PSP - Buzz Isn't All Good

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AWSJ(5/6) Sony To Unveil `PSP' Gadget; Buzz Isn't All Good (Dow Jones News
Service)
Updated: Wednesday, May 05, 2004 05:31PM ET


(From THE ASIAN WALL STREET JOURNAL)
By Phred Dvorak

Tokyo -- SONY CORP., maker of PlayStation game machines, next week is
expected to unveil what is arguably this year's most hotly anticipated
video-game product: a hand-held player for games, videos and music.

Game makers hope Sony's PSP, whose name is derived from "PlayStation
Portable," will attract more users to a market Nintendo Co.'s Game Boy has
long cornered. Consumer-electronics companies wonder how the PSP will stack
up against Apple Computer Inc.'s iPod, and a host of portable media players
starting to hit retail stores.

Sony -- along with its games mastermind Ken Kutaragi -- has a huge strategic
stake in getting the "Walkman of the 21st century" -- as Mr. Kutaragi has
dubbed it -- right. The PSP is scheduled to go on sale at the end of the
year in Japan and early next year in the U.S.

But only days before the prototype's expected May 11 debut ahead of the E3
video-game show in Los Angeles, not all the buzz is happy.

Many big video-game creators have started developing games for the machine,
but some say they have too little information to really get going. As of
late April, many still hadn't received the final development kit due out
this spring, as well as some basic specifications including memory size and
projected price.

What's more, Sony's decision to put out a machine that plays movies as well
as games has some creators scratching their heads.

"Will it be a game machine or a video Walkman?" asks Michihiro Sasaki,
general manager of corporate strategy at Japanese video-game maker Square
Enix Co. "We're still not sure what Sony wants to do with it -- that's a
problem."

Mr. Sasaki says Square Enix, known for its Dragon Quest and Final Fantasy
games, eventually hopes to provide content for the PSP but wants to hear
more about the PSP's business model before deciding what to prepare.

Game makers' uneasiness underscores the challenges Sony faces as it pushes
ahead with a bold strategy of marrying video games with its core business of
consumer electronics. Under Mr. Kutaragi, the creator of the PlayStation who
was promoted last year to executive deputy president, that strategy is
supposed to inject life into Sony's sluggish electronics business by
bringing some of the style and raw processing power of the game machines
into television sets and video players. Sony said during its earnings
announcement last week that it aims to ship three million PSP machines in
2004, but it hasn't disclosed its price.

If crossover gadgets such as the PSP are successful, that could give Sony an
advantage in the battle with companies such as Microsoft Corp. over whose
technologies will rule the home theaters and Walkmans of the future. Sony is
hard at work on another crossover product: the successor to its No.
1-selling PlayStation 2 console, which is expected out in 2005 or 2006.
Microsoft, which has its own Xbox console and also is readying a
next-generation machine, is trying to maneuver its software to the center of
a home-entertainment network that would handle games, movies and music.

Still, some game developers worry that it may be hard to balance competing
technical demands -- as well as figure out the price and audience -- for a
gadget that combines the functions of a Walkman, video player and game
machine.

Sony's latest game-electronics combo, a DVD recorder called the PSX that
doubles as a PlayStation 2, hasn't sold as well in Japan as the company
hoped it would, as consumers puzzled over whether it was a game console or a
home-electronics device. Sony has said it will sell the PSX in the U.S. and
Europe sometime this year.

"It would be better if [the PSP] were just a game machine," says Kazumi
Kitaue, executive in charge of video games at Konami Corp., which puts out
the popular Metal Gear Solid series. "It's silly to talk about watching
movies anywhere anytime; you want to concentrate."

Mr. Kitaue says that Konami has started developing games for the PSP and
that he has high hopes for the machine. But he worries that the product
release could be delayed in Japan -- as it was in the U.S.

Initially, at least, the PSP's big rival probably won't be portable video
players or iPods, but rather, Nintendo hand-helds. Nintendo is planning its
own new portable machine that will go on sale around the same time as the
PSP. But compared with Nintendo's current top-end model, the Game Boy
Advance SP, PSP specifications released so far suggest that it will be a
much more powerful machine with a bigger, higher-resolution screen.

The PSP will play games and movies stored on a new kind of optical disc that
holds 1.8 gigabytes of data -- several times more than the Game Boy's
cartridges. Mr. Kitaue and other game developers expect the PSP to attract
gamers older than the teens and preteens who commonly buy the Game Boy. That
is an important bonus for many game developers -- particularly in Japan --
which are being pinched by shrinking video-game markets and rising
development costs.

Besides Konami, big-name game publishers such as Sega Corp., Namco Ltd. and
Koei Co. of Japan, as well as Electronic Arts Inc. of the U.S., say they are
developing PSP games, although they won't say whether they will have demos
ready to show by next week's E3 debut.

Despite misgivings of some game creators, Sony insists the PSP is on
schedule. Masayuki Chatani, chief technology officer for Sony Computer
Entertainment Inc., Sony's video-game arm, says he is confident that the
games-movies-music idea will fly, pointing to the success of the DVD-playing
PlayStation 2.

"After all, if you were to do it all separately, you'd need three different
machines," Mr. Chatani says.


(END) Dow Jones Newswires