Blu-ray Causes PS3 Delay in Europe

Sony Computer Entertainment president Ken Kutaragi said Wednesday his company's PlayStation 3 game console rollout for the European market would be delayed. The PS3 had been scheduled for worldwide release in mid-November; now, the date will likely be March. Lack of blue laser diodes used by the console's built-in Blu-ray Disc player were directly blamed for the delay.

"I feel sorry. I think there are so many people out there who hold such high expectations for PS3," Reuters quotes Kutaragi as saying, just after the close of the Nikkei market, where Sony's stock had already fallen nearly one percent.

The Associated Press is reporting that it has learned directly from Kutaragisan that Sony also intends to reduce shipments to North America and Japan. 400,000 PS3 units will be available in North America on November 17, with only 100,000 units available in Japan on November 11.

Sony has not yet said how many more PS3 consoles it plans to produce before the end of the year, although its original worldwide sales goal for 2006 had previously been set at two million units.

Sony is the principal supplier of blue laser diodes, not only for its own Blu-ray Disc players and PS3 consoles, but also for other BD manufacturers as well, including player makers Matsushita, Pioneer and Philips. Sony also supplies diodes for Blu-ray burners.

Two months ago, Taiwan BD burner maker Lite-on IT, which also produces drives under the BenQ brand, voiced its concern in Taiwan's Commercial Times that Sony may have earmarked so many blue laser diodes for its own PS3 that it could not fill orders for other customers.

Two weeks ago, the Taiwanese electronics industry daily DigiTimes reported that only two BD equipment manufacturers, Pioneer and Plextor, said they were able to fulfill their shipments, while all the other major vendors -- Sony itself included -- reported likely delays, especially to Europe. Evidence of this pattern has been verified by British news sources.

Sony is far from the leading producer of blue laser diodes; Nichia holds that distinction, according to DigiTimes, with 80 percent of the world's supply. That company now reports that yield rates for its blue laser diodes, which it supplies to both BD and HD DVD customers, have yet to top 30 percent.

Sharp and Sanyo are the world's two other major blue laser diode suppliers, and they are also members of the Blu-ray Disc Association.

The delay of the PS3 in Europe comes at the worst possible time for that console, missing the critical holiday buying season, and perhaps even ceding it to Microsoft's Xbox 360 and Nintendo's strangely-named, though much-lauded, Wii.

The latter console is the least dependent on new, cutting-edge technology, which in the face of supply problems is to Nintendo's advantage. Sony claims it will continue to meet its sales goal of six million PS3s sold worldwide during 2007, although analysts are now predicting a figure closer to four million.

Strangely, there could be a bit of a silver lining in this for Sony. Although hardware analysts such as iSuppli have yet to see a PS3 up close, they predict that component costs for Sony, once a teardown analysis is complete, will show that company losing far more per unit manufactured than Microsoft currently loses for each Xbox 360.

If Sony manufactures fewer PS3s, some could say it's losing less money in the short term. Furthermore, if those supplies end up being delayed by more than a single quarter, which is likely due to missing the holiday rush, component costs for Sony could actually decline, meaning the company saves even more on per-unit costs once it can fulfill those orders.

Sony Computer Entertainment America did not respond to a request for comment by press time.

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