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Yesterday's PlayStation Is Still on Today's Holiday Shopping Lists

PSOne is expected to do well this season because its availability and price give it an edge over the ultra-cool new consoles.


Remember PlayStation?

Not the fancy, 128-bit PlayStation 2 video game console that stores couldn't keep on shelves last year, but the original 32-bit PlayStation, a box so ancient that the technology powering it can now fit in your pocket.

Unlike yesterday's consoles that have vaporized once their more powerful successors arrive, PlayStation has refused to go away. This holiday, retailers expect to sell more PlayStations than either the GameCube or the Xbox, two ultra-powerful new consoles debuting this month.

PlayStation is expected to do well this year primarily because new consoles will be tough to find. Microsoft Corp. has said it will ship as many as 1.5 million of its new Xbox consoles to North America this year, while Nintendo Co. has said it will have 1.7 million GameCubes on hand.

Shortage aside, retailers also are betting that skittish, recession-minded consumers will be more receptive to the PlayStation's price, which at $99 is $200 less than Xbox and PlayStation 2, and $100 less than GameCube.

"New technology can be very exciting, but a lot of consumers are going to vote with their dollars this holiday," said Jack Tretton, senior vice president at Sony Computer Entertainment of America in Foster City, Calif.

Sony is nudging sales by spending more than $80 million this year to market the machine, including $10 million on a fall television advertising campaign. Sony also gave the box a makeover last year, trimming its bulk by two-thirds and giving it a 5-inch snap-on color screen, which will be available this holiday season. It also gave the box a new moniker, the PSOne.

More than just old wine in new bottles, Sony is hoping the new, more portable package will bring in a whole new class of consumers, including young children and older, more casual players.

PSOne sales have flagged since last year, when the PlayStation 2 hit the market. Hardware sales are projected to fall 25% this year to 3.2 million machines, compared with 4.3 million in 2000. And revenue from PSOne games at game publishers such as Electronic Arts Inc. is expected to decline by as much as 65%.

That last-generation consoles fade into obscurity faster than yesterday's high scores is to be expected. What's surprising is just how long it's taking PSOne to disappear. Sales from PSOne games this fiscal year ending March 31 are expected to make up 7% to 8% of the revenue for Electronic Arts, the world's largest independent game publisher. That's equal to the revenue Electronic Arts expects to get from Xbox and GameCube combined. By comparison, the N64, Nintendo's precursor to the GameCube and the technology peer of the PSOne, will account for just 1% of Electronic Arts' sales.

Put another way, PSOne is expected to generate $1.6 billion this year from sales of hardware, software and peripherals, according to Sony internal estimates. This year, Sony expects 56 million PSOne games will be sold at an average retail price of $23, making software sales equal to $1.2 billion. The PlayStation 2, meanwhile, will generate only slightly more in software sales at $1.5 billion, according to Sony estimates.

Meanwhile, the Xbox is expected to generate $700 million in sales, assuming all of the 1.5 million $299 machines Microsoft expects to ship this year actually sell and that consumers buy three games at $49.99 for each Xbox.

PSOne's strong forecasts have given retailers confidence that PlayStation will remain viable--at least through the holidays. In a closely watched survey of the nation's toy merchants, PSOne was ranked among the hottest game hardware for the season. Game industry analyst Sean McGowan of Gerard Klauer Mattison in New York said he expects PSOne to outsell Xbox and GameCube this year, if only because the new consoles will be in short supply because of manufacturing constraints.

But the platform will sell on its own merits aside from being the consolation gift, said Richard Ow, an analyst with NPD Group, a market research firm in Port Washington, N.Y. Ow said sales of PSOne rose 3% between the first and second quarters of this year.

"The redesign has turned this into a somewhat portable product," Ow said. "This is not a living-room product anymore. This is an any-room product. You can play this baby in the car, hotel room, grandma's house, whatever. The redesign has changed the console into a pseudo-portable device that's no longer in the same category as the PlayStation 2. Now it serves a new purpose. It's found new life."

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