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Sony frets over PS2

On the one hand, they could lose money, but on the other they could lose market share!

Sony is feeling the heat of competition breathing down its neck, if a report today at FT.com is to be believed. Kunitake Ando, Sony's president and COO, has told the FT that the presence of Xbox on the market could shorten console lifecycles. In other words Ando-san fears that the more powerful Xbox, which actually retails for the same price as PlayStation 2 in the States, will force Sony to manufacture the PlayStation 3 ahead of schedule. Ando-san also uses the opportunity to have a little pop at Nintendo, drawing attention to the disappointing sales of the console in Japan. At the moment, Sony's console is the only one on the market in the USA, but as of this time next week it will have two competitors to deal with. The PS2 has an awesome catalogue of titles at the moment, though, and not content with that, Konami has mysteriously decided to launch Metal Gear Solid 2 one day after the US Xbox launch. The news that Sony feels PS3 production may need to be ramped up sooner is slightly confusing, because the company isn't used to backing away from current formats as soon as something else hits the market. That was Sega's MO, and the last thing we want is Sony repeating their mistakes. If it's so worried about market share slipping through its fingers, why not hack another $100 off the price of PS2? Don't forget, while we pay £199, American consumers still having to pay $299 - a shade over £200 at current exchange rates. Under normal circumstances we would expect to pay as many pounds as the yanks pay dollars. Sony isn't exactly giving itself every break, which is why this PS3 message seems somewhat confused. The truth is, Sony may not be losing much money on PS2 units at the moment, but with another $100 off the price it would be, and in order to get PS3 production online early (which Ando-san believes his company may need to do) it needs to recoup a lot of its investment in chip manufacturing. Perhaps now it's regretting its decision not to farm out console production to another firm, as Microsoft have done with Xbox… If Sony is in that position, it's a no-winner. They can't afford to drop the price of PlayStation 2 because they need to recoup costs, but they certainly can't afford to let Microsoft steal their market share by undercutting them in the near future. So which is worse? Losing the ability to construct PlayStation 3 in time to deal with an Xbox successor (HomeStation is still happening, as far as we know), or losing market share? It's an unenviable position to be in. The one thing we would say, is that Microsoft has more of a fight on its hands than anybody else. They have no previous success in the games console sector upon which to base their promotions, few if any killer applications (Jet Set Radio Future isn't even out yet, so forget that), and they are opting for the higher price of $299. With things the way they are now, Sony's next move may decide whether Xbox is a success or a failure. Related Feature - The Console Wars

Source - FT.com