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Sony's PlayStation 2 Making Its U.S. Launch From a Shaky Platform

Electronics: In Japan, the new game console hasn't met expectations in sales and performance. Also, parts shortages are hampering deliveries.


TOKYO — By most accounts, Sony Computer Entertainment should be doing victory laps this week with the U.S. launch of its highly sought-after PlayStation 2 game console.

But in Japan--although Sony has sold 3 million PS2 consoles since the launch in March--the devices have clearly fallen short of expectations.

Programmers grumble that the machine is difficult to work with. Hard-core game players grouse about blurry and "jagged" images. Designers still don't have a blockbuster PS2 software title after 18 months on the job. And component shortages have forced Sony to delay its European launch and halve its promised 1-million unit delivery this week as U.S. retailers enter the all-important Christmas season.

Granted, Sony trounced competitors with its first-generation console. It has 76 million PlayStation users worldwide. And the powerful new PS2 machine--with its music, DVD and Web capabilities--has been touted as a "Trojan horse" poised to unseat the personal computer as people's preferred gateway to the Internet.

The early tribulations in Japan, though, have heartened competitors. And most would love to have Sony's problems right now, as U.S. customers try desperately to get their hands on one of the sleek black consoles. Still, Sony needs to arrest the problems quickly or it risks undermining customer loyalty and eroding its lead in an area strategic to its future.

"A rain check under the tree doesn't go too far," said Peter Moore, president of Sega of America Dreamcast. "Their early grade for the launch is a C minus, at best."

Sony officials decline to comment on supply problems but say they're doing their best to spur production and expand the machine's potential.

Last March, when the PS2 launched in Japan, Sony's Web site crashed under a deluge of advance orders and young game freaks camped out for days in front of major retailers. Seven months later, the ardor has cooled with sales lagging some early bullish projections.

"So far, the market has been a bit disappointing," says Kazumi Kitaue, a director at software maker Konami Corp., which is working on several new titles for the PS2. "It's very difficult to forecast what's ahead."

Furthermore, an estimated one-third of the 3 million sets sold here so far have gone to customers primarily interested in using the PS2 as a DVD player, not as a video game machine. Last year, DVD players went for upward of $800 in Japan, making the PS2 at $379 a relative bargain. This is not the case in the U.S., where low-end DVD players go for as little as $110.

Relatively weak Japanese console sales also are blamed on the dearth of software blockbusters. This dovetails with complaints from some software makers of programming difficulties. Sony makes most of its money from software licensing fees, so having good titles in the market is key.

"So far there are no 'killer applications' in Japan. Even Sony hasn't had any really strong offerings," says Motoharu Sone, an analyst with Tsubasa Securities. "If the software doesn't sell well, the hardware won't sell either."

A string of new U.S. and Japanese game offerings are expected in coming months, however. And some early grumbling may reflect little more than the inevitable learning curve problems.

"It's true PS2 is a tougher machine to program," says Hisashi Suzuki, president and chief executive of Tokyo-based Square Co., a leading maker of role-playing software. "But anything new is difficult at first."

The machine clearly has tremendous capabilities and the graphics quality is impressive. With the benchmark set so high, however, some users say texturing and definition fall short of expectations.

"Of course the PS2 is much better than the PS1," says Hiroyuki Hoshii, 24, an avid game fan with 10 years of experience at the joystick. "But when there are a lot of characters on the screen at once, the edges blur and you can sometimes see little parts of it stop."

Some also wonder whether Sony is trying to do too much by offering a DVD player, Internet gateway, game machine and music system all in one machine, an approach that leads to inevitable technical compromises. Nintendo, the creator of Pokemon, boasts that it remains focused on core game players. "Adding so many functions is a very traditional marketing ploy," says Nintendo Deputy Manager Yasuhiro Minagawa. "Costs rise, but the performance is not that great."

The last six months in Japan offer little insight into whether Sony ultimately can convince consumers to download Sony songs and movies online, play network games, shop and handle their finances through this deceptively simple device in their living room. High-cost Japan lags well behind the United States in Internet and broadband use.

"Phone bills are so expensive in Japan, I can't really expect to see that any time soon," said Akihiro Matsushita, 15. "At $75, the PS2 software is also a bit expensive."

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