Sony Unveils Plans for PlayStation 3

CULVER CITY, Calif. -- Sony's(SNE Quote) PlayStation 3 will hit store shelves a year after the competing Xbox 360 game device and will cost up to $300 more in the U.S., but the staying power of Microsoft's(MSFT Quote) early lead in new video-.game hardware is anything but certain.

At a media event here, Sony finally released some of the crucial details on its upcoming game machine -- the latest iteration of its market-dominating PlayStation line. Among the revelations: the PlayStation 3 will come in two versions, one costing $499, the other a whopping $599, and the company plans to ship 4 million of the machines by the end of the year.

The price point is likely to be an eye-opener for many gamers who have been waiting for the machine's debut, since it's the highest retail price yet for a PlayStation system and far higher than previous and competing consoles. The company's PlayStation 2 debuted in 2000 with a launch price of $299, for instance. And last year, Microsoft's Xbox 360 was released in two versions, one priced at $299 and the other at $399.

How consumers react will likely reflect how they feel about what they're getting for that price. The cost is hefty for a game system, acknowledged Van Baker, an analyst with media research firm Gartner who attended the event.

But one of the key features of the PlayStation 3 is its ability to play Blu-ray DVDs -- a disc that can store high-definition movies and video. Other Blu-ray DVD players are just starting to come to market at prices north of $1,000, Baker noted.

Compared with those, "It's cheap," he said.

Meanwhile, unlike one of the Xbox 360 models, both iterations of the PlayStation 3 will come with a built-in hard drive, the cheaper one with a 20GB version, the more expensive featuring 60GB of capacity. Like the hard drive on the Xbox 360, the one on the PlayStation 3 will be used to store downloaded content. Sony also plans to use the hard drive to speed loading times on games.