Sony PlayStation 3 Supply Stabilizes - TheStreet

Sony PlayStation 3 Supply Stabilizes

The market may get a better read on the pricey console.
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Sony's

(SNE) - Get Report

PlayStation 3 game console may finally be ready to break out.

Retail giants such as

Best Buy

(BBY) - Get Report

and

Target

(TGT) - Get Report

are expected to feature the PS3 console in their weekly retailer advertisements starting this week in a move that could signal Sony has sorted out production problems with the next-generation device.

Sony had faced delays in the mass production of blue laser diodes, a component of its Blu-Ray hi-definition DVD player that is part of the PS3 console, which pushed the launch of the console in Europe to March 23.

The company launched the PS3 in North America on Nov. 17, but supply of the consoles has been tight.

Now PS3 supply levels are "stabilizing," says Dave Karraker, spokesperson for Sony Computer Entertainment America.

"We are seeing more units of PS3 in stores on a regular basis and not the extreme sellouts that were there soon after the console was introduced," says Karraker. "And with supply levels stabilizing, you can expect to see increased marketing for PS3."

Best Buy featured its first ad for the PS3 on Feb. 18, while Target is slated to put one out on Feb. 25.

"This probably means Sony has enough confidence in its supply to allow big vendors to advertise," says Brian O'Rourke, senior analyst at market research firm In-Stat.

Sony, however, did not give exact numbers on current PS3 stock levels.

Shares of Sony were recently up 40 cents or 0.7% to $52.94.

PS3 sales also are likely to accelerate because of big software game title launches like

MotorStorm

from Sony and

Virtua Fighter 5

from

Sega

, says Sony.

Tie ratios -- the numbers of games purchased for each hardware unit sold -- for the PS3 have improved by 80% since the device's launch, says Sony, in what could be very good news for video-game publishers such as

Electronic Arts

(ERTS)

and

Activision

(ATVI) - Get Report

.

Still, Sony has a long way to go to catch up in the console race. According to preliminary data released by NPD on Tuesday,

Nintendo

(NTDOY)

continued its momentum with 436,000 units of its Wii device sold in January.

Microsoft

(MSFT) - Get Report

sold about 294,000 Xbox 360 systems last month, while Sony sold some 244,000 PS3 units.

With more consoles in the market now, this could also be the litmus test for Sony when it comes to the

PS3's high price tag. Sony's 20-gigabyte PS3 model retails for $499; the 60-GB model sells for $599.

Sony has suggested up to now that PS3 sales lagging behind the Wii and the Xbox 360 have been because of supply constraints.

"If they are over their supply problems, we will know exactly how many consumers want a $500 console," says O'Rourke.

Some video-game industry experts have suggested that the console may be too expensive for customers and that Sony may have to drop the price to push more units. So far, Sony has said a price cut for the PS3 console this year is unlikely.