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Reuters News Archive
Sony Playstation 2 Shipments Hit 10 Million
Last updated: 23 Mar 2001 08:39 GMT+00:00
TOKYO (Reuters) - Sony Corp said on Friday global shipments of its PlayStation 2 game console hit the 10 million mark, meeting a target that had been pared back earlier this year due to glitches in production of a key component.
Sony Computer Entertainment Inc, the company's game-making subsidiary, said it planned to make 1.5 million of the consoles in April, ramping up monthly production to two million units by this autumn. It also reiterated its target of shipping 20 million units in the 2001/02 business year starting in April.
Shipments since the PlayStation 2's debut in Japan on March 4 of last year were triple those of the original PlayStation during the same period after its launch in December 1994, the company said.
It had nevertheless been forced in January to cut its shipment target for 2000/01 by 10 percent to nine million units after the machine's rollout was hobbled by early supply glitches with a graphics chip.
The stumble shaved the game maker's profits and the edge it enjoyed over rivals Nintendo Co Ltd. and Microsoft Corp, which are set to launch their own advanced game consoles in the latter half of this calendar year.
Sony Computer Entertainment said 169 software titles were now available for the machine domestically, expected to rise to 183 by the end of the month with another 370 titles seen reaching the market in the next business year.
Sales of the PlayStation 2 began in Japan on March 4, 2000, followed by North America on October 26 and Europe on November 24.
The news came after the close of trade on the Tokyo Stock Exchange. Sony's shares ended 3.33 percent higher at 9,000 yen on Friday, riding a wave of gains in the technology sector led by a rally in semiconductor stocks in the United States.
The shares have lost nearly half their value from a split-adjusted all-time peak of 16,950 yen hit last March, although they have gradually moved higher from a low hit late in December of 7,510, their lowest in 15 months.
MegaChips Says Macronix to Supply Chips to Nintendo
Thursday March 22 4:25 AM ET
TOKYO (Reuters) - Japanese chip designer MegaChips said on Thursday Taiwan's Macronix International Co Ltd. has agreed to build a new production line to supply chips for Nintendo (news - web sites) Co Ltd.'s new game consoles.
The move is aimed at securing a stable supply route of chips for the new machines, which are expected to see solid demand worldwide, said MegaChips, a developer of the customized chips for the game systems.
Under the three-way agreement, memory chip maker Macronix will lease chip-making equipment worth $75 million from Nintendo to add the new production facilities specifically designed to make chips for Nintendo's portable game console Game Boy Advance and the GameCube home video machine.
The additional facilities will give the Taiwanese maker monthly capacity of 3,000 eight-inch wafers or eight-inch equivalent, which would generate annual sales of around 10 billion yen ($81.18 million), a MegaChips spokesman said.
On Wednesday, Nintendo launched Game Boy Advance, the successor to the top-selling Game Boy handheld game machine, in Japan, shipping 650,000 units on the first day.
It plans to add more than 400,000 units by the end of this month, with an eye to shipping 24 million by the end of March 2002.
The world's second-largest home video game machine maker is also scheduled to release GameCube, the next-generation home video game system, in July at home and in October in the United States.
MegaChips and Macronix have previously collaborated on the Nintendo64 game player, providing mask ROM, or microchips that retain information when the power is off, MegaChips said.
Shares in MegaChips closed up 5.54 percent at 4,380 yen, compared with a 1.91 percent drop in the benchmark Nikkei average Nintendo shares dipped 5.93 percent to 20,000 yen, partially due to an investment rating downgrade by a securities brokerage.
Shares in Macronix closed T$2.6 or 5.4 percent higher at T$51.
Sony Bets on Cell Phones As Game Platform
Last updated: 15 Mar 2001 04:01 GMT+00:00 (Reuters)
By Eriko Amaha
TOKYO (Reuters) - Sony Computer Entertainment Inc (SCE), the game-making unit of Sony Corp, said it has no plans to develop portable game devices of its own and would rely on cell-phones to add mobility to its popular PlayStation consoles.
Kenichi Fukunaga, a senior director for SCE corporate communications, told Reuters in an interview on Wednesday that developing portable game hardware was a costly enterprise that made little sense because cell phones have already emerged as a viable game platform.
"Making portable devices would mean having to compete directly with mobile phones," he said. "We couldn't offer devices with the same capabilities and price."
Fukunaga's comment follows an announcement last month by parent company Sony that it would start selling cables that could connect PlayStation consoles to "i-mode" Internet-enabled phones made by Japan's leading mobile phone operator, NTT DoCoMo Inc
Users will be able to download their favorite characters from the Internet into games on the PlayStation and its souped-up successor, the PlayStation2, and display i-mode content on TV screens hooked up to their consoles.
Users will also be able to play PlayStation games that are formatted to fit on mobile phones' business-card sized screens.
The cables are expected to hit stores just eight days after rival Nintendo Co Ltd releases its latest handheld game player, "Game Boy Advance," on March 21. Nintendo's console will also be mobile phone compatible.
SMALL IS BEAUTIFUL
Speculation that SCE might expand into portable game machines emerged last year when the company released a smaller version of its original PlayStation, called "PS one."
Yutaka Kagiwada, director of SCE's network business development division, said that while the company wanted to make PlayStation users free to leave their living rooms, the costs of developing small, portable devices were prohibitively steep.
"Having the technology to develop such devices and actually selling them and creating a feasible business model are different things," Kagiwada said.
The company would also face a tough time competing with Nintendo, which dominates the hand-held sector with its Game Boy series.
SCE plans to release a new PS one model with a liquid crystal display (LCD) by the end of the year, although the timing of its debut will depend on the market price of LCDs, he said.
The release of Nintendo's Game Boy Advance is likely to fuel more competition in Japan's $5 billion game hardware market, where SCE holds about a 54 percent share.
Fukunaga said that although mobile devices were important, SCE would focus more on fixed-line broadband transmission, which allows users to enjoy interactive games and eye-popping images.
"We want to offer computer entertainment that no one has ever seen before by using a machine that can handle massive amounts of data."
Fukunaga said the company believes its goal of selling nine million PlayStation 2 game consoles by the end of March was attainable. SCE has set a target of 20 million for the next fiscal year starting in April.
Sony shares ended Thursday morning trade down 0.86 percent at 8,050 yen. The company's stock has risen about two percent since January, while the benchmark Nikkei share average has dropped some 14 percent in the same period. ($1=120.95 Yen)
Microsoft declines comment on Xbox profitability
LOS ANGELES, March 9
Microsoft Corp. (NasdaqNM:MSFT - news) on Friday declined to address a recent report that it would take five years to reach profitability with its new Xbox video game console, saying the forecast by Merrill Lynch was based on assumptions that were the brokerage's own.
"That forecast was based on information and targets that have not been shared with the public," said John O'Rourke, director of games marketing. He declined to comment on Microsoft's projected profitability.
Earlier in the week Merrill Lynch analyst Henry Blodget predicted the Xbox console would lose $2 billion before breaking even in about five years.
In a report the brokerage calculated the Xbox would cost Microsoft $380 each to make, and would sell for close to $299, the price of Sony's rival PlayStation 2 console. Accounting for the retail margin, Microsoft was projected to lose about $130 for each Xbox sold.
While analysts have noted that console developers generally lose money on the hardware and profit on software and peripheral sales and licensing fees, the forecast for losses did raise some eyebrows.
O'Rourke said the marketing costs for the launch of the new video game platform will total some $500 million, and that about 1,000 employees were working in the Xbox division.
The Xbox, scheduled for launch this fall, is aiming to attract the same core video game fan base of teenage boys that Sony Corp. (NYSE:SNE - news) targeted with its PlayStation 2, launched in the United States last fall.
PlayStation 2 sold some 1 million units in the United States after its first three months, limited by a shortage of components.
The Xbox incorporates a Broadband high-speed Internet connection, but requires consumers to purchase a peripheral to play DVD movies. In contrast, the sequel to the popular PlayStation console has a DVD player in the console, but consumers must buy an attachment to access the Internet.
Wednesday March 7 8:57 PM ET
Schwarzenegger Revives Speculation About 2002
By Steve Gorman
LOS ANGELES (Reuters) - Terminate that denial. Movie star Arnold Schwarzenegger may still train his political guns on the California governor's mansion.
After first issuing a statement ruling out a bid next year to unseat Democratic Gov. Gray Davis (news - web sites), the Republican action hero reloaded Wednesday and said through his publicist that he remained undecided about whether to go into politics just yet.
The back-and-forth by the Austrian-born former bodybuilder capped speculation, fanned by Schwarzenegger himself, that he might challenge Davis in 2002.
It also came amid signs that Davis views Schwarzenegger as enough of a threat to warrant an effort by the governor's political team to discredit the star by circulating recent magazine articles accusing the star of sexual misconduct.
Meanwhile, several leading actresses, including Sharon Stone, have rallied to Schwarzenegger's defense, vouching for his gentlemanly ways and condemning the articles as fabrications.
One of Hollywood's highest-paid actors, Schwarzenegger has long been a Republican activist despite his 15-year marriage to broadcast journalist Maria Shriver, daughter of John F. Kennedy's sister Eunice.
In the latest round of will-he-run-or-won't-he speculation, the 53-year-old star of the "Terminator'' series first denied through a spokeswoman that he intended to run in 2002.
"While he's most interested in politics ... and believes that being a public servant would be a great honor in a country which has given him such great opportunities, he (Schwarzenegger) has commitments which will take him through 2004,'' his spokeswoman, Jill Eisenstadt told Reuters in remarks echoing an earlier statement in the Los Angeles Times.
About an hour later, however, Eisenstadt called back to say Schwarzenegger should not be counted out just yet.
"He's absolutely not made up his mind. Yes, he does have commitments, so yes there would be considerable obstacles should he decide to run for public office,'' she said. "But he said he would be sorting things out over the course of the next several months and will come to a conclusion then about whether he will or will not run. ... As far as he's concerned, the door is not closed.''
Defending The 'Terminator'
Eisenstadt also dismissed the idea that Schwarzenegger's political ambitions may have been chilled by a recent Premiere magazine story and tabloid newspaper articles accusing of him of habitually groping women and cheating on his wife.
The articles were faxed by Gov. Davis' senior political adviser, Garry South, to newspaper offices around the state with a cover sheet that said: "here is the long-awaited Premiere magazine expose on might-be gubernatorial wanna-be AH-nuhld Schwarzenegger. Titled 'Arnold the Barbarian' (what a great campaign moniker in this age of GOP family values and compassionate conservatism!) the piece lays out a real 'touching; story -- if you get what I mean.''
The actor's camp has called the articles unfounded tabloid ''trash'' and categorically denied their claims. Several of Schwarzenegger's colleagues, including female co-stars Jamie Lee Curtis (''True Lies''), Linda Hamilton (''Terminator'') and Rita Wilson (''Jingle All the Way''), have sent angry letters to Premiere magazine denouncing its story.
Curtis called it a "politically motivated hatchet job'' while Hamilton condemned as "fantasy'' an incident in which the Premiere article claimed Schwarzenegger lifted her onto his lap in the presence of her then-boyfriend director James Cameron.
ARNOLD FOR GOVERNOR?
Davis political adviser South told Reuters that he doubted Schwarzenegger could glean enough support from conservatives to win the Republican nomination. And he said Schwarzenegger's celebrity would do little to impress California voters.
"We're not particularly star-struck in this state,'' he said. "When people of that profile who have never run for office before decide to do so, I think they're in for a rather rude awakening.''
But Democratic political consultant Richard Lichtenstein said he thought Schwarzenegger could offer Republicans their best shot at mounting a viable challenge to Davis. "The Republican Party in the state of California is for all intents and purposes in shambles,'' he said, noting that Schwarzenegger is an attractive, wealthy figure with instant name recognition.
Wednesday March 7 12:01 AM ET
Microsoft's Xbox payoff 5 years away -- analyst
By Scott Hillis
SEATTLE (Reuters) - Microsoft Corp. will lose $2 billion on its upcoming Xbox (news - web sites) video game console before it breaks even in about five years, when it could add as much as $1 billion a year to the software giant's bottom line, according to a Wall Street analysis released Tuesday.
"Although we think Xbox represents a big opportunity, we do not believe it will become a major contributor to operating profit in the next five years," Merrill Lynch analyst Henry Blodget said in a summary of his report on the Xbox.
"Moreover, near-term, we believe it will require substantial investment. We estimate $2 billion in losses before break-even in FY2005," Blodget wrote. Microsoft's fiscal year starts July 1.
The report by Blodget and fellow analyst Justin Baldauf is one of the most comprehensive looks yet at how the Xbox will impact the world's top software maker as it pushes into new markets amid a slowdown in its core business of the Windows operating system and Office business software.
Microsoft said it had no comment on the report.
Microsoft shares rose $2, or 3.5 percent, to $59-7/16 on the Nasdaq amid a broad tech rally. The shares have tumbled from a year high of $115 last March, driven down by slowing profit growth as the PC market matures and corporations hunker down during the U.S. economic slowdown.
The Xbox, Microsoft's much-anticipated entry into the fiercely competitive video game market, is one attempt to reignite growth. The device will go head-to-head with Sony Corp.'s PlayStation 2 (news - web sites).
"Obviously one of the things Microsoft is trying to do is figure out ways to leverage its brand and its huge cash position," Blodget told analysts in a conference call later.
The Xbox is expected to go on sale in the second half of the year, about the same time that Nintendo (news - web sites) Co. Ltd. plans to launch its new GameCube. Microsoft is spending $500 million to market Xbox the first year it is on the market.
If it takes up the No. 2 slot behind PlayStation 2, Xbox could rake in $500 million to $1 billion in operating income, or 6 to 11 cents per share, by the 2006 fiscal year, accounting for about 5 percent of Microsoft's total profit, Blodget said.
Tackling Playstation 2
Microsoft would likely sell about 5 million Xboxes in fiscal 2002, 8 million in 2003 and 10 million in 2004, Baldauf told the call.
Featuring an Intel Corp. Pentium III processor and a graphics chip from nVidia Corp., each Xbox will cost Microsoft $380 to make. The machine will likely sell for $299, with $50 going to the retailer. So Microsoft stands to lose $130 on each sale, Baldauf said.
But the real money in the industry comes from software sales, which are expected to grow steadily for 5 years even as hardware sales slow, Baldauf said.
Although Microsoft is highlighting the quality of its games and ease of use for game makers, it will have a tough time dislodging Sony from its perch atop the industry, because the PlayStation 2 will have had a year's head start and 20 million units in the hands of gamers, Blodget said.
"Clearly, long-term, anything is possible, especially because we're dealing with Microsoft. But this is a market that deals with network effects. That will provide a very big competitive barrier," Blodget said.
If Microsoft does trounce the PlayStation 2, it stands to make two or three times as much money as it would make in the No. 2 or No. 3 market position, Blodget said, though he added such an outcome was far from certain.
"It is equally likely that Microsoft will fail to gain traction and actually just get out of the business. So we wouldn't want to bet heavily either way there," Blodget said.
Wednesday March 7 10:49 PM ET
Nintendo Eyes New Game System for Next Game Boy
By Yuka Obayashi
TOKYO (Reuters) - Japan's NintendoCo Ltd began whetting game players' appetites for its next generation hand-held player on Wednesday, unveiling plans to create a high-tech interactive game system for the successor to its best-selling Game Boy player.
Nintendo (news - web sites) announced it would forces with camera maker Olympus Optical to develop a card-swipe system enabling players to download their favorite animated characters to do battle on the pocket-sized machine.
"This is one of our many innovative and simple ideas that the new console will bring to game players and game software publishers," Atsuo Asada, Nintendo Executive Vice President told Reuters in an interview.
"Game Boy Advance is designed to offer an alternative to users bewildered by all the sophisticated features hyped up for other game machines."
The new Game Boy -- faster than its predecessor, boasting higher resolution, more colors and Internet capability -- will be launched on March 21 in Japan and analysts expect it to cement Nintendo's dominance in the handheld sector.
With help from Olympus, Nintendo aims to launch the "card-e" system worldwide later this year, aiming to win over younger players with the promise of a wide variety of characters that can be downloaded using special cards and card-readers.
The paper cards will carry sounds and visual data from a range of characters, including those from the phenomenally popular "Pokemon" series.
The game maker also showed off its initial software line-up for the Game Boy Advance on Wednesday, saying it was expanding to 25 titles from 10 originally planned. They will include new versions of old Nintendo favorites such as "Super Mario."
Shares in Nintendo jumped 5.71 percent to end at 19,450 yen, outperforming a 0.28 percent rise in the benchmark Nikkei average Olympus Optical shares rose 3.37 percent to 1,627 yen.
Dominance
Analysts said the new system fitted in with Nintendo's tried-and-tested strategy of focusing on fun, simple games that will attract young players.
"Card-e is a typical example of Nintendo's way of doing business," said Eiji Maeda, senior analyst at Daiwa Institute of Research. "It always tries to create new trends in the children's game market while adopting the latest technologies.
"Nintendo is likely to continue its dominance of the handheld market and the Game Boy business will be main profit contributor to the company in the next business year."
Nintendo's Asada said the company believes it could sell 100 million units of the new machine in less than four to five years. Cumulative sales of the first Game Boy topped 100 million last year, 11 years after its launch.
"Game Boy Advance hardware business will be profitable from the first year because we will utilize the production resources already in place for the Game Boy players," Asada said.
The new console, which uses a 32-bit processor, compared with its predecessor's slower eight-bit processor, will have better image processing and a 50 percent larger screen. It also allows up to four users to link up to play each other.
Asada confirmed Nintendo's plan to ship one million units of the new model in March and an additional 23 million units in the next business year starting in April.
The new machine will carry a 9,800 yen ($82.59) price tag in Japan and will retail at $99.95 in the United States.
Battles Ahead
Although Nintendo has no serious competition in the handheld sector, it is gearing up for a titanic struggle against U.S. software giant Microsoft Corp and Japanese rival Sony Corp in the home console market.
This year will see the release of an Microsoft's advanced game machine -- the Xbox (news - web sites) -- as well as Nintendo's own GameCube. Sony Corp currently dominates the market with its PlayStation 2 (news - web sites).
Analysts have said there may only be room for two players in the market, even after the withdrawal of Japan's Sega Corp earlier this year.
On Wednesday, Asada said the GameCube, the successor to the Nintendo64 machine, was on track for a July launch at home and an October release in the United States, followed by Europe next spring.
Copyright Reuters, 2001
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