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Just as



lagging PlayStation 3 console was showing signs of a comeback thanks to a

price cut in July, the company has stubbed its toe again.

The Japanese conglomerate said Thursday that it has delayed Home, its much awaited online network for the PS3, from an expected release this fall to next year. Instead, Sony announced a new game controller that analysts say is unlikely to affect demand for the console.

Coupled with a weak game lineup, the moves could dampen sales of the PS3 and result in a bleak holiday season for the electronics giant -- unless it comes through with another price cut.

Sony ranks third in the console sale wars, with 1.75 million PS3s in the U.S. compared to 6.3 million


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Xbox 360s and 4 million


Wiis, according to data from NPD.

Sony said it will move the Home release to next year in its quest to bring a better product to its users. But the move could end up compounding the negative sentiment around the PS3.

Sony unveiled Home

in March as an online virtual world where PS3 users can create their own avatar, watch movies, build and furnish their own personal spaces and be part of an online community.

Home was planned as a free download that can be directly launched from the console and had analysts giving the idea a thumbs-up.

Sony's weak game lineup, too, could keep potential customers away from the PS3.

The delay of


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Grand Theft Auto IV

, a game that was widely expected to be the best showcase for the power of the PS3 console, has hit Sony hard. Take-Two

pushed back the release of

Grand Theft Auto IV

from October to early next year.

Already, video game publishers are favoring the Xbox 360 over the PS3.

Electronic Arts'


upcoming skateboarding game,


, is scheduled for launch on the Xbox 360 -- a week before the PS3 version.

"At this point, gamers are likely to think they will be better off buying the Xbox 360 because they don't want another week or two to get the same game on the PS3," says Jesse Divnich, an analyst for The simExchange, an online video games

prediction market. "Sony needs a big exclusive title to turn the tide in its favor."

Sony has also failed to get gamers' attention with its two big PS3 exclusive game releases,



Heavenly Sword

, as rival Microsoft is set to ride high with its upcoming launch of the

Halo 3

game. The two titles were hyped by Sony and were expected to help the company slow down

Halo 3





Heavenly Sword

are not likely to do as well as Sony is hoping," says Divnich. "At the same time, they are having these problems with the delay of Home and the lack of big exclusives for the console, which is likely to make things difficult for them in the short term."

The simExchange predicts



Heavenly Sword

, are likely to sell under 300,000 copies in September. Over the life of the game,

Heavenly Sword

is expected to sell 1.43 million copies and


is likely to sell 647,000 copies, says the site.

The exchange also forecasts that PS3 consoles will likely only see a 30,000-copy increase over August.

Halo 3

is expected to help sell an extra 130,000 Xbox 360s, and the game is expected to sell more than 2.5 million copies in the first few weeks of its U.S. release.

Halo 3

, which will be released on Sept. 25, could sell 11.3 million copies in its lifetime, estimates the simExchange.

Shares of Sony were off 95 cents, or 2%, to $46.57 in recent trading. The company's stock is up 8.5% this year.

Though this holiday season may bring little cheer to Sony, the company could see the beginning of a turnaround in PS3 sales next year with the release of

Grand Theft Auto IV

-- and could eventually catch up to the Xbox 360.

But even if Sony gains momentum, it's likely the company will finish third -- a mighty fall from its position as the undisputed leader during the last console cycle.