PlayStation 3 Could Change Game for Sony

Sony shares, down 61.4% for the year to date, closed Tuesday's trading session up 59 cents, or 2.8%, to $21.55.

The PS3 has struggled against other consoles by Microsoft (MSFT Quote) and Nintendo (NTDOY.PK Quote), both of which have been priced far below Sony's hardware. The PS3 has sold 6.1 million units in the U.S. from its launch through November 2008, according to the NPD Group.

By comparison, Nintendo's Wii has sold 15.4 million units over its lifetime, and the Microsoft Xbox 360 has seen sales of 12.5 million. The Xbox 360 launched in November 2005, and the Wii began selling about one week after the PS3's launch in November 2006.

In 2008, sales of the PS3 had begun catching up with the Xbox 360. Through November, 2.8 million PS3 consoles were sold in the U.S., slightly trailing the Xbox 360 with 3.3 million. Nintendo's Wii console outsold both combined with 8 million units in the U.S. In November, though, the PS3 sold only 378,000 units in the U.S., compared to 836,000 Xbox 360 consoles and 2.04 million Wiis.

Analysts had pointed to the PS3's large price tag as a key factor behind the weak sales data. The entry-level model is priced at $399 for an 80-gigabyte hard drive, and the deluxe version includes a 160-gigabyte hard drive for $499.

While the PS3 could boast it had a Blu-ray high-definition disc player bundled in the console, both the Wii and Xbox 360 carried significantly lower price tags. Nintendo's offering has remained at its launch price of $249, while Microsoft lowered its entry-level Xbox 360 Arcade bundle in September to $199.

Atul Goyal, analyst with CLSA Asia-Pacific Markets, argues that Sony's gaming business is among the top loss-making businesses for the company, along with LCD TVs and the mobile handset business, and it continues to worsen. What is more shocking, Goyal says, is an apparent lack of communication even within Sony's gaming business.

In October, Sony Computer Entertainment of America head Jack Tretton told Thomson Reuters that the PS3 was selling faster than expected and would reach full-year sales targets even if the global economic crisis hurts holiday sales. "We are tracking at 100% up over last year ... about 30% ahead of where we should be," Tretton said in the interview.

However, nearly two weeks later, Kazuo Hirai, president of Sony's game unit, told Bloomberg TV that "I don't think we can meet [our PS3 sales target] easily, but I think we don't have to give it up at this point."

"Interestingly, this statement came out barely two weeks after Jack Tretton, SCE US head said that PS3 sales are 30% better than expected," Goyal wrote in a research note. "We are not sure what the executives intend with these confusing reports or whether there is just no communication between them!"

Sony and Sony Computer Entertainment were not immediately available for comment for this story.