Digital Home Thoughts: Sony Bets More Than Video Game Unit on PS3 Success

"With the launch of its PlayStation 3 video game console six months away, Sony Corp. is gearing up for an all-out battle to put the electronics and entertainment conglomerate back on a growth path. At stake is not just pole position in the $25 billion video game industry, but dominance in the next generation of DVDs, the commercial viability of Sony's Cell microchips and possibly control over living-room electronics around the world..."We will supply microchips and other key devices in large quantity for PlayStation 3. So, the impact will be felt in Sony's all core businesses," Sony Senior Vice President Takao Yuhara told reporters last week. "Our movie division is also holding high hopes on Blu-ray. PS3's success is a concern for the Sony group as a whole." Sony is a leading proponent of Blu-ray optical disc technology, which competes with the HD DVD standard promoted by Toshiba Corp...."Brisk sales of PS3 means lower cost of Blu-ray drives for (stand-alone) optical disc players and recorders," Daiwa Institute of Research analyst Kazuharu Miura said."



Sony is betting the farm on PS3, while Microsoft already has a firm foothold in the next-generation with the Xbox 360. Sony's problems are only compounded by the fact that Microsoft is soon releasing an HD DVD add-on drive for the Xbox 360. With all of the strengths and advantages that HD DVD has over Blu-Ray, I have to wonder if Sony is making the right move. Then again, they've always been known for driving their own proprietary standards rather than partnering with others, so this should come as no surprise. The next 12 months are going to be very interesting indeed.