E3: Sony Enters Portable Game Market, Cuts PS2 Price

Sony Computer Entertainment (SCE) announced this week that it will take on the market-leading Nintendo GameBoy with a new handheld video game system called the PlayStation Portable (PSP), which features advanced graphics capabilities, a wide-screen display, and a small DVD-like disk drive. Additionally, in a bid to counter-attack one of the Microsoft Xbox's more obvious advantages over the PlayStation 2 (PS2), the consumer electronics giant slashed the price of its PS2 video game console and released a new version--at the old price point--that includes the broadband networking adapter that SCE used to sell separately.

"There's a new member of the [PlayStation] family, and it's not the PlayStation 3," said SCE President and CEO Ken Kutaragi (the so-called Father of the PlayStation), referring to the PSP. "The baby is still in the incubator, but as the father I can look in the window and see his face, and he is very cute." The PSP will ship about the time of the 10th anniversary of the original PlayStation, he said, and will be "the Walkman for the 21st century."

The PSP will debut in late 2004, the company said during briefings this week at the Electronic Entertainment Expo (E3) in Los Angeles. The new product will feature several innovative features, including a 5.4" 16:9 wide-screen backlit LCD display with a resolution of 480 x 272 pixels, and will use a new DVD-like disc format that SCE calls UMD. UMD disks, about half the physical size of a DVD, will hold 1.8GB of data--almost three times the storage capacity of a CD-ROM. The PSP will also include stereo speakers, USB 2.0 ports, a laptop-like rechargeable lithium ion battery, 3-D-graphics capabilities, and MPEG-4 video support.

On the video game-console front, SCE dropped the price of its PS2 console from $200 to $180 and introduced a new version of the console for $200; the new console includes a broadband networking adapter, a built-in infrared (IR) receiver, and better DVD movie playback capabilities. Although critics might charge that SCE is simply trying to meet some of the technological advantages in its primary competitor, the Xbox, the company wasn't offering much in the way of kudos for its competition. Instead, Kaz Hirai, president of SCE US, declared victory for the PS2 in "the battle for [video game] console supremacy." Predictably, as I write this, reports about Xbox price cuts are starting to filter in as Microsoft moves to counter the effects of SCE's announcement.