Sony has much riding on PS3 launch

With the launch of its PlayStation 3 video game console six months away, Sony 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. During 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, 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's already-released Xbox 360 and Nintendo'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."

Source: ZDNet

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