Sony feels the heat as stock tumbles on PS3 fears

Stan Beer
Wednesday, 04 October 2006 12:55

Your IT - Home IT

It seems that Sony can't catch a break in 2006. If it's not overheating batteries eroding profits due to recalls, overheating PlayStation 3 consoles causing machines to malfunction at games shows, poor PSP sales and Blu-ray manufacturing problems delaying PS3 production, then it's analysts questioning whether PS3 may be a flop in the market.

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A number of analysts have downgraded Sony stock and the company's share price has taken a fall as a cumulative result of the series of unfortunate events.

For the Sony, much of the immediate financial health of the company rests on the success of the PS3. It is under pressure to repeat the phenomenal success of its two predecessors, PS and PS2, hich have each sold well over 100 million units worldwide.

However, Sony has risked a lot with a single throw of the dice on PS3. It is by far the priciest games console to ever hit the market because of the integrated Blu-ray player.

In turn, Sony's success in winning the high definition video war against the HD DVD camp led by Toshiba and Microsoft, hinges to a great degree on how successful PS3 is in the marketplace.

Sony is hoping that PS3 sales will drive the Blu-ray market by giving consumers a relatively cheap option compared to high priced standalone Blu-ray players. While PS3 is expensive for a games console it is about the same price as a standalone HD DVD player.

Unfortunately for Sony and its investors, they are not likely to be able to gauge the success of PS3 for at least six months, when consoles become available in quantity in the key global markets. A sign that the company is deeply worried was displayed two weeks ago, when Sony took the unprecedented step of slashing prices of the PS3 two months before its release in Japan.