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Sony Sticks to PlayStation 3 Shipment Target

Sony is sticking to its target of shipping 2 million PlayStation 3 consoles by the end of the calendar year, its president said Thursday as he addressed concerns the company wouldn't be able to meet even the relatively low goal it set ahead of the year-end shopping season.

Speaking to reporters in Tokyo, Sony Corp. (SNE) President Ryoji Chubachi also said there were no expected changes in the cost of an embarrassing global recall of Sony laptop batteries, which has affected almost every major laptop maker in the world.

"It's true that availability has been a bottleneck," Chubachi said of the PlayStation 3. "But the targets are achievable. We do not need to revise our shipment targets."

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Tokyo-based Sony also expects to meet its shipment target of 6 million PS3 ready by the end of the fiscal year ending March and will launch its next generation system in Europe as soon as possible, Chubachi said.

PlayStation 3 made its highly anticipated world debut in Japan in November to long lines, with local stores selling out their supplies of the video game console in a pattern that was followed days later at the U.S. opening.

The console, which is powered by the new Cell computer chip and supported by the next-generation Blu-ray video disc format, delivers nearly movie-like graphics.

But the launch has been anything but smooth. Plagued with production problems, Sony pushed back its release date and said it expected to ready only 1 million PlayStation 3 machines each in time for the year-end holiday crunch. It also postponed its Europe launch until next year.

There is concern, however, that even the total 2 million machine mark may be a challenge. Though Sony has not released sales or shipment figures, some industry estimates have put actual shipments below 2 million.

That has helped rival Nintendo Co.'s Wii, which also hit U.S. stores last month, outsell the PS3 there by more than two to one, according to industry figures. Microsoft Corp.'s (MSFT) Xbox 360 got a head start with a launch last year.

The competition has meant it will be difficult for Sony to maintain the dominance its previous generation consoles commanded on the global market, with more than 200 million PlayStation series machines sold worldwide over the years.

Selling machines in high volumes is crucial in the gaming business because hot-selling formats attract software companies to make more games, which in turn boost console sales.

The company is also relying on royalties from game makers to reap returns on the massive investment in its PS3 console.

Sony will be losing money for a some time on each PS3 sold because of the high costs for research and production that went into the highly sophisticated machine, as well as high costs of parts.

Chubachi said Sony is working to cut PS3 production costs, and expected to see the effects of that next year. A weak yen against the euro is also expected to minimize losses it makes on consoles sold in Europe and play to Sony's advantage.

He also said a recent management reshuffle — which saw technology guru Ken Kutaragi relieved of day-to-day responsibilities as president of Sony's game unit — was meant to reflect more emphasis on software development and marketing elements of an increasingly vital business for the company.

"With the PS3 launch, the entire game industry will expand. Its positioning within the Sony group is larger than ever," Chubachi said.

Kutaragi, also known as the "father of the PlayStation," was technically promoted from president to chairman of Sony's gaming arm.

But in Japan, such a move sometimes disguises retirement or demotion — and analysts have expressed concern that Kutaragi was sidelined over difficulties in the PS3 launch or that the move signals serious disagreements within the group's executives.

The PlayStation 3's success will be critical to helping a company struggling to gain lost ground to rivals in digital music players and flat-panel TVs.

Welsh-born American chairman Howard Stringer — the first foreigner to head Sony — has closed plants, wiped out divisions and trimmed jobs in an attempt to turn round the company's fortunes.

But recovering sales got devastated by a recent massive global battery recall, which cost the Japanese electronics and entertainment company 51 billion yen ($438 million) in the third quarter.

Almost every major laptop maker in the world, including Dell Inc. (DELL), Apple Computer Inc. (AAPL) and Lenovo, has announced recalls of Sony lithium-ion batteries that could overheat and burst into flames

Startup costs for the PS3 have also battered Sony's books, sending its profit for the July-September quarter plunging 94 percent to 1.7 billion yen ($14.6 million).

Sony shares rose 1.8 percent to 4,970 yen ($42.45) Thursday in Tokyo, little changed from the morning close before Chubachi's comments. The company's share price has fallen by almost 20 percent since April.

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