Consumer electronics giant Sony may delay the launch of its next generation games console.
Technological issues are currently hampering the PS3’s development. At the heart of the problems are the cost of the CPU chip and the specification for the next generation Blu-Ray DVD drive in the machine. Sony is expected to shoulder a considerable loss on the machines during its initial stages as the cost of production could be anything up to 50% more than the widely anticipated $499 price tag of the machine.
We originally predicted the games sector to grow by 15.6% in 2006, driven by a PS3 launch during Q3, sufficient to take the value of the sector beyond the GBP3 billion mark for the first time. However with the PS3 now not expected to arrive in the UK until Q1 2007, this will result in around GBP90 million of lost sales this year.
This news could not come at a better time for Microsoft, which will now enjoy almost a full year of sales as the UK’s sole next generation console. It will face some limited competition from Nintendo’s next generation offer – the Revolution – but the console does not possess the wider home entertainment capabilities of either of its rivals.
We expect Microsoft to use this extended timeframe to make some improvements to its machine – by upgrading the size of its hard disk from the current 20 GB to something closer to the optional 80 GB drive the PS3 will offer and to extend its games catalogue even further.
Although Microsoft has not signaled any intentions to incorporate a HD DVD drive into the Xbox 360, the delayed launch of the PS3 could present it with the opportunity to provide the cheaper HD DVD format it is backing a significant boost by incorporating it into future machines. Both companies have a lot at stake beyond the next generation console battle. They are betting everything on the disc wars and such a move could put a spanner in the works for Sony’s chances of success.
