Sony's Last Stand

NEW YORK ( TheStreet) -- Sony ( SNE) took the unusual step Wednesday of an evening press event to launch its PlayStation 4 game console, on which CEO Kazuo Hirai is betting the company.

The new console sports an Intel ( INTC)-based chipset, a new wireless controller and the ability to share game play more effectively, PortableGamingRegion writes. It also allows use of an Android tablet as a second controller, notes 9to5 Google.

That's what the press was told, but Sony didn't show a working machine. Instead, it showed films from game companies and promised hardware in the fourth quarter of this year, as the Washington Post noted. Lead system architect Mark Cerny talked up the new box while holding a mock-up of the controller, which looks just like the old controller except for the addition of a small touchscreen.

Reviews from the tech press were stark and negative, according to Techcrunch. The PS4 was trending on Google Plus as this was written, and it's pretty brutal.

The launch comes on the heels of a complete failure by rival Nintendo ( NTDOY), which launched its Wii U in November and has since seen sales nosedive, as DigitalTrends notes. GameSutra says fewer than 60,000 Wii U units moved in January, trailing the previous Wii console badly.

Sony's PlayStation competition is no longer limited to Microsoft ( MSFT) and Nintendo. Social games, mobile games and free games played on tablets like Apple's ( AAPL) iPad are stealing time from dedicated consoles. Kids are no longer just sitting in their rooms, alone, pushing buttons. They're out in the world, interacting through networks, making the whole console experience look very 20th century.

In some ways the Sony event reminded me of a famous Microsoft sales meeting from the last decade, where CEO Steve Ballmer marched across the stage shouting "developers, developers, developers." This did not save Microsoft from the iPad.

It's like the old joke about the Lone Ranger telling Tonto, "We're surrounded by Indians." "What you mean we, kemosabe?" Tonto replies. Which developers could well tell Sony this fall. If there is more money to be made investing in other platforms, that is what they will do. Cool isn't nearly as cool as cold, hard cash.

Sony shares were falling the day after the launch, but still stand almost 25% above the level of early January, before the company's hype machine kicked into high gear.

Sony still has immense assets, and investors should hope that it's willing to part with them if they expect a return on their money. It's in the process of selling its medical unit and forecasts a $1.2 billion gain on that, according to Bloomberg. Japan's government is trying to help sell Sony's car battery unit to Nissan ( NSANY), to keep it from being bought by Chinese interests, Reuters reports.

The big prizes are Sony's movie and music units, which live in industries now drawing big valuations. Sony Pictures led the U.S. box office in 2012, and Sony Music has about 29% of its market. The original concept behind the PlayStation 2, still Sony's biggest console hit, was that it would provide a conduit for selling access to these libraries. That's why it had a DVD player.

Price and value are the big questions, and these questions weren't answered by the Sony event, as Forbes noted.

We don't know what the PS4 will look like or cost, so we can't compare it to the tablets and Ultrabooks that might also be emerging for Christmas. The big advantage of a game machine over a computer is that the game machine gives you faster hardware for a lower price than a PC. But will that be true this Christmas, and does that really make a difference?

Twitter has a hashtag to summarize all this: #FAIL.

At the time of publication the author had a position in AAPL.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.