Sony Eyes Nintendo in Game Wars


Video game developers in Japan, the U.S., and Europe are reported to have already received prototype versions of Sony’s (NYSE:SNE) PlayStation Portable 2 and are preparing software for the device for a fall 2011 release.

The company’s second attempt to take on reigning portable-device champ Nintendo (PINK:NTDOY) has been said to include high-end graphics akin to what’s seen on Microsoft’s (NASDAQ:MSFT) Xbox 360 and Sony’s own Playstation 3, along with touch screen and motion controls like those seen in Apple’s (NASDAQ:AAPL) iPhone and iPod Touch. it was only this week, though, that Sony itself confirmed that these features would be included in the PSP’s successor.

In a The New York Times piece about the PSP2 on Wednesday, Sony Computer Entertainment President Kazuo Hirai was less evasive than the average top executive. Kirai said that Sony has been thinking about the next iteration of the PSP since its original release in 2004.

From his comments, it appears that the PSP2 will indeed feature both a touch screen and traditional, button-based video game controls as has been previously rumored. “Depending on the game, there are ones where you can play perfectly with a touch panel, but you can definitely play immersive games better with physical buttons and pads,” said Hirai.

It’s those immersive games that have been the crux of both Sony’s home and portable game console strategies, a strategy to which Hirai says the PSP2 will recommit. “The games being played on Android and Apple platforms are fundamentally different from the world of immersive games that Sony Computer Entertainment, and PlayStation, aims for,” Hirai explained.

While his comments lend credence to claims of the PSP2′s advanced graphics, his digs at Apple and Google (NASDAQ:GOOG), whose Android mobile operating system is also an emerging force in the portable game market, suggest that Sony is not intending the PSP2 as a direct competitor for the casual game-focused platforms from those companies.

That job will likely fall to Sony’s other oft-rumored device, a PlayStation branded smartphone from the company’s Sony Ericsson venture. Hirai suggests that it will be a challenge to ensure a clear distinction between its disparate portable offerings, “We don’t want gamers to be asking, what’s the difference between [the Playstation Phone] and a PSP. We have to come up with a message that users will understand. it would have to be a product that keeps the PlayStation’s strengths intact.”

If Sony is to capture a majority of the portable gaming market, it will have to compete on both the high-end tech and casual fronts. Nintendo will release its own portable device next year — the Nintendo 3DS, featuring stereoscopic 3D graphic effects without the need for 3D glasses, is expected in March 2011 well in advance of the PSP2.

Sony’s original PSP has struggled to compete with Nintendo’s portable products over the past six years, selling just 62 million of the devices over its lifetime compared to the DS’ 140 million, but this will be the first time the two are competing with presumably comparable technology.

Both devices, however, are threatened by the rise of Apple’s iPod Touch and iPhone. in October, Wedbush Morgan analyst Michael Pachter stated that the steep declines in year-on-year Nintendo DS sales (PSP sales have largely been flat in the U.S. since 2008) due to the iPod Touch “cannibalizing” its sales. A Sony Ericsson gaming phone would have to be affordable, have equal software support to both iOS and Android platforms, and offer unique Playstation content in order to successfully compete with the iPod Touch and iPhone.

Sony’s plans in the portable game market should became clearer following the Consumer Electronics show in Las Vegas next month.

As of this writing, Anthony John Agnello did not own a position in any of the stocks named here.

Sony Eyes Nintendo in Game Wars

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