Sony Aims To Step Up Sales and Dethrone Nintendo

Jennifer LeClaire, newsfactor.com Tue Jul 22, 4:46 PM ET

Nintendo's Wii may be in the lead, but Sony is looking to reach the 150 million sales mark for its PlayStation 3 video-game console within the next few years.

Kaz Hirai, CEO of Sony's PS3 game-console division, told E3 convention attendees last week that sales of the original PlayStation reached 102 million units since 1994. The popular PlayStation 2, now in its ninth year on the market, has sold 140 million units. Hirai hopes the PS3 will outpace its predecessor in a similar time frame.

"It's not fun for me replicating the PS2 numbers. I've seen that movie already," he said. "I want to try to see if we can exceed the PS2 numbers after nine years, otherwise why are we in this business?"

An Unexpected Competitor

Of course, Sony didn't have the Wii to contend with in the past. The game-console crown was Sony's to lose in the latest round of video-game hardware wars. Sony held the title for the past two consecutive generations, an impressive feat in the industry, according to Michael Gartenberg, an analyst at JupiterResearch.

"Fairly late in the console cycle Sony is making some moves to try to reestablish its position," Gartenberg said. "It's not likely now that Sony will dominate the market as it did in past generations. At this point is a question of can Sony at least move into the market leader position? Certainly the last company Sony was expecting to deal with in that role was Nintendo."

Sony's admitted problem is that it made a heavy bet early on that Blu-ray drives would drive adoption of the PS3, and it didn't. Rather, the Blu-ray issue caused manufacturing delays and drove up the cost of the console out of the gate. What's more, Gartenberg said, Sony didn't have a great game title at launch. Now Sony has Metal Gear Solid 4, which is the type of title you need to drive sales and drive down price points.

"What it really will come down to is holiday 2008," Gartenberg said. "It is going to be a very critical point in this console cycle in determining who takes the lead."

A Holiday Battle Brewing

For now, Nintendo is clearly winning this round of the console wars. The Wii is expected to win 50 percent or more of the installed base while Microsoft and Sony battle over what's left. A Sony price cut could give it the edge, but Nintendo has taken its crown.

"The video-game market has expanded. Nintendo has done a very good job of going beyond the traditional video-game audience, extending gaming to other members of the family, focusing on gaming on media, content and other applications and services," Gartenberg said.

"What it's going to look like is who has the game lineup in the fall, how those games ultimately shake out in the marketplace, and what are the price points," he said. "Even as games represent a good value to consumers in a down economic situation, people will still be looking at the core value proposition very carefully to see who gives them the best entertainment value for their dollar."