Is Sony finally getting its PlayStation 3 act together?

Will last month's PS3 price cuts and this week's set of additional announcements help Sony's Playstation gaming platform to hold its own against Microsoft's Xbox and Nintendo's Wii? The verdicts from analysts are mixed.

"I see the PS3 as running head-to-head with the Xbox [360] this holiday season in terms of units sold," said Michael Cai, a gaming analyst with Parks Associates. "What happened this week will add to the momentum that's already gotten started."

On the other hand, some analysts see too much pre-existing momentum in the other direction.

"The PS3 is still about the most expensive game console out there, thanks largely to its support for Blu-ray," said Rob Enderle, principal analyst at Enderle Associates. "For the PS3 to be priced competitively, Sony would need to get down to the sub-$300 delta. But even that wouldn't be enough to make the PS3 really succeed in the console market."

The last month has brought a bewildering array of announcements from Sony, the obvious effect of which has been to keep the company in the news, but whose intended effect seems to be to make both developers and users aware that it's no longer treating its competition so lightly.

It all began when the company quietly sold its Cell BE chip fab to Toshiba, and then a few weeks later when Sony CEO Sir Howard Stringer proclaimed the whole Blu-ray/HD DVD format battle -- which the PS3 was originally intended to make short order of -- a stalemate.

Then on October 18, Sony reduced prices on the high-end 80 GB PS3 from $599 to $499, a maneuver which does appear to have helped bolster sales, despite earlier indications. PS3 sales then shot from a previous average of 30,000 to 40,000 units per week to 75,000 units during the week of October 29, according to Sony officials, who attributed the improvement to that sales cut along with the rollout of a 40 GB model for $399 on November 2. For the week ending November 11, Sony's sales for all consoles topped 100,000 units, officials said.

According to some industry analysts, Sony is simply grasping at more and more straws, in a desparate attempt to gain market share against Microsoft's industry-leading Xbox 360 console. But others argue that this week's news represents a set of solid next steps for building on a foundation paved by last month's price cut.

Rob Enderle predicts that Sony's gaming console will remain in the number three position industry-wide -- behind both the Xbox and Nintendo's Wii -- despite Sony's announcement on Monday of new development tools and price reductions on its existing SDK, and the opening up on Tuesday of PlayStation Store to PC downloads by PSP users.

But the recent string of positive sales numbers prompts Michael Cai to disagree wholeheartedly with Enderle about PlayStation's future.

"The worst time has passed. Now, Sony is going to do better. Demand for the PS3 is picking up. That should be true in Japan as well as in Europe and the US," said Cai. He called on Sony to drive development of more games for its platform, saying, "The PS3 needs better content."

Unlike Enderle, Cai doesn't regard Nintendo's Wii as belonging in the same product category as the Xbox 360 and PlayStation 3. "The Wii is in its own league, with its own demographics. It draws on the untapped interest of non-traditional gamers, especially with the games involving physical motion," Cai elaborated.

In Enderle's opinion, though, Sony's move to cut the price of its SDK in half is mainly an effort to keep developers from drifting away to competing gaming platforms. "Sony's been bleeding developers," he maintained.

But Enderle suggested that these attempts are likely to be futile unless Sony manages to stick close to the sales figures of its competitors. The main challenge for sales, he said, is that the PS3 lacks either the gaming catalog of the Xbox 360 or the "family features" of the Wii.

Both analysts, however, agree that the PS3 and 360 consoles are quite different animals than recently rolled out PC gaming platforms such as Dell's XPS One system and Hewlett-Packard's Blackbird 002, which cost a lot more than consoles and tend to run different types of games.

"But the PC platforms are much easier to upgrade," Cai observed. "It doesn't take long for a game console to get outdated."


[CORRECTION: Parks Associates' Michael Cai wrote in to say he may have been misquoted in this story earlier: Specifically, he said that maximum PS3 video resolution does not exceed that of Xbox 360, which is accurate. We apologize to Michael and have corrected the story above.]

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