An apologetic Sony delays its PlayStation 3 to November
By Martin Fackler The New York Times
WEDNESDAY, MARCH 15, 2006
TOKYO Sony said Wednesday that it would postpone release of its next-generation PlayStation video game console until November, a potentially costly decision that the company called a marketing move but that analysts said might reflect difficulty in containing high component prices.
The delay of the new console, PlayStation 3, is an apparent setback to Sony's turnaround efforts at a time the struggling electronics giant badly needs a new hit. The formerly highflying electronics maker has fallen on hard times as competition from China has eroded earnings on bread-and-butter consumer electronic products like televisions.
Ken Kutaragi, president of Sony's game unit, apologized before a hastily called meeting of game software developers, analysts and reporters for failing to have the console ready this spring as originally promised. He cast the delay as largely a strategic move to give developers time to write game software and to make a splash during the year- end holiday shopping rush.
Kutaragi said Sony would be ready to produce a million consoles a month by November and planned to make six million machines by March 2007.
"Instead of rushing, we want to have a solid launch," Kutaragi said. "We wanted to have time to make the big sales season that starts with Thanksgiving."
But analysts said the delay would be costly for Sony. It means PlayStation 3 will not reach the market until nearly a full year after Microsoft released its competing machine, xBox 360. Sony has also been counting on PlayStation 3 to serve as a showcase for two new technologies upon which the company is betting its future: the Blu-ray DVD format and the powerful Cell processing chip, co-developed with IBM and Toshiba.
Sony is particularly eager to build up market momentum for the Blu-ray format, which is locked in a battle with a technology from Toshiba to become the global standard for next-generation DVDs. Sony has hoped that installing Blu-ray drives into PlayStation 3s would help popularize the format. Victory could mean billions of dollars in sales and royalty payments.
Sony is also betting on these new technologies to make PlayStation 3 a success. With Blu-ray offering five times more memory capacity than current DVDs, and the Cell chip processing speeds dozens of times those of its predecessor, PlayStation 3 promises a leap in graphics and realism that Sony hopes will dazzle consumers.
On Wednesday, Kutaragi cited delays in developing copyright protection technology for the Blu-ray disc drive as a factor in PlayStation 3's delay. But he said this and other technical problems would be resolved by June. He said Sony could have launched PlayStation 3 earlier had it chosen to do so.
"We were discussing selling it in September, and some even said put it out in July," Kutaragi said.
However, some analysts were immediately skeptical, saying Sony needed to get the console out as soon as possible to combat Microsoft's head start, and the expected release this year of Nintendo's next game console, Revolution.
They said Sony may be trying to buy time to bring down the production cost of key components like the Blu-ray drive and the Cell chip. While Kutaragi did not reveal a price on Wednesday, analysts say Sony would likely try to sell PlayStation 3 for about $500. While that is far higher than the $299 initial price of its predecessor, PlayStation 2, six years ago, analysts said it probably would be well below the new console's actual building cost.
"Sony faces the prospect of swallowing several hundred dollars in losses per machine until production volumes get high enough to drive down costs," said John Yang, an electronics analyst in Tokyo for Standard & Poor's rating agency.
One point upon which Kutaragi and analysts seemed to agree was the need to ensure a smooth roll out for PlayStation 3.
Sony desperately needs the new console to replicate the smashing success of PlayStation 2, which sold more than 100 million units in six years. Game consoles and related software have been Sony's most profitable products, contributing as much as two-thirds of operating income in recent years.
TOKYO Sony said Wednesday that it would postpone release of its next-generation PlayStation video game console until November, a potentially costly decision that the company called a marketing move but that analysts said might reflect difficulty in containing high component prices.
The delay of the new console, PlayStation 3, is an apparent setback to Sony's turnaround efforts at a time the struggling electronics giant badly needs a new hit. The formerly highflying electronics maker has fallen on hard times as competition from China has eroded earnings on bread-and-butter consumer electronic products like televisions.
Ken Kutaragi, president of Sony's game unit, apologized before a hastily called meeting of game software developers, analysts and reporters for failing to have the console ready this spring as originally promised. He cast the delay as largely a strategic move to give developers time to write game software and to make a splash during the year- end holiday shopping rush.
Kutaragi said Sony would be ready to produce a million consoles a month by November and planned to make six million machines by March 2007.
"Instead of rushing, we want to have a solid launch," Kutaragi said. "We wanted to have time to make the big sales season that starts with Thanksgiving."
But analysts said the delay would be costly for Sony. It means PlayStation 3 will not reach the market until nearly a full year after Microsoft released its competing machine, xBox 360. Sony has also been counting on PlayStation 3 to serve as a showcase for two new technologies upon which the company is betting its future: the Blu-ray DVD format and the powerful Cell processing chip, co-developed with IBM and Toshiba.
Sony is particularly eager to build up market momentum for the Blu-ray format, which is locked in a battle with a technology from Toshiba to become the global standard for next-generation DVDs. Sony has hoped that installing Blu-ray drives into PlayStation 3s would help popularize the format. Victory could mean billions of dollars in sales and royalty payments.
Sony is also betting on these new technologies to make PlayStation 3 a success. With Blu-ray offering five times more memory capacity than current DVDs, and the Cell chip processing speeds dozens of times those of its predecessor, PlayStation 3 promises a leap in graphics and realism that Sony hopes will dazzle consumers.
On Wednesday, Kutaragi cited delays in developing copyright protection technology for the Blu-ray disc drive as a factor in PlayStation 3's delay. But he said this and other technical problems would be resolved by June. He said Sony could have launched PlayStation 3 earlier had it chosen to do so.
"We were discussing selling it in September, and some even said put it out in July," Kutaragi said.
However, some analysts were immediately skeptical, saying Sony needed to get the console out as soon as possible to combat Microsoft's head start, and the expected release this year of Nintendo's next game console, Revolution.
They said Sony may be trying to buy time to bring down the production cost of key components like the Blu-ray drive and the Cell chip. While Kutaragi did not reveal a price on Wednesday, analysts say Sony would likely try to sell PlayStation 3 for about $500. While that is far higher than the $299 initial price of its predecessor, PlayStation 2, six years ago, analysts said it probably would be well below the new console's actual building cost.
"Sony faces the prospect of swallowing several hundred dollars in losses per machine until production volumes get high enough to drive down costs," said John Yang, an electronics analyst in Tokyo for Standard & Poor's rating agency.
One point upon which Kutaragi and analysts seemed to agree was the need to ensure a smooth roll out for PlayStation 3.
Sony desperately needs the new console to replicate the smashing success of PlayStation 2, which sold more than 100 million units in six years. Game consoles and related software have been Sony's most profitable products, contributing as much as two-thirds of operating income in recent years.




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Smart. (No confirmation but obviously they think it'll happen.)










There's about 15 "proposed" Revo interface screens on Joystiq alone.

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