Sony Delays Launch of Playstation 3

TOKYO – Sony will put off the release of its much-awaited PlayStation 3 machine until November from its planned spring debut because of delays in finalizing its next-generation disk technology, the company said Wednesday.

Ken Kutaragi, the head Sony's video game division, made the announcement at a hastily called news conference after reports of the delay surfaced in the business daily Nihon Keizai Shimbun and other papers.

The PlayStation 3 is critical for Sony Corp's profits and brand image, so a delay is seen as a major setback for the Japanese electronics and entertainment company as it struggles to mount a recovery after several years of poor earnings.

Reports of the delay sent Sony's stock tumbling 1.8 percent to 5,470 yen ($46) Wednesday. Kutaragi announced the decision after the close of trading on the Tokyo Stock Exchange.

Kutaragi said the company is still trying to finalize the copyright protection technology for the Blu-ray disc, the format for PlayStation 3 and next-generation video for the company's electronics gadgets in the works.

The new timeline means that the PlayStation 3 will still hit store shelves in Japan and North America in time for Christmas.

The PlayStation series is now the dominant brand for home consoles, helping support Sony's bottom line in recent years. Sony has shipped nearly 204 million PlayStation machines worldwide, when combining the original PlayStation and PlayStation 2.

But competition in next-generation game consoles is heating up with U.S. software maker Microsoft Corp. already putting the Xbox 360 on sale last year. Nintendo Co., the Japanese manufacture of Game Boy machines and Pokemon and Super Mario game software, is also planning its version called Revolution later this year.

The success of the new machine when it goes on sale, including pricing and game software lineup, will be more important than the timing of the sale, said Yuji Fujimori, an analyst with Goldman Sachs.

A delay was already factored into the share price, he said, because of growing speculation the PlayStation 3 may be delayed.

"The news brings some measure of assurance in that it indicates the PS3 will be ready for the year-end holiday season," Fujimori said in a report.

Any setback in the PlayStation business could deal a big blow to Sony at a time when it just announced in January it will post a profit of 70 billion yen ($592 million) for the fiscal year through March, instead of sinking into a 10 billion yen ($85 million) loss forecast earlier.

The loss would have been the company's first full-fiscal-year loss in more than a decade since plunging into the red in 1994 for losses related to its acquisition of Columbia Pictures.

Toshihiro Atae, head of sales at Fimat, a brokerage in the Societe Generale group, in Tokyo, said a delay alone isn't enough to determine how the PlayStation 3 business will fare.

"We don't really have a clear picture yet of how this is going to hit Sony's earnings," he told Dow Jones Newswires.

For decades, Sony symbolized Japan's manufacturing power exemplified in its Walkman portable. But in recent years, the company, which also has movie and music businesses, was battered by declining electronics prices. Sony also fell behind rivals in flat-panel TVs and music players that have been the main growth products in electronics.

Sony's core electronics division has lost money for two straight fiscal years. It's only been in recent months Sony has made somewhat of a comeback in flat-panel TVs using liquid crystal displays manufactured in a joint venture with South Korean rival Samsung Electronics Co.

Sony has also come out with Walkman MP3 digital music players to try to catch up with the hit iPod from Apple Computer Inc. Earlier, it had resisted catering products for the growing MP3 format because of concerns about copyright infringement.

Since Welsh-born Howard Stringer took over last year as the first foreigner to head the company, Sony has been trying to achieve a turnaround.

It has scrapped unprofitable operations such as Aibo entertainment robots, plasma display TVs and an expensive luxury audiovisual line offered in Japan called Qualia. It has also promised to trim 10,000 jobs, or nearly 7 percent of Sony's global work force, by March 2008.