Report: PlayStation 2 to land Jan. 23

Securities firm expects strong sales -- but first year will be rocky, with losses of more than $110m.

Financial analyst Merrill Lynch predicts that the PlayStation 2 -- Sony's next-generation game console -- will hit Japanese shelves on Jan. 23 at a hefty price of 45,000 yen (£238), according to a report published Friday.

Even at that price Sony will barely cover the cost of the parts needed to build the machine, ZDNN reported in a previous article. In addition, the machine will have to contend with Sega's Dreamcast which has been available in Japan for almost a year.

While Dreamcast machines will hit American shops Sept. 9 (British shops Sept. 23) at a much more affordable £199, analysts have predicted the PlayStation 2 will become the giant in the market. Merrill Lynch agrees. The report pegs initial shipments of the PlayStation 2 at 400,000 units with a total of 1 million consoles sold during the first three months of 2000.

Those numbers mesh with the agreements forged between Sony and its partners. For example, Sony has contracted Toshiba to manufacture the console's main processor to the tune of 1 million processors by Dec. 1999, and another million in the first quarter of 2000. The aggressive plans will drain the company's coffers, according to the Merrill Lynch report, which predicted that Sony's PlayStation division will post a $110m loss in the year ending March 2000.

Those losses will be temporary if demand picks up, transforming into a $130m profit by the following year. High software prices will contribute to the turnaround, with the 10 initial titles at an average price of 8,000 yen (£42) each.

The report said to expect more details at the Tokyo Game Show in September.

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