Sign in Subscribe
Software industry

Sony Faces Fresh Woes as PlayStation 3 Performance Raises Concerns

Strategic Insights

— 1 min read

Sony Corp. is dealing with fresh embarrassment following reports of erratic performance from its much-anticipated PlayStation 3 video game console at a recent Tokyo Game Show. The issue has sparked worries among investors, who saw the company's shares drop nearly 3 percent amid concerns about the console's upcoming release. The PlayStation 3 is set to hit stores in Japan on November 11 and in the United States on November 17, but its European release has been delayed until March due to the intense competition from Microsoft Corp. and Nintendo Co.

Key Takeaways:

  • Sony Corp.'s shares dropped nearly 3 percent on Tuesday amid concerns about the upcoming release of its PlayStation 3 video game console.
  • The console's performance issues at the Tokyo Game Show were attributed to overheating, likely caused by the high temperatures at the venue and poor ventilation in the kiosks displaying the units.
  • Sony Corp. has denied any technical problems with the PlayStation 3, but the issue has raised concerns among investors and may impact the company's ability to meet its sales targets.
  • Sony is sticking to its plans to ship 2 million PlayStation 3 units by the end of the year and 6 million by March 31, 2007.
  • The company is facing intense competition from Microsoft Corp. and Nintendo Co., which has led to delays in the European release of the PlayStation 3 until March.
  • The PlayStation 3's performance issues come amid Sony's efforts to turnaround its business under its first non-Japanese CEO, Howard Stringer.

Statistics:

  • Sony Corp.'s shares dropped 2.75 percent to 4,600 yen ($38.98) on the Tokyo Stock Exchange on Tuesday.
  • The company's shares have plunged more than 20 percent since April, before the recall woes.
  • 200 PlayStation 3 units were displayed at close proximity and housed in kiosks that concentrated heat and provided poor ventilation.
  • Sony Corp. has recalled 7 million of its laptop batteries on fears they could catch fire.

Sources:

  • The Associated Press, "Sony Faces Fresh Woes as PlayStation 3 Performance Raises Concerns", September 26, 2006.
  • Macquarie Equities analyst David Gibson's report, cited in the AP article.
  • Sony Corp.'s statement to the press, as cited in the AP article.

Read more