Sony Corp, the world's biggest maker of video game machines, will begin selling a portable game player by the end of next year, posing a challenge to the hand-held Game Boy devices built by rival Nintendo Co.
The device, called PSP, is aimed at extending Sony's lead in the market for video game players to hand-held devices.
Sony's PlayStation 2 is the top game console, selling more than twice as many as Microsoft Corp's Xbox and Nintendo Co's GameCube combined.
Detailed specifications of the gaming device, or its price, were not disclosed.
"We can't tell whether the release of a new product is good for a company or not until we actually see its content and the scope of its ability," said Kazuya Yamamoto, an analyst with UFJ Tsubasa Securities Securities Co, who has an "underperform" rating on Sony.
Nintendo has benefited from demand for its Game Boy Advance, the top-selling portable game player, as sales of its GameCube console fell short of its forecasts. Nintendo sold 15.7 million Game Boy Advance players in the fiscal year ended in March, 700,000 more than it had forecast.
Sony needs new hit products to woo buyers and win back support from investors who sold the stock after the company surprised the market with poor earnings and forecasts last month.
Microsoft Corp's Xbox this year surpassed the GameCube to become the world's second best-selling console behind the PlayStation 2. Sony's PSP is scheduled for release next year.
"We wanted to take the entertainment experience that we brought to the home in 1995 with the PlayStation and 2000 with the PlayStation 2 and take that exciting entertainment experience outside the living room," Kazuo Hirai, the president and chief operating officer of Sony Computer Entertainment America Inc said in an interview.
Sony ADRs, which each represent one of Sony's common shares, rose 1.6 percent to US$25.52 in New York Stock Exchange composite trading. Nintendo ADRs, eight of which represent on common share of the company, fell 1.9 percent to US$10.15. Microsoft shares fell 0.8 percent to US$25.99.
At the Electronic Entertainment Expo in Los Angeles, the annual video game trade show, Sony also announced that it will begin shipping its PlayStation 2 in the US with a modem that allows users to play each other over the Internet.
Sony has sold the modem separately for US$39.99 and the price of the PlayStation 2 console with the modem will remain at US$199 in North America.
Electronic Arts Inc, the largest US video game publisher, said it will make the console versions its top-selling sports games, such "Tiger Woods PGA Tour 2004," available for online play only through Sony's machine, not Microsoft's Xbox.
Microsoft and Sony are trying to attract video-game users who like to play each other over the Internet.
Sony, which lets users play games either by dial-up or high-speed Internet access, has sold more 600,000 modems since last August. Hirai said he aims to have at least one million online players for PlayStation 2.
"Winning the console wars is great, but it's incumbent upon us to make sure that we further evolve the business beyond the traditional battle of the boxes," Hirai said.