Sony Hits Generation Gap

It was a happy holiday season for most video-game device makers, as industry sales grew nearly 28% to $3.7 billion in December, but Sony's(SNE) next-generation console couldn't outsell its previous version.

Sony sold 490,700 of its PlayStation 3 devices in December, according to research firm NPD, bringing total devices sold since launch to 687,300 units.

Those figures appear to contradict Sony's own recent report that, as the company had predicted, it has shipped 1 million PS3s to the U.S. so far.

A possible reason for the discrepancy in PS3 numbers could be that many units are still tied up in the retail channel, wrote P.J. McNealy, an analyst for independent research firm American Technology Research

"We believe that Sony's shipment number refers to a channel unit number, and our research indicates that a channel range of 20% to 30% for the PS3 is not unreasonable at this time," wrote McNealy. "This implies 200k to 300k units in the channel -- in transit, in warehouses and in retail shelves."

Still, wrote McNealy, there is cause for investor concern about the demand surrounding Sony's rather expensive PS3 console. Despite the seeming interest for the device, there are still PS3s available on shelves in some stores, wrote McNealy.

"This is in stark contrast to the Wii availability, which by-and-large has remained quickly sold out both at retail and on Web sites," he wrote. "While the PS3 launch is seven weeks old, we find it a little troubling to find the console in stock." Sony's 20-gigabyte PS3 model retails for $499; the 60-GB model sells for $599.