Sony Corp, the world's biggest maker of video game players, will sell the PlayStation 3 starting in Nov. 11 in Japan, betting the console's new controller and high-definition DVD player make it worth US$100 more than Microsoft Corp's Xbox 360.
The PS3 will also come with a 20-gigabyte hard disk and sell for ¥59,800 (US$535) in Japan, and US$499 or 499 euros in the US and Europe starting on Nov. 17, said Sony Computer Entertainment America's chief executive Kazuo Hirai, yesterday at an industry conference in Los Angeles.
Sony demonstrated the console in Los Angeles with games including Electronic Arts Inc's NBA Live. It also touted features such as chatting and playing games online, as it looks to catch up with Microsoft, which started selling the Xbox 360 in November. Sony is looking to lure gamers with the unit's Blu-ray DVD player and a controller that allows users to maneuver games by waving it around in the air, features not available on the Xbox 360.
"Early adopters will buy the console, even if it's expensive," said Fumio Osanai, an analyst at UBS Securities Japan Ltd. "The Xbox 360 graphics are no different from the previous PlayStation and on top of that, the PS3 will have Blu-ray, so they can justify the price."
Sony on March 15 delayed the global release of the PS3 from an earlier target to get the player out in "spring," because of a holdup in copy protection standards for the Blu-ray DVD technology.
Shares of Sony have gained 2.6 percent since March 15 when it said it would delay the PS3 by about six months, lagging the Nikkei 225 Stock Average's 5.3 percent advance in the same period.
Sony stock fell 0.9 percent to ¥5,610 today.
The PS3 is key to Sony's business strategy because it uses the Cell chip, the company's fastest processor ever, and can help spur sales from its movie library which includes classic hits from Metro-Goldwyn-Mayer Inc's James Bond and Pink Panther series to recent blockbusters such as Spiderman.
"The PS3 is a pillar business for Sony, because it holds the future for its software and device businesses," said Naoki Fujiwara, who oversees about US$172 million in Japanese equities at Shinkin Asset Management Co in Tokyo. "I can't imagine the PS3 spreading that much -- at 60,000 yen it's not something you can easily get the kids for Christmas."
The PS3 price compares with US$399 for an Xbox 360 with a 20-gigabyte hard drive and US$299 for a version without a drive. The PS2 cost ¥39,800 in Japan when it came out in March 2000 and US$399 in the US. A 60-gigabyte version of the PS3 will sell for US$599 or 599 euros, and retailers in Japan can set their own price on that model.
Even with a US$599 price tag, Sony will lose about US$100 to US$200 on every unit is sells initially, analysts said.
The console costs about US$800 to make, Hiroshi Takada, an analyst at JPMorgan Securities Asia wrote in a report today.
Sony last month said the video games unit may have a ¥100 billion operating loss in the year started April 1.
"The start-up costs are such that you may not make money on every single unit from day one, but you will" ultimately make money, said Phil Harrison, president of worldwide studios at Sony Computer Entertainment, in an interview at the conference.