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PlayStation 3 arrives to long lines at stores, red ink at SonyBy YURI KAGEYAMA AP Business Writer The Associated Press Video game fans will brave the cold and stand in long lines Saturday to buy Sony's PlayStation 3 in what's certain to be a sellout launch in Japan of the much-awaited upgrade to the popular console. Supply is limited as Sony Corp., plagued with production problems, has managed to ready only 100,000 PlayStation 3 machines for the Japan launch date. When it goes on sale in the United States Nov. 17, some 400,000 PS3 consoles will be available. The sales date has been pushed back in Europe until March. "I waited all this long, and I'm not disappointed. I'm glad I waited," said Takayuki Yokozawa, a 27-year-old employee at a computer maker who owns the original PlayStation as well as its successor PlayStation 2. Despite such enthusiasm, Sony will be losing money for a some time on each PS3 sold because of the high costs for research and production that went into the highly sophisticated machine. Powered by the new "Cell" computer chip and supported by the next-generation video format, Blu-ray disc, the console delivers nearly movie-like graphics and a sense of reality in gaming, including detail for sword-wielding soldiers or faces in a crowd, as well as subtle textures such as shining metal or pulsating human flesh. The more expensive model with a 60-gigabyte hard drive, costs about 60,000 yen or US$600 in the U.S. But Sony expects to lose 200 billion yen (US$1.7 billion; euro1.34 billion) in its gaming division in the fiscal year through March 2007. Game makers like Sony must retrieve the returns for the exorbitant development costs for the machines by selling game software. But developing games for PS3 is a costly and time-consuming task because the machine is loaded with cutting edge technology. Only five games will be on sale on the PS3 Japan launch date. The red ink is coming at a time when the Japanese electronics and entertainment company, known for the Walkman portable audio player and "Spider-Man" movies, is struggling to stage a comeback. In recent years, Sony fell behind in key products like flat-panel TVs and digital music players. But it has been making progress with a two-year revival by getting back to basics in its consumer electronics operations. But a major fumble in its PS3 business could prove a huge blow to the already faltering Sony, at a time when it's seeing its brand image badly tarnished by a massive global recall of lithium-ion batteries for laptops. In an unprecedented move, Sony slashed the price for the cheaper PS3 model in Japan ahead of its launch by 20 percent to about 50,000 yen (US$420; euro330) in what some critics have scorned as a desperate effort to win market share, in the face of intense competition with Japanese rival Nintendo Co.'s Wii console and U.S. software maker Microsoft (News - Alert) Corp.'s Xbox 360. Wii goes on sale Nov. 19 in the U.S. and Dec. 2 in Japan. Xbox 360 has had a year start. Last month, Sony lowered its forecast for its fiscal 2006 group net profit by 38 percent to 80 billion yen (US$680 million; euro540 million), citing costs for the battery recall and PS3 expenses, including the production problems and price cut. Tatsuya Mizuno, analyst for Fitch Ratings in Tokyo, believes it will be hard for Sony to maintain the 70 percent market share domination it has built with previous PlayStation consoles, and Sony will likely lose some of that market to rivals, especially Nintendo. Sony has sold more than 200 million PlayStation series machines over the years. "If Sony had kept it a simple game machine, then it could have kept costs lower," Mizuno said, referring to its ambitions to push PS3 as the herald for a host of futuristic Internet-connecting gadgets. "But it's still a big question whether there really is a market for that kind of product among consumers." Sony has already drawn criticism for announcing that a software download upgrade will be needed for some PS3 online services, such as online gaming, implying the machine wasn't completely ready at its launch date. Sony Computer Entertainment spokesman Daisuke Nakata says the download was neither unexpected nor a fix for a problem, and it's easy and relatively fast. "We view software updates as a positive thing," he said. Still, skepticism has been growing about PS3. The machine was initially promised for worldwide sales for spring this year but was postponed in March to November. In September, the European sales date was delayed by another four months. Although Sony is sticking to its plan to ship 6 million PS3 machines worldwide by the end of March next year, Mitsuhiro Osawa, analyst for Mizuho Investors Securities Co., thinks Sony may fall short of that target. "There may not be enough machines to go around, and people will buy Wii and Xbox," Osawa said. "For all you know, it may take Sony five years to get back the money it's invested in PS3, even 10 years if it doesn't watch out." That doesn't bother Hisafumi Funato, a 35-year-old who plans to buy PS3. "The image quality is so superb you'd almost think it's a real movie," he said after trying it out at a demonstration event in downtown Tokyo. "I want one, especially if I don't have to stand in a long line." |