that. Is it a waste of the people's money or the corporation's money?

[directory]

i see it as both. i don't own a psp/playstation/xbox.

i went all out and built a computer to handle my gaming needs. for just under $1000-- its faster and has better graphics than all of those systems combined. does way more than any hand held can do (just only in my computer room..heh) i use my another computer to play music and a 3rd computer is for movies...you get my drift..

with my emulators--i can play any game i want....

don't fall for the big companies "latest and greatest". you'll only end up disappointed and broke--with a bunch of machines laying around on the floor.

screw all of the competition that drives up the prices. i just wait for the games to become available.

[longlivetheZ]

The $99 iPod is an iPod Shuffle...not a real iPod. I don't even know why the make that Shuffle thing...it's like having a player that's permanently stuck on "shuffle". But still...there are other MP3 players out there that ARE that cheap. I just like having it all in one thing.

You say the DS has more games...the DS has 153 games (according to the DS home page) and the PSP has 119 (according to the PSP home page...and, yes...I counted them...). The DS JUST plays games...it should have more. Also, are you taking into account the approx 315 UMD movies for the PSP? (Counting those were fun...yup...all 18 friggin pages) I'm sure "parents take this into consideration", as you say (you must be a parent). This could replace the fancy schmancy DVD player the parents were going to put into the family minivan.

PSP Pros:

Plays games...most of which I consider to be much less childish. Nintendo has always been kinda "kid oriented" in my mind. Sure, they do have some "adult-ish" games, but they have a huge array of kid oriented games. I'm not a kid. I don't have kids.

Plays movies...they have a SHIT LOAD of movies out for this thing...

Wireless internet enabled...very handy when I don't feel like turning the computer on but I wanna check my mail. Online games also kick ass...I love SOCOM online...DS doesn't do this..."Future games may take advantage of the DS Wireless LAN connection for more multiplayer possibilities.", as their site says.

Plays videos...you can download off the internet, put them on from you computer, whatever.

Allows you to view pics.

Acts as an mp3 player.

You can personalize the look of the screen with wallpaper pics...who really cares? Not a big deal but I think it's kinda cool.

The periferals out there for the thing are really cool. Little docking stations with speakers so you can watch movies on it easier, external hard drives, etc...very cool stuff.

The only pro the DS has in my eyes is that it's cheaper. This is far overshadowed when you look at all it doesn't do, though...especially when the PSP isn't THAT much more than it.

PSP vs. DS is no contest in my eyes...guess that's why I have a PSP...lol.

Now, don't get me wrong...my ex that I still live with (not for long...that's a long story...) has a DS so I have used both systems before.

[Muscletang]

UPDATE

Sony may delay launch of PlayStation 3

The launch could be delayed from the scheduled debut in the spring because of the failure to set the specifications of the Blue-ray DVD technology, a Sony Computer Entertainment spokesman said, according to Kyodo News.

Thought so, as I've said before, the Blue-ray was a bad idea from the start.

The Blu-ray DVD technology is "indispensable" for PlayStation 3 consoles which feature high-definition, movie-quality graphics, the Sony spokesman reportedly said.

Uh oh. Considering that's the high point everybody is praising about this thing, it'd be a bummer if it was released without it.

A group of about 80 Blu-ray DVD manufacturers, including Sony Corp. and Matsushita Electric Industrial Co., failed to set specifications for the advanced DVD format by the end of last year, Kyodo said.

I've heard this thing Blue-ray has its problems but I didn't know it was this bad. I thought they were suppose to be shipping these things out now.

Sony Computer Entertainment has apparently been behind schedule in taking orders for the new PlayStations from retailers, Kyodo said.

More good news.

Sony is now likely to shift its focus on product sales from the spring to the year-end sales period, promotion for which begins in October, industry analysts told Kyodo.

I'd say this would be the smartest plan. Stop trying to make the spring, gather your strength, and try to launch an all out assault on the Christmas season.