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Delay Won't Zap Sony

The possibility that Sony (SNE - Get Report) may delay the launch of its upcoming PlayStation 3 console is setting off alarm bells in the video-game industry.

But is it all much ado about nothing?

Reports out of Japan suggest that Sony could postpone the release of the new video-game system by as much as a year from its currently expected date of this spring, Merrill Lynch said in a research note late last week. The reports follow weeks' worth of rumors and rumblings to the same effect.

With Microsoft (MSFT - Get Report) having launched the Xbox 360 last November and Sony predicting a "spring" launch for the PlayStation 3, many in the industry were hoping to see Sony's launch as early as March.

The chances of that happening now look slimmer. If the PlayStation 3 were really coming out next month, you'd expect to hear more about it from distributors and retailers -- not to mention Sony itself, analysts say.

"I don't see how they could possibly launch in any market prior to June, and even that's pushing it," says Michael Goodman, who covers the video-game industry as an analyst for the Yankee Group, a market research firm.

On the surface, that would seem to be bad news for Sony and for video-game publishers. A yearlong delay would give the Xbox 360 another holiday selling season to establish itself as the leading next-generation platform before Sony enters the market.

For the game publishers, which are already struggling through a rough transition from old game technology to the new, the delay could further postpone the payoff for their investments in developing games for the new systems.

But some analysts and investors say worries about a delay are a bit overblown.

"At this point, it's premature to think that [a delay] could have much of an impact," says James Lin, an industry analyst for the Simba Group, a consulting firm.
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