Sony Ups Ante in Console Wars

The next generation of video-game consoles is moving beyond the conception stage.

On Monday, Sony (SNE) announced plans to debut the successor to its market-leading PlayStation 2 game system by April of next year. The company also plans to show off a demonstration version of the new machine at next May's Electronic Entertainment Exposition (also called E3), the video game industry's giant annual confab.

The news from Sony follows a similar announcement from Nintendo, which plans to show off its new console, code-named Revolution, at E3 also, according to published reports. Nintendo representatives have not confirmed those reports, but a company representative said that Nintendo plans to have its latest console on the market no later than its rivals.

Sony's announcement could put pressure on Microsoft (MSFT) to unveil its next-generation XBox at E3 or earlier. Like Nintendo, Microsoft representatives have said that they plan to launch the next Xbox no later than Sony's PlayStation 3.

Microsoft has not made any announcements about a specific date for debuting the new Xbox, a company representative said. The representative did not know how Microsoft would respond to Sony's announcement.

Console launches have traditionally been dramatic and sometimes traumatic events in the video-game industry, both for the hardware makers and the software publishers. For console makers, next-generation platforms provide the opportunity to gain market share and new users. Meanwhile, software makers have to balance the pursuit of new customers with the generally higher costs of developing for the latest hardware.

During the last console transition, video-game software makers such as Electronic Arts (ERTS) and Activision (ATVI) saw their profits drop as they poured money into developing games for the PlayStation 2 and Xbox while seeing sales of their PlayStation and Nintendo N64 games decline.

Although Sony plans to unveil the new PlayStation next year, the company did not say when it plans to actually start shipping the console to retail outlets. Analysts speculate that it may not reach store shelves until 2006.

Sony officials also said that the company plans to launch its new handheld game machine, the PlayStation Portable (or PSP), on schedule. The company has said that it plans to have the PSP at retail outlets in Japan by the end of the year and in the U.S. and Europe by March. Some analysts have doubted that timeline, noting that Sony has been late in delivering a full development kit to software publishers.

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