Kutaragi: Sony Hardware 'In Decline'

In an extraordinary public statement of regret and despair over having to postpone his company's PlayStation 3 debut in Europe and Australia until March, and to limit availability elsewhere to only 500,000 units come November, Sony Computer Entertainment President Ken Kutaragi is quoted by Reuters as having told reporters, "If you asked me if Sony's strength in hardware was in decline, right now I guess I would have to say that might be true."

Kutaragi's comments come as his company struggles to reassure customers in North America and Japan that there's still something to look forward to before the holidays. Sony senior corporate communications director Dave Karraker reassured BetaNews this week that November 17 continues to be the PS3's North American launch date, although only an estimated 400,000 units will have shipped to retailers here by that date.

Back when Microsoft was criticized for having underestimated Xbox 360 demand during last year's Christmas season, the company still reported having sold 600,000 units in the United States between last November and January.

Financial analysts are mixed about whether this setback will result in permanent damage for Sony. Some are saying this week that game console consumers will simply delay their purchases for as long as Sony pushes back the PS3. The theory is that PS3s are already "sold" to the majority of customers - if they're going to buy it, they've already made up their minds to do so.

But others are citing the fact that the PS3 is supposed to double as an entry-level Blu-ray Disc player, by way of concluding this could be a calamitous turn of events for Sony. Consumers in the high-definition media space have yet to make up their minds as to whether HD DVD -- whose players and movies were released first -- or Blu-ray will provide the better overall experience.

Many of those consumers are believed to have been waiting until November to make up their minds. If they can't actually get their hands on a PS3 because it hasn't shipped, or has been put on back-order, some believe they could purchase a Toshiba HD DVD player for Christmas instead - or perhaps even an Xbox 360 with an HD DVD player attachment, if Microsoft manages to make that add-on component available before the holidays.

After news of the PS3 delay hit Japan, it precipitated the biggest single-day drop in the Nikkei average in one month, falling 1.67% yesterday and continuing its decline today. On the New York exchange, Sony stock had been trading lower, but had started a rebound by lunchtime Friday.