Sony Takes Aim at the Hand-Held Market
Eight years after entering, and then quickly dominating, the intensely competitive video game console market, consumer electronics giant Sony Corp. announced plans Tuesday to challenge rival Nintendo Co.’s control of the multibillion-dollar hand-held games business.
With the PSP, set to hit store shelves in late 2004, Sony will enter a field ruled by Nintendo, whose 14-year-old Game Boy has cornered more than 90% of the global market for hand-held games. The PSP also is intended to compete with efforts by Microsoft Corp., Intel Corp. and Samsung Electronics Co. to jointly develop a portable entertainment device for music and movies.
Sony’s device will have the processing power of its original PlayStation console and will be able to play movies, music and games on a 4.5-inch backlighted screen.
“This is the Walkman of the 21st century,” said Ken Kutaragi, Sony’s corporate executive deputy president and chief executive of its PlayStation business, which accounted for 13% of the company’s overall sales but 61% of its operating income for its fiscal year ended March 31.
The PSP will play discs half the diameter of a CD. Each disc will be able to store up to 1.8 gigabytes of memory -- about three times more than a CD and enough to play up to four hours of high-quality video.
“It will reset the whole playing field for hand-helds,” said Richard Doherty, research director of Envisioneering Group, a technology consulting firm in Seaford, N.Y. “You can now put a movie and a game on that disc.”
At Nintendo, about half of the $4.2-billion in annual revenue comes from sales of Game Boy devices and game cartridges.
“This is the first major threat to the unassailable Game Boy,” said Billy Pidgeon, senior analyst for Zelos Group in New York.
Nintendo executives said they weren’t worried about Sony, which made the PSP announcement at the annual Electronic Entertainment Expo being held this week in Los Angeles.
“We have a good head start,” said Satoru Iwata, president of Kyoto, Japan-based Nintendo, which has sold 27 million Game Boy Advance devices worldwide. “And we have a library of 1,000 games for the portable market. What will they have?”
Iwata questioned how much the PSP will cost.
“We also considered having all those functions that Sony talked about,” Iwata said. “But we decided against many of them because of the cost.”
Sony didn’t disclose a price for the PSP. Nintendo sells the newest version of its hand-held console, the Game Boy Advance SP, for $99.
Analysts said Sony wasn’t aiming just at Nintendo. It’s also tackling the market for portable entertainment gadgets that can play a wide variety of entertainment, Doherty said.
Microsoft announced in January a collaboration called Media2Go with hardware companies, including Intel, Samsung, Sanyo Electric Co. and ViewSonic Corp., to develop a device to play downloaded music, movies and photos. At the time, it said it hoped to have products available at Christmas.
