Sony Sets Portable Game-Player Rollout

Despite the PSP's initial success in Japan, some analysts have worried about the overall potential for the PSP, noting that industry leader Nintendo is targeting the same 18-to-34-year-old audience as Sony with its DS and is charging less for its device than Sony is for the PSP.

Ironically, the more successful the PSP is, at least initially, the more Sony could lose on it. One analyst has estimated, for instance, that Sony is losing about $50 on every PSP that it sells.

Company spokeswoman Janette Barrios declined to talk about the specific economics of the PSP, but likened the dymanic to "razors and razorblades," where any negative impact would be offset by royalties.

Barrios noted that Sony used a similar business model with its PlayStation consoles. Despite the subsidy on its consoles, Sony's PlayStation division has consistently posted profits, Barrios noted.

"We're not concerned about that at all," she said.

The company plans to sell the devices in Europe also, but has not yet given out details on when it will debut the device there or at what price.

The U.S. price may surprise some analysts and consumers. In Japan, Sony is charging the equivalent of less than $200 for the PSP.

But Barrios noted that the company offered two different PSP packages in Japan. One was a value pack similar to that offered in North America, but for the equivalent of about $240. The version offered for less than $200 was a stand-alone package that did not include a battery pack, AC adapter, memory stick or headphones, she said.

In the North American launch, Sony does not initially plan to offer a stand-alone version of the PSP, Barrios said.

"What we found was that the value pack was much more in demand than the stand-alone," Barrios said. With the value package, there's no confusion about what people are or aren't getting."

By the end of March, some 24 titles should be available for the PSP. Among the recent hits that will be available for the device are FIFA 2005 and NFL Street 2 Unleashed from Electronic Arts (ERTS) and Activision's (ATVI) Spider-Man 2.

Sony's ADRs closed lower by 4 cents a share, or 0.92%, to $36.65 on the NYSE Thursday.

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