Sony PS3 hits crucial European market

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Sony’s PlayStation 3 was finally launched on Thursday night in Europe, the market likely to determine the fate of the revolutionary console in its battle with Microsoft’s Xbox 360 and the Nintendo Wii.

The stakes are high for Sony. Sir Howard Stringer, chief executive, has called the PS3 the company’s “most important product”.

“I think Europe is viewed by Microsoft and Sony as the most important territory,” says Paul Jackson, video games analyst with Forrester Research.

“Microsoft is almost certainly going to win in the US and Sony is almost certainly going to win in Japan eventually, depending on whether the Wii’s appeal as a novelty item is going to peter out. Europeans, however, are pretty agnostic and tend to buy whatever has the coolest games.”

The PlayStation 2 dominated the last round of the console wars and has sold more than 115m units, but the PS3 is currently trailing a poor third in the next-generation sequel.

It has sold just over 1.5m units worldwide, compared with more than 5m Wiis and more than 10m 360s. Production problems forced Sony to confine the console’s launch to North America and Japan last November, delaying its European debut by four months.

But, in spite of plentiful supplies in the US last month, the PS3 still only sold 127,000 units, compared with 228,000 Xbox 360s and 335,000 Wiis, according to the NPD research firm.

Analysts say a lack of compelling games and the console’s high price have put off gamers – the PS3 sells for as much as $600 in the US, compared with $400 for the top 360 model and $250 for the Wii. The PS3 will be even more expensive in Europe, selling in UK for £425 ($825).

The console will be launched in Europe with 30 titles, including MotorStorm, an off-road racing game that Phil Harrison, head of Sony’s worldwide games studios, believes will be a “killer application” for the console.

The realistic multi-car crashes of the game, he says, demonstrate the capabilities of the powerful “Cell” microprocessor Sony has developed for the console.

Games analysts say that Sony will have no trouble selling its first allocation of 1m consoles in Europe, as there is a great deal of pent-up demand from dedicated gamers, who will be willing to pay a premium for the device.

“After the loyal fan base is saturated, however, Sony will have to do something on pricing,” said Carl Gressum, analyst at Ovum.

The company has already reduced the number of components in the console to put it in a position to cut the price.

“Past history shows that a halving of the price results in quadrupled volumes,” said Yuji Fujimori, a Sony analyst at Goldman Sachs.

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