----------------------------------- hbgator Sun 07 May, 2006 Sony bets more than video game unit on PS3 success ----------------------------------- TOKYO, May 7 - With the launch of its PlayStation 3 video game console six months away, Sony Corp. is gearing up for an all-out battle to put the electronics and entertainment conglomerate back on a growth path. At stake is not just pole position in the $25 billion video game industry, but dominance in the next generation of DVDs, the commercial viability of Sony's Cell microchips and possibly control over living-room electronics around the world. Sony needs a hit. Over the past four years, its revenues were virtually flat as its operating profit rose 3 percent. By comparison, rival consumer electronics company Matsushita Electric Industrial Co. Ltd. , the maker of Panasonic brand products, boosted its sales by 20 percent and saw its operating profit soar more than threefold. Sony's new console, equipped with a Blu-ray next-generation disc drive and powered by the Cell microchip, is slated for early November release, setting the stage for a three-way showdown with Microsoft Corp.'s already-released Xbox 360 and Nintendo Co. Ltd.'s upcoming Wii. Sony controls about two-thirds of the current-generation global game console market. Although the game unit accounted for less than 5 percent of the corporation's operating profit in the year ended March 31, the division's performance has sweeping effects on the Sony group. "We will supply microchips and other key devices in large quantity for PlayStation 3. So, the impact will be felt in Sony's all core businesses," Sony Senior Vice President Takao Yuhara told reporters last week. "Our movie division is also holding high hopes on Blu-ray. PS3's success is a concern for the Sony group as a whole." BLU-RAY VS HD DVD Sony is a leading proponent of Blu-ray optical disc technology, which competes with the HD DVD standard promoted by Toshiba Corp. and supported by Microsoft. Since Sony holds more patents in Blu-ray technology than in the current generation of DVD format, a victory over HD DVD would boost Sony's bottom line substantially. Toshiba launched the world's first next-generation optical disc players in March, but Sony hopes PlayStation 3 sales will turn the tide in Blu-ray's favour. Sony expects to sell 6 million units of PlayStation 3 by March 2007. "Brisk sales of PS3 means lower cost of Blu-ray drives for (stand-alone) optical disc players and recorders," Daiwa Institute of Research analyst Kazuharu Miura said. "Toshiba is selling the lower-priced version of its HD DVD players at about $500 in the United States. If Sony gives a similar price to PlayStation 3, that would make the machine attractive not only as a game console but as a Blu-ray player," Miura said. Key information on PlayStation 3 such as selling prices and software availability may be unveiled at the Electronic Entertainment Expo, or E3, in Los Angles, an annual trade show the week of May 8. Sony also counts on robust sales of PlayStation 3 for boosting output and reduce production cost of Cell microchips, co-developed with Toshiba and International Business Machines Corp. to drive advanced digital electronics. "Achieving volume production of Cell chips for the game console and then putting them in its digital electronic products is Sony's strategy," Mizuho Investors Securities analyst Mitsuhiro Osawa said. "If Sony fails to sell PlayStation 3 in volume, this business model crumbles." POINT OF NO RETURN Sales versus Microsoft's latest console will be watched particularly closely since any success of Xbox 360 is expected to allow Microsoft, which already dominates the PC sector with its Windows operating system, to gain a secure foothold in living room electronics -- a Sony stronghold. "In the PC market, growth is still brisk in volume terms, but not so much in value, prompting Microsoft to go after the living room," Daiwa Institute of Research's Miura said. Sony's company-wide effort to drive PS3 sales and defend its home turf comes with a hefty price. The company says operating profits will tumble 48 percent in the fiscal year to March 2007 as heavy start-up costs for PlayStation 3 push its game division deep into the red. "Sony has been the winner in the game industry and I have no problem with that. But it appears that it is going to cost Sony an arm and a leg to defend that position," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management. "I wonder just how much return they can get from that," Akino said. Despite such market concerns, Sony has no choice but to keep pressing towards the November launch after pouring in billions of dollars for PS3 development, Osawa said: "The point of no return is behind it." ----------------------------------- Lady DarkFire Mon 08 May, 2006 Re: Sony bets more than video game unit on PS3 success ----------------------------------- Wow, it's already six months away from being released! I remember fondly the day the PSone came out. I had a pre-ticket sale and bought the console for $249.00 at Toys R Us. Amazing how fast Sony has been developing the system since those early days. Hmm maybe I should get a pre-ticket now at least the PS3 sounds better than a Wii. -_- ----------------------------------- hbgator Mon 08 May, 2006 Re: Sony bets more than video game unit on PS3 success ----------------------------------- yes a release right before the holiday shopping season *lol* ----------------------------------- aiolos Mon 08 May, 2006 Re: Sony bets more than video game unit on PS3 success ----------------------------------- We've read some wild price speculations over the past few months. Everything will depend on how much money Sony is prepared to lose on each console. Sony has always been very strong in Japan, but I doubt the rest of the world would pay more than $500 for a console. ----------------------------------- Lady DarkFire Tue 09 May, 2006 Re: Sony bets more than video game unit on PS3 success ----------------------------------- 500 dollars? Yeah I say that's pretty steep but then again as the article mentioned its the price they have to pay to stay on top. Far as I remember though Sony has always been pricey when compared to Nintendo. I agree that not everyone will want to shell out so much money for a system just before the holiday season. Then again...some people were willing to buy that horrid new Xbox for 600 dollars on ebay and the thing didn't even work properly, lol. ^_^; ----------------------------------- aiolos Tue 09 May, 2006 Re: Sony bets more than video game unit on PS3 success ----------------------------------- I had great inspiration last night. :D It seems that the PS3 will indeed cost $500. I wish I was that lucky with numbers in the lottery... ----------------------------------- hbgator Wed 10 May, 2006 Re: Sony bets more than video game unit on PS3 success ----------------------------------- yes 500 dollars gets you the cheap model too, you have to add another 100 for the top gamer ----------------------------------- aiolos Fri 12 May, 2006 Re: Sony bets more than video game unit on PS3 success ----------------------------------- Still, Sony thinks their console is not expensive : Kutaragi said: "This is the PS3 price. Expensive, cheap - we don't want you to think of it in terms of game machines." "For instance," Kutaragi continued, "Is it not nonsense to compare the charge for dinner at the company cafeteria with dinner at a fine restaurant? It's a question of what you can do with that game machine. If you can have an amazing experience, we believe price is not a problem." Kutaragi reiterated comments he made earlier regarding the original PlayStation, which he says was also considered too expensive at launch. "Same for the PlayStation 2," Kutaragi said. "However, when released, both had sales that were unthinkable for previous game machines. This is because both offered experiences that could not be had on previous machines." ----------------------------------- santa Fri 12 May, 2006 Re: Sony bets more than video game unit on PS3 success ----------------------------------- any word if the games from psone and ps2 can be play :?: ----------------------------------- aiolos Wed 17 May, 2006 Re: Sony bets more than video game unit on PS3 success ----------------------------------- Speaking with a spokesperson from Sony, the rep said that any rumors of not being able to upgrade are completely false. This confirms comments made by Sony's Phil Harrison in a recent interview with GI.biz, where he stated: "You can upgrade to whatever size of drive you like. You can put in any drive that you like - it is a computer, after all." The spokesperson went on to reveal that Sony plans to release a Wi-Fi adaptor for the 20GB PlayStation 3. Consumers will also have the option to purchase a separate adaptor that will allow the use of memory sticks, SD cards and compact flash cards with the machine. Apparently, the only item on the lower end machine that will not be upgradeable, is the HDMI output, that is featured on the 60GB model.