Bloomberg is reporting that Sony is considering introducing a new Playstation 3 with a bigger hard drive in the wake of killing off their 20GB model.

``It's in line with our strategy as we had planed to choose models based on consumer needs,'' Fukuoka said. The larger model, which retails for $599 in the U.S. and is $100 more expensive than the smaller version, accounts for about 90 percent of sales, he said.

The company is also considering introducing the model with a bigger hard disk, Fukuoka said, without providing details.

I love that Sony seems so willing to shift around their model designs based on consumer demands, though I'd love to see a breakdown of how many of the 20GB PS3s went unsold. That 90 percent figure either means people didn't want the cheaper PS3 or they couldn't find them. I suspect the first, but I'd still love to see the hard numbers. Brian Crecente

Sony Shares Rise on Report Profit to Exceed Estimates (Update3) [Bloomberg]

Enterbrain's figures, by way of Bloomberg, peg Wii sales at 1.95 million consoles compared to 812,000 PS3s during a similar time period. Actually, the PS3 has been available to Japanese consumers and Chinese nationals working for scalpers nearly a month longer.

So where is Sony keeping pace with Nintendo in the home turf console war? Total yen sales! With some 47.6 billion yen in sales versus Nintendo's 48.7 billion yen, that high price is helping them in one way. For the record, I'm estimating that with a fairly generous 20% of those PS3 sales being of the 20 GB variety.

Oh, and with PS3's eleven pound shipping weight, I'm sure Sony is crushing them in total pounds shipped. Michael McWhertor

Nintendo's Japan Wii Sales Double Those of Sony's PlayStation 3 [Bloomberg]

Three board members were targeted for removal, according to Bloomberg. Current CFO Karl Winters will remain at Take-Two for the time being, despite conjecture to the contrary.

Plagued by an stock option backdating scandal and five quarters of losses, shareholders voted to put Strauss Zelnick in the position of chairman and Benjamin Feder in the position of chief executive officer.

News of the shareholder takeover come just hours after the public premiere of Grand Theft Auto IV, Take-Two's most profitable franchise.

More details on the top level changes at Take-Two are available at Bloomberg. Michael McWhertor

Take-Two Dissidents Win Control, Install New Chief [Bloomberg]

Tonight New York Times bestselling author Dean Koontz will be giving a virtual reading of his forthcoming novel The Good Guy in Second life.

The reading, Bloomberg reports, will take in the Bantam Dell Book Shop and Cafe, Bantam Dell Publishing's new Second Life stomping ground.

Bloomberg writes that the virtual Koontz will have his own likeness helped out by two virtual Bantam employees during the reading, one of which will field audience questions and relay them to the author who will answer in his real voice via an audio feed.

While the actual location will only support about 40 people, they event will be simulcast to other locations in the virtual world as well.

Russ Lawrence, president of the American Booksellers Association and owner of Chapter One Book Store in Hamilton, Montana, is sanguine about the prospect of virtual competition. "If publishers want growth, they have to look to reach people where they haven't before," he says. "Second Life is itself a fictional environment. Who knows, selling fiction there might be a pretty good match."

Let's just hope he's not attacked by any flying body parts. Brian Crecente

Bloomberg sat five gaming analysts down and talked to them about the launch of the PS3 recently. The conclusion they reached: Sony failed to fend off Nintendo's Wii and lost a big chunk of market share to their competitor.

Losses from games probably drove net income down to 84.1 billion yen ($691 million) in the three months ended Dec. 31, from a record 168.9 billion yen a year earlier, according to the median estimate of five analysts surveyed by Bloomberg. Sales at Tokyo-based Sony, which reports earnings tomorrow, probably rose 9.6 percent to 3 trillion yen.

The results may highlight Chief Executive Officer Howard Stringer's failure to fend off Nintendo, whose $250 Wii console outsells the PlayStation 3 by two-to-one. Sony may still exceed its full-year profit target because of a weaker yen, sales of Bravia televisions and growth at its movie unit.
...
The game division, Sony's second-largest by revenue, probably lost 50.9 billion yen during the quarter, compared with a profit of 67.8 billion yen a year earlier, after sales fell 7 percent, according to the Bloomberg survey.

After botching the PS3's debut with production delays and cutting the price to compete against cheaper Wii and Xbox players, Sony will probably lose a record 191.9 billion yen from games this fiscal year, compared with profit of 8.7 billion yen the previous year, according to the Bloomberg survey.

Uh-oh... I see a promotion in Sir Stringer's future. Brian Crecente

Sony 3rd-Quarter Profit May Fall 50% on PlayStation 3 (Update2) [Bloomberg]

Jan. 29 (Bloomberg) — Sony Corp., the world's largest maker of video-game players, may report third-quarter profit fell 50 percent after its flagship PlayStation 3 lost market share to Nintendo Co.'s Wii.

Losses from games probably drove net income down to 84.1 billion yen ($691 million) in the three months ended Dec. 31, from a record 168.9 billion yen a year earlier, according to the median estimate of five analysts surveyed by Bloomberg. Sales at Tokyo-based Sony, which reports earnings tomorrow, probably rose 9.6 percent to 3 trillion yen.

The results may highlight Chief Executive Officer Howard Stringer's failure to fend off Nintendo, whose $250 Wii console outsells the PlayStation 3 by two-to-one. Sony may still exceed its full-year profit target because of a weaker yen, sales of Bravia televisions and growth at its movie unit.

``A drop in third-quarter results is largely expected on the games division. There's no surprise unless the company further reduces its profit forecasts,'' said Mitsushige Akino, who oversees $468 million in assets at Ichiyoshi Investment Management Co. in Tokyo. Akino doesn't recommend investors buy Sony stock ``until the company improves its earnings.''

Sony in October cut this fiscal year's profit forecast to a five-year low of 80 billion yen after delays in the new PlayStation's debut and a recall of defective laptop batteries, the largest in consumer electronics history.

Shares of Sony have risen 9.6 percent in the past six months, trailing the 61 percent gain by Nintendo and Xbox 360-maker Microsoft Corp.'s 26 percent increase. Today, Sony's stock fell 1.2 percent to close at 5,730 yen in Tokyo.

Wii Wins

The game division, Sony's second-largest by revenue, probably lost 50.9 billion yen during the quarter, compared with a profit of 67.8 billion yen a year earlier, after sales fell 7 percent, according to the Bloomberg survey.

After botching the PS3's debut with production delays and cutting the price to compete against cheaper Wii and Xbox players, Sony will probably lose a record 191.9 billion yen from games this fiscal year, compared with profit of 8.7 billion yen the previous year, according to the Bloomberg survey.

Nintendo, the world's largest handheld game maker, last week reported profit in its latest quarter jumped 40 percent to 77.6 billion yen, fueled by demand for Wii consoles and portable DS game players.

In the U.S., Nintendo sold 1.1 million consoles in November and December, almost double the PlayStation 3 units shipped during the period, according to researcher NPD Group. In Japan, Nintendo sold 989,118 Wii units last year, more than double PlayStation 3 sales, according to researcher Enterbrain Inc.

TVs Help Stringer

Redmond, Washington-based Microsoft last week cut its Xbox 360 forecasts and now expects to sell 12 million units by June 30, instead of 13 million to 15 million. The company sold 10.4 million units of the console since its December 2005 debut, exceeding Microsoft's own 10 million target.

Even so, Sony's overall profit this fiscal year may beat its own forecast from sales of Bravia LCD TVs, Vaio computers and Cyber-shot digital cameras, the analysts said.

The company will probably post net income of 122.1 billion yen this fiscal year, 53 percent higher than the company's October forecast, the survey showed.

Profit at the consumer electronics division, the world's second-largest behind Panasonic-maker Matsushita Electric Industrial Co., probably increased 23 percent to 97 billion yen as revenue rose 9.4 percent to 1.75 trillion yen, according to the survey.

Sticking to Profit Pledge

Profit from cell-phone unit Sony Ericsson Mobile Communications Ltd., which this month reported profit tripled in the latest quarter, also helped ease losses from the game division, according to the analysts.

The business, which posted a loss last fiscal year, will generate 152.3 billion yen in profit this fiscal year, almost double overall operating income, according to the survey.

TV sales helped Stringer, 64, say at this month's Consumer Electronics Show that he's sticking to a pledge when he became chief executive in 2005, to increase Sony's profit margin to 5 percent by March 2008. The company had a 2.6 percent margin last fiscal year.

Sony and partner Samsung Electronics Co., the world's two biggest LCD TV makers, sell most of the sets sized 40 inches and above, according to researcher DisplaySearch.

The movie studio business probably posted a profit of 24.9 billion yen, from a loss of 400 million a year earlier, according to the Bloomberg survey.

James Bond, Spider-Man

Profit at the division will probably jump 73 percent this fiscal year, according to the survey, after Sony had a record 13 films open at No. 1 and led all other studios in U.S. ticket sales with films such as ``The Da Vinci Code'' and ``Casino Royale'' during 2006.

Movies such as ``Spider-Man 3,'' due for release in May, will probably help drive up profit, CLSA Asia-Pacific Markets analysts Atul Goyal and Sandeep Muthangi said in a Jan. 24 report.

Profit from financial services, including life and auto insurance, probably fell 63 percent to 17.5 billion yen and sales declined 11 percent to 169.5 billion yen, the survey showed.

The division's profit fell because of lower stock gains after the Nikkei 225 Stock Average's climb slowed to 6.8 percent during the quarter, Credit Suisse Group analyst William Drewry wrote in a Jan. 22 report. A year earlier, the index surged 19 percent, its fastest quarterly growth in a decade.

The company plans an initial public offering of Sony Financial Holdings Inc. as early as the year beginning April 1, according to spokeswoman Kayoko Miyako, who declined to comment on the size of the offering.

Sony may raise 300 billion yen to 400 billion yen in an IPO of the unit in July or August and may disclose the timing of the offer tomorrow, Macquarie Research Equities analyst David Gibson wrote in a note to clients on Jan. 17. The funds may be used for a stock buyback, benefiting investors, he said.

The following is a summary of earnings that analysts are predicting for Sony's third quarter and fiscal year ending March 31. Figures are in billions of yen.

3Q FY3/07
SALES 2,595.4 8,165.5
Electronics 1,746.6 5,774.0
Games 390.0 939.0
Pictures 224.8 783.8
Financial 169.5 656.3
Other 121.8 424.0
OPERATING PROFIT 94.3 78.1
Electronics 97.0 152.3
Games -50.9 -191.9
Pictures 24.9 47.3
Financial 17.5 76.5
Other 11.3 20.3
NET INCOME 84.1 122.1

To contact the reporter on this story: Young-Sam Cho in Seoul at ycho2@bloomberg.net

Bloomberg is reporting that the Sharp Corporation is set to invest BILLIONS in the manufacturing of blue laser diodes, the very same ones found in the PlayStation 3. And every Blu-ray player and recorder. And HD-DVD players. Sharp will start pumping out 150,000 diodes per month, ramping up to 500,000 by September 2007.

So does this mean that the blue laser diode production is now a non-issue? Will every man woman and child have easy access to life-giving blue lasers? Will the PlayStation 3 flow like wine to the thirsty masses? Should Europe breathe a sigh of relief now that the March launch is secure?

Not really.

Sharp is planning to manufacture their own Blu-ray recorders, with "most" of the diodes going into the Sharp electronics. Although I'm sure Sharp would be willing to part with a diode or two for the right price, I'm guessing that PS3s will continue to trickle in to stores as slow as they have been... for the time being. Michael McWhertor

Sharp to Make Laser Diodes for Blu-Ray, HD Recorders [Bloomberg]

A Playstation 3 title has to sell at least half a million copies to make a profit, the president of Namco told Bloomberg.

President Takeo Takasu went on to say that graphics for PS3 games cost about 1 billion yen to create, or more than double what it costs to create graphics for Wii titles.

``We have to sell at least 500,000 copies per title worldwide to make a profit on PlayStation 3 games,'' said Takasu. He said titles for the new Sony console are ``selling well.''

The story goes on to quote a bunch of analysts saying that game developers might be hesitant to start making games for a console that is so expensive to develop for if it is having shipment issues. Brian Crecente

Namco Bandai's Takasu Says PS3 Game Titles Must Sell 500,000

Nov. 30 (Bloomberg) — Namco Bandai Holdings Inc., Japan's second-biggest maker of video-game software, must sell at least half a million copies of a game for Sony Corp.'s PlayStation 3 console to make money on the title, said President Takeo Takasu.

Graphics for the high-definition games cost about 1 billion yen ($8.6 million) to create, more than double that for Nintendo Co.'s Wii titles, Takasu said in a Tokyo interview Nov. 28.

``We have to sell at least 500,000 copies per title worldwide to make a profit on PlayStation 3 games,'' said Takasu. He said titles for the new Sony console are ``selling well.''

Shortages of the PlayStation 3 may also make it more difficult for software makers to sell enough games. Tokyo-based Sony halved shipment targets for the console this year and delayed the European release amid a dearth for some parts. The company may have missed its goal of shipping 400,000 consoles in the U.S. earlier this month, according to analysts including Jeetil Patel at Deutsche Bank Securities in San Francisco.

``Game makers may hesitate to make games for a console if its shipment is being delayed,'' said Yuuki Sakurai, who helps manage $6.02 billion at Fukoku Mutual Life Insurance Co. in Tokyo. ``Some game makers may wait until a console becomes popular because of increasing production costs.''

Tokyo-based Namco Bandai expects games for the consoles introduced this month by Sony and Nintendo and a year ago by Microsoft Corp. to account for 10 percent of software sales, or 3.15 million units, this fiscal year ending March 31, Takasu said. The company sold about 26,000 titles for Microsoft's Xbox 360 last year, when it was introduced.

Namco Bandai developed two titles, the ``Ridge Racer'' car racing series and the latest ``Gundam'' shooting game, for Sony's PlayStation 3's Japan debut on Nov. 11, and will introduce four titles for Nintendo's Wii this weekend. The Wii offers a motion- sensor controller without high-definition graphics.

Shares of Namco Bandai fell 0.3 percent to 1,734 yen as of 1 p.m. on the Tokyo Stock Exchange.

Bloomberg is reporting that (are you sitting down?) Sony may not have actually made their 400,000 unit shipment target for the launch of the PlayStation 3.

More than half the 150 stores checked by Kaufman Bros. said they wouldn't have enough units to cover preorders, according to a Nov. 16 research note by retail analyst SooAnn Roberts. She predicts Sony will ship no more than 200,000 units to the U.S. this year.

Yeah, that's this year. 200,000. Not on launch day, when Sony expected 400K on that one day and 1.2 million by end of year, but for the rest of 2006.

Other analysts are slightly more positive, with shipments expected to hit the 400,000 mark. Sony is being non-committal, saying that they "shipped as many PlayStation 3 units into the North American market as possible and continue our efforts in supplying systems to retailers nationwide through the holidays" but still hope to ship 1 million units by January 1.

Regardless of the final figures, it's not going to be easy to get one any time soon. Michael McWhertor

Sony May Have Missed PlayStation 3 Goal, Analysts Say

While the wire-service story doesn't quote a source, they report that the music and video player from Msoft is set to come out this Christmas. Instead the story is based on "people briefed on Redmond, Washington-based Microsoft's plans."

More interesting is their report that J Allard is overseeing development of the device and that Robbie Bach is supervising.

No mention, in the story, if the device will have any gaming features.

Microsoft's device will be able to connect to the Internet and other devices using the wireless fidelity, or Wi-Fi, standard, which iTunes doesn't have, the people said.

Microsoft is also promising the screen will have a better quality picture than the iPod, according to the people, who saw the slideshow Microsoft is using to promote
the device.

The music and TV companies are interested in working with Microsoft in order to blunt Apple's power in the market, according to people close to the media
companies.

I spoke with Microsoft shortly after the story hit the wires and got a big fat no comment. It seems obvious that some sort of music, video player is on the way. The real question, it seems, is if it will be the fabled Xboy. Brian Crecente

The story also says that 28 percent, or about 42,000 of the 159,000 available Xbox 360s were sold. The second number comes via Media Create. Is it just me or is that a pretty sizeable difference?

Neither of the research firms dared to hazard a guess at the Xbox 360 sales figures in the U.S. and U.K. Previously published reports put the U.S. sales at anywhere from 332,000 to 400,000 and about 75,000 in the U.K.

Check out our own Brian Ashcraft s coverage of the 360 launch in Osaka, where things seemed a bit slow.

Microsoft Sold 28 percent of Xbox 360s in Japanese Stores [Bloomberg]