Kutaragi: Sony's Hardware Presence 'In Decline'

Following announcements last week by Sony concerning hardware shortages and delays of its forthcoming PlayStation 3 console, president and CEO of Sony Computer Entertainment Ken Kutaragi recently commented that company's position as a hardware super power may be deteriorating. "If you asked me if Sony's strength in hardware was in decline, right now I guess I would have to say that might be true," Kutaragi commented to Reuters, following Sony Computer Entertainment Europe's (SCEE) decision to delay the release of the PlayStation 3 in the PAL territories of Europe, Russia, the Middle East, Africa and Australasia from its previously announced date November 17 until March 2007. The chief issues cited by Sony as the cause of the delay include problems with the mass production of the blue laser diode used in the console’s Blu-ray disc drive. In addition, while the launch dates for both Japan and North America remain unchanged from November 11 and November 17 respectively, these manufacturing difficulties have significantly reduced the number of console units expected to be made available at the time of release, with Kutaragi suggesting earlier just 400,000 will be available for the North American launch and "about" 100,000 for Japan. "All of this has raised concerns about whether there is something fundamentally wrong with Sony's manufacturing process," Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management, told Reuters. "And it could further damage the Sony brand." The repercussions of Sony's recent announcements have the potential to extend beyond that of just the hardware giant as well, at least according to comments made by Shinko Securities analyst Hideki Watanabe. "I see a major risk that Sony's presence in the game market will weaken," he said. "Investors will have to start considering the possibility in the future that the game division will not produce any real profits at all." However, despite these issues, Sony is not changing its shipment forecast of six million units globally within the fiscal year ending March 2007, presumably hoping to catch up its manufacturing delay in the weeks and months after launch.