Here we go. The first hint that Sony's PS3 production There's little doubt the success or failure of the PS3 will have a far-reaching impact on Sony's earnings, and delays like this aren't a good starthas serious problems. Ken Kutaragi, head of Sony's global computer entertainment division, has just announced that the European and Australian launch of the PlayStation 3 games console will be delayed until March 2007.
Mr Kutaragi blamed the delay on problems in mass producing certain components of the high-definition Blu-ray disc drives in the PS3 (most likely the laser diodes).
This delay is expected - in a blog post I made here a few weeks ago I worked out that if Sony was going to be able to squeeze 2,000,000 consoles off the production line in three months, that meant Sony had to get 925 PS3 made an hour, or 15 a minute, 24/7, until launch. Given this aggressive schedule, one thing that could trip Sony up was a kink anywhere in the parts supply chain. Well, it looks like that kink's appeared already. To make matters worse, Sony hasn't even started full scale manufacture of the Cell processor used in the PS3 - this is expected to start at the end of this month. There's little doubt the success or failure of the PS3 will have a far-reaching impact on Sony's earnings, and delays like this aren't a good start. Sony now needs to work on making sure that the quality of the units shipped is high, because delays combined with a high number of faulty systems could shake buyer confidence and be disastrous for the company.
My guess is that this is the first of many delays and that even if Sony can keep to the launch dates for Japan and the US (November 11 and November 17, respectively), the PS3 is going to be seriously scarce over the Holidays. Sony has cut back the number of units that will be available at launch in the US and Japan to 500,000 units (roughly split 400,00 for the US market and 100,00 for Japan) - not much considering that the PS3 has had months of hype (by comparison, Microsoft has 1.5 million Xbox 360s at release). Bad news for anyone who wants to guarantee getting one for the Holidays, but good news for anyone hoping to get one and make a killing on eBay.
This is also going to be sweet news for the Xbox guys over at Redmond. Microsoft is bound to take full advantage of any PS3 delays to get a greater foothold in the games market. If the PS3 is going to end up being scarce over the Holiday period, this will be the second Christmas where the Xbox 360 has had little in the way of competition. This is also going to be excellent news for Nintendo who plan on releasing the Wii console sometime this fall. If these two companies can make sure their product are on the shelves and available while Sony instead has to make promises to customers, both Microsoft and Nintendo could cash in on these delays.