Graphics chip problems or lack of games are 'worst case scenario'

Analysts are questioning the reasons behind further delays in the launch of Sony's eagerly-anticipated PlayStation 3 video games console.

Sony will push back the release of the PS3 to November, the company announced at a press conference in Tokyo today.

However, some analysts have questioned the reported reason for the delay, which Sony claims is due to problems with the digital rights management (DRM) on the console's next-generation Blu-ray optical drive. Instead, they suggest more serious issues.

"We think that slower than planned progress in developing the graphics chip, or a lack of software titles, is probably the main reason for the delayed launch," said analyst Eiichi Katayama of Nomura Securities' Financial & Economic Research Center in Tokyo.

Blu-ray discs will give the new PlayStation console removable storage capacity more than five times greater than that offered by the DVDs used in older consoles.

The Blu-ray DRM technology is already close to finalisation, Nomura believes, and is therefore an unlikely source of delays.

"Of the three copy protection technologies for the Blu-ray disc, AACS was set in the early stages of development, licensing of the ROM mark has already started, and licensing of BD+ is also likely to start soon," said Katayama.

"In view of this, we think that delays in copy protection technologies are unlikely to be the biggest reason for the delay in the PS3 launch."

However, a shift to a November start date is not a major surprise, according to Katayama, and is not too serious if it is caused by DRM teething troubles with Blu-ray.

"However, if the graphic chips or software were the problem, the earnings impact would be very serious and possibly a worst-case scenario," he said.

Sony Corporation's shares were down 1.8 per cent by mid-afternoon in Tokyo, despite a general rise in the market.

When the PS3 does appear, its main rival in the games console market, Microsoft's Xbox 360, will have had a full year's head start since its November 2005 launch.

Nintendo's new Revolution console will also have been launched worldwide by November, if it meets that company's announced schedules.

Other commentators have questioned whether a November launch date in Japan means that Sony will miss the critical US and European Christmas seasons.

"The November launch appears to be only for Japan,'' Dominik Maeder, an equity sales trader at HSBC in Tokyo, told Bloomberg earlier today. "Given Sony's track record, you can kiss the overseas Christmas launch goodbye."

However, Sony Computer Entertainment president Ken Kutaragi said during a press conference in Tokyo today that the November launch will include all major markets.