Sony puzzles analysts with portable PlayStation plans

The electronics giant's plans to release a portable version of its game console leaves some critics scratching their heads about the company's strategy.

3 min read
Sony next month will release a portable version of the PlayStation, the company announced today, leaving some critics scratching their heads about the company's strategy.

Sony will release the PSone, a more portable version of the PlayStation gaming console, in Japan on July 7. The device, designed to be used in the home or the car, is about one-third the size of the PlayStation and is priced at 15,000 yen, or roughly $140.

The PSone is Sony's first portable game player and essentially its first entry into the market for mobile information or gaming devices. This month, Sony will show its first digital information device, based on Palm's operating system.

But the product is not truly portable and must be plugged into an electrical outlet to be usable, leaving some analysts wondering how the PSone fits into Sony's overall strategy.

The device must be plugged into either a wall socket or a car's cigarette lighter and is roughly twice the size of Nintendo's popular Game Boy player, so it cannot truly be considered a portable product, according to Michael Goodman, an analyst with The Yankee Group.

"It seems like they kind of want to get into the handheld game market to compete with Game Boy, but this isn't the device which does it," Goodman said. "This is a device in limbo."

The consumer electronics giant has said it sees four gateways into the home, where it hopes to sell a range of digital devices and content: the PlayStation2, mobile devices like its upcoming Palm-based handheld, PCs and digital set-top boxes for the television.

The PlayStation family appears to be a crucial part of that strategy. The gaming console will feature high-end graphics and online access as a sort of Trojan horse into the house, with Sony expecting the game machines to drive sales of other Sony digital content and appliances. In a separate announcement, Sony said today it will release a broadband Internet add-on card for the PlayStation2 in December.

Sony said it will offer a cell phone adapter, which will allow PSone users to connect to the Internet for online game-playing. Nintendo also plans to offer similar features in its Game Boy products, Goodman said.

"Sony is not the first to market this idea," said Goodman, noting that Internet access through the cell phone is not as appealing as simply hooking up the full PlayStation2 to the Internet via the broadband connection. "They're timely, but they're coming out the same time as everyone else."

The company's strategy for the future may be hurting its current product lineup, analysts said. "They need to generate revenues to maintain current position but at the same time create a networking company," said Marge Costello, editor of CE Online News, speaking about the obstacles facing the company. "They have to reconcile working toward the future with continuing to produce hardware."

These contradictions are apparent in Sony's decision to only offer broadband Internet access via the PlayStation2. Sony announced in Japan that it will ship an ethernet connection and hard drive for the PlayStation2 this winter, offering high-speed Internet access via the game console. Sony has not announced any plans to offer analog, or dial-up, Internet access on the PlayStation2.

At the end of 1999, 39 million U.S. homes were connected to the Internet, but only 1.4 million of those were using high-speed broadband connections, according to the Yankee Group. By 2004, 75 million homes will connect to the Internet, with 20 million connecting with broadband access. By only offering broadband Internet access, Sony is ignoring the mass market, Goodman said.

"The goal has been to strictly embrace broadband," he said, explaining that Sony hopes eventually to sell its own videos and games and deliver them through the high-speed pipes.

"But for now, and for the foreseeable future, dial-up is the dominant method of accessing the Internet," Goodman said. "Sony is clearly leaving out all those people who have dial-up Internet access and want to be able to use the PlayStation2."