Sony's (SNE) Playstation Pipe Dream

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Sony’s (NYSE: SNE) PS3 may have a better year in 2008 than it did in 2007. That would not be hard. The game console was beaten like a red-headed mule by the Nintendo Wii and Microsoft (NASDAQ: MSFT) Xbox 360.

Sony’s hope for improvement rests on the fact that production quantities will allow it to bring down component costs and retail prices. There are also several "hot’ new games coming that will run on the PS3. Reuters writes "2008 will be a turning year for the PS3," said iSuppli analyst Pamela Tufegdzic. "Sony is offering a better forthcoming software pipeline with blockbuster titles like "Gran Turismo 5", which will boost PS3 sales this year."

The optimism seems misplaced. Microsoft still has the most popular game in the market with its "Halo 3" game. Nintendo has introduced the new Wii Fit and expects to sell over one million units of the new product in the US this year.

The leads that Microsoft and Nintendo have are formidable and may even be insurmountable. Sony should learn to rely on its TV business and movie studio operations. Its two rivals will do everything they can to keep the PS3 out of the game.

Douglas A. McIntyre