Companies Pursue Game Console Supremacy (topix.net)

- topix.net -

The game-console war is officially under way with the sold-out launches of Sony's PlayStation 3 and Nintendo's Wii, but there are still a lot of battles to fight _ and dragons to slay.

The long-awaited debuts marked by buying frenzies and marred by violence over extremely limited supplies of the PS3 mean the intense sales challenge for the competitors and retailers will play out beyond the holidays.

'We're just pushing off the starting line here,' Colin Sebastian, an analyst with Lazard Capital Markets, said Monday. 'We continue to anticipate that both the PS3 and Wii will sell out at retail through the holiday period, but the real battle for next-generation console leadership will be fought in 2007.'

Supplies of the Wii, which launched Sunday, and PS3, which made its U.S. debut Friday, are not expected to meet demand until next year.

'The hard part is that we'd love to have every consumer have a PS3 or Wii under their Christmas tree. Unfortunately, that's not going to happen,' said Jill Hamburger, Best Buy's vice president of gaming.

Best Buy Co Inc. and other major retailers expect regular shipments of the consoles in coming weeks but only in limited quantities.

Sony Corp. said it will have about 1 million PS3 systems for North American stores by the end of the year while Nintendo Co. said it will have shipped 4 million units.

The shortage has led to astronomical bidding online.

EBay Inc. said more than 13,000 PS3 consoles _ which retails for $500 to $600 _ had been sold on its online auction site by midday Monday at an average price of $1,400. More than 9,500 Wiis had been sold at an average price of $467, almost twice its retail price.

Microsoft Corp.'s Xbox 360, which had a one-year lead over the PS3 and Wii, isn't facing the same supply constraints and is being heavily marketed to gift buyers who won't be able to find a PS3 or Wii.

Amazon.com Inc. is conducting a poll this week to see which bargain customers most want the online retailer to offer Thanksgiving Day: 1,000 units of the Xbox 360, which normally sells for $300, at $100 apiece; 2,500 mountain bikes at $30 each; 2,000 Barbie dolls at $10 each; or 2,000 Amazon membership packages at $10 apiece. Amazon said it would make good on the most popular deal.

Wal-Mart Stores Inc. is promoting an Xbox 360 holiday package for $479 that includes a 20-gigabyte model, a video game, two extra controllers, and a three-month membership to the Xbox Live gaming service.

Retailers expect consumer excitement over the new consoles to also drum up sales of games and other equipment. Accessories such as memory cards, extra controllers and gaming chairs are all for sale.

'Retailers will use whatever console allocations they get to try to drive traffic to their stores,' Sebastian said.

Despite the supply problems, retailers are optimistic about the holiday season.

Today, there are more hardware options for video gaming than ever _ from next-generation consoles and its predecessors to gaming handhelds such as Sony's PlayStation Portable and Nintendo's DS.

Sony said it already saw a jump last week in PSP and PS2 sales compared to the previous week due to publicity over the PlayStation brand.

'The big thing is that it's a great year for gaming no matter what your gaming interests are,' Hamburger said.