Sony finds trouble in Japan, cuts price by 20%

**Mels_Smileys45** · September 23rd, 2006, 11:18 PM

Sony Cuts PS3 Price by 20 Percent as Japan Users Balk

Sept. 22 (Bloomberg) -- Sony Corp., the world's biggest maker of video-game players, cut the price of its PlayStation 3 by about 20 percent in Japan, responding to complaints it cost twice as much as consoles from Microsoft Corp. and Nintendo Co.

The game player will retail for 49,980 yen ($430) from Nov. 11 and comes with a HDMI connection that allows high-definition pictures, Ken Kutaragi, head of Sony Computer Entertainment Inc., said at the Tokyo Game Show today. The company previously said it would sell a lower-end model for 59,800 yen, excluding tax.

``It is negative for the short term because the company may not be able to sell enough consoles to cover an instant loss caused by the price cut,'' said Naoki Fujiwara, who oversees $720 million in assets at Shinkin Asset Management Co. in Tokyo.

Sony Chief Executive Officer Howard Stringer is relying on the PlayStation 3 to revive a company that has lost half its market value in the past six years. The price cut would still make the PlayStation 3, which comes equipped with a high- definition Blu-ray DVD player and a fast processor called the Cell, the most expensive player on the market.

``The Japanese users and media would not stop saying a price tag of over 60,000 yen, including tax, was too expensive,'' Kutaragi told reporters.

Redmond, Washington-based Microsoft this month said it will start selling a cheaper Xbox 360 in Japan for 29,800 yen on Nov. 2, while Kyoto-based Nintendo is offering its Wii console for 25,000 yen.

Shares of Sony fell 1.9 percent to 4,770 yen, a two-month low, as of 2:40 p.m. on the Tokyo Stock Exchange. The stock has declined 12 percent in the past six months, compared with a 5.4 percent drop in the benchmark Nikkei 225 Stock Average.

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`Expensive Toy'

``If you consider the PlayStation 3 a toy, then yes, it is an expensive toy,'' Kutaragi said in an interview with Japanese game magazine Famitsu in May. ``The PlayStation and PlayStation 2 were both 10,000 yen more than their competitors at launch, yet they both sold to shortages.''

Sony forecast costs of developing the PlayStation 3 will widen the games division's losses this quarter and may take five years to recoup. More than five million Microsoft Xbox 360 players have been sold worldwide in the 10 months since its introduction last November.

Sony on Sept. 6 said it will delay the European release of its PlayStation 3 by four months until March and cut its 2006 global shipment target by half to 2 million.

The delay is due to problems with Sony's blue diode laser, the key component of the Blu-ray player included in the console that reads information on the disc, the company said. A Blu-ray disc can store at least five times more than the 4.7-gigabyte standard DVD.

Microsoft's Opportunity

``It's a great opportunity for us'' in Europe, Peter Moore, corporate vice president of Microsoft's interactive entertainment unit, said in an interview in Tokyo today.

The PlayStation 3 will make its debut in Japan on Nov. 11 and in the U.S. on Nov. 17. Nintendo's Wii console will go on sale on Nov. 19 in the U.S. and Dec. 2 in Japan.

``It's ridiculous to decide to cut the price before they start selling the PlayStation 3,'' said Yoku Ihara, head of equity research at Retela Crea Securities Co. in Tokyo. ``They may cut the price again if sales don't go well.''

Story source: http://www.bloomberg.com/apps/news?p...WYg&refer=home