When Sony Corp launches the PlayStation 3 in Japan this weekend, they will likely fly off store shelves in no time. But the road to profitability is expected to be a long and rocky one for Sony's game business.
Sony will roll out the latest version of its blockbuster games machine in Japan on Saturday in a three-way showdown with Microsoft Corp's Xbox 360 and Nintendo Co's upcoming Wii in the nearly $30 billion video-game market. The stakes are high for Sony.
With its Walkman music players trailing far behind Apple Computer Inc's iPod in a market the Tokyo-based company created more than a quarter of a century ago, losing its leading position in another key market would be nothing less than a nightmare.
Sony, which has dominated the game market over the past decade, packs the PS3 with its cutting-edge technology including a Blu-ray high-definition DVD player and the Cell microchip, dubbed a "supercomputer on a chip". The advanced functions and components guarantee lifelike graphics to please hard-core gamers. But they come at a price.
Sony, which calls the PS3 its most important strategic product of the year, plans to sell a basic model for 49,980 yen ($424), almost double the price of the Wii and 26 percent higher than the Xbox 360.
Still, Sony is expected to rack up a loss for every PS3 it sells, and the electronics maker forecast an operating loss of 200 billion yen at its game unit for the year to March. "The game business has been such a huge cash-cow operation for Sony," Shinko Securities analyst Hideki Watanabe said.
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