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Sony's PlayStation 3 to be delayed until November

Written by: Staff
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TOKYO, Mar 16 (Reuters) Sony Corp. said on Wednesday it would delay the release of its new PlayStation 3 video game console until early November because development of some of the technology was behind schedule.

The company, which currently dominates the game console market with a market share of about 70 per cent, said it planned to launch the much-anticipated PlayStation 3 (PS3) almost simultaneously in Japan, North America and Europe in time for the key holiday season.

''When we initially announced our plans to launch this spring, we had expected the standardisation work on all of the technologies to be completed by last August, but there were improvements that were decided on since then,'' said Ken Kutaragi, president of Sony's game division.

''We wanted to be sure to include all future technologies that are available now,'' he said at a business briefing for software developers as he apologised for not updating the industry sooner.

The PS3 launch date has been the subject of heavy speculation in the industry as expectations are high for the machine, which will have cutting-edge technology and is expected to enable users to play games and movies, as well as download videos from the Internet.

A six-month delay in the launch date could mean handing further advantage to rival Microsoft Corp., which launched its competing Xbox 360 console last November.

Sony is now also likely to go head-to head with Nintendo Co.

Ltd.'s next-generation Revolution console, which is expected to hit markets around the same time.

Sony shares fell 1.8 per cent on Wednesday after media reports the PS3 launch would be pushed back.

NEGATIVE BUT EXPECTED ''(The delay) is negative news, but it was expected,'' said Mitsubishi UFJ Securities analyst Hirotoshi Murakami.

''The launch date is before the Christmas shopping season, so it is avoiding the worst scenario,'' he said, adding that some analysts had speculated the PS3 would not hit the market until next year.

Toshiaki Nishimura, senior analyst at Yasuda Asset Management, said he believed the delay was likely to have a short-term impact on earnings.

''Because game sales are a big source of earnings for Sony ...

and because the release is being pushed back by half a year, this is likely to drag earnings in the first half of next year below the market consensus,'' Nishimura said.

U.S.-based Electronic Arts Inc., the world's biggest video game publisher, which gets most of its revenue from domestic sales, had expected a North American launch in the same time frame announced by Sony.

''It doesn't change our development plans,'' said EA spokeswoman Tammy Schachter.

The market expects Sony to post an operating profit of 167.04 billion yen in the business year from April, according to a consensus of 19 analysts compiled by Reuters Estimates.

KBC analyst Hiroshi Kamide said the delay of the PS3 also bodes ill for Japanese software developers, many of whom rely on PlayStation's popularity to drive revenues.

''There's nothing in the first half of the year and the install base in the second half will be so small it will have no material impact for earnings at all,'' he said. ''This is going to be a horrendous year.'' Kutaragi blamed the delay on the belated finalization of the copy protection technology standard for the Blu-ray Disc drive, a next-generation DVD player that will be included in the PS3.

The standardisation of digital audio and video technology to connect electronics devices was also late, he said.

Kutaragi said Sony planned to produce 1 million PS3 units a month initially, for a total of 6 million units in the business year ending March 2007.

''This may not seem like much, but it's more than the initial capacity for PlayStation 2,'' Kutaragi said, adding that near-final tool kits to develop games would be available to software makers by mid-May.

Analysts expect the PS3 to cost about 0 with an initial line-up of at least five to 10 games.

Microsoft's Xbox 360 supply has fallen short of the company's initial targets and exacerbated an industry slowdown as consumers wait for new consoles and game titles.

EA's Schachter said such early shortages are not uncommon.

''We always expect limited supply at launch,'' she said.

Sony shares closed down 100 yen at 5,470 yen. The electric machinery index was up 0.3 per cent and the Nikkei average was up 0.5 per cent.

REUTERS SD PM1630

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