Sony Corp unveiled a new handheld gaming device and announced it would make PlayStation games available on other makers' hardware, as it battles with Nintendo's DS and tries to fend off competition from Apple Inc's iPhone.
The announcement to an audience of hundreds packing the ballroom of a Tokyo hotel came the same day as Nintendo, which is readying the launch of a 3D version of its DS handheld next month, reported a 46 percent slide in quarterly profit, below analysts' estimates.
To the accompaniment of loud dance music, Sony showed off its new device, codenamed NGP for Next Generation Portable, featuring a 3G wireless data connection and a 5-inch organic light-emitting diode (OLED) touch screen, as well as motion sensors and a rear touch panel.
The capabilities of handsets are leaping ahead and pick-up-and-play games are becoming a big business, Kazuo Hirai, the president of Sony's games unit, told reporters after a media briefing in Tokyo. We have to be aware of that environment.
But it is unclear whether the new gadget can hold off the challenge from Apple and products emerging from rivals such as Samsung Electronics.
The key will be pricing of the device, said Nobuo Kurahashi, an analyst at Mizuho Investors Securities. If the company prices it cheaper than Nintendo's 3DS, it would be positive.
With smartphones and tablets offering a versatile alternative to handheld game devices, Sony needs new products able to tap a ballooning market for mobile gaming, which research firm Gartner expect to more than double to nearly $12 billion within three years.
Sony said the NGP will not go on sale until around the year-end and declined to give pricing details. Nintendo's 3DS will sell for 25,000 yen ($304.2) in Japan and about $250 in the United States.
Sony's latest release will stoke market speculation the Japanese consumer electronics giant is readying a gaming smartphone.
By the end of the year, Sony plans to make PlayStation games available on other portable devices running on Google's Android operating system, through a system called PlayStation Suite that will compete with applications from Apple.
It's an alternative to the Apple stuff, said Ricardo Torres, editor-in-chief of games website gamespot.com. Maybe another Angry Birds could be created on the PlayStation Suite. That's what they would love to happen. he said, referring to the hugely popular smartphone game.
Hurt by falling sales of its aging DS ahead of the launch of the 3D-capable model, rival Nintendo's October-December operating profit was 104.6 billion yen ($1.3 billion), below an analysts' consensus of 118 billion yen.
Underscoring the tough competition, Nintendo cut its sales forecast for the Wii console to 16 million units from 17.5 million units for the year to March. It also lowered its DS sales forecast by 1 million units to 22.5 million, but kept its profit outlook unchanged.
Nintendo's DS sold nearly 136 million units up to last September. Sony's PSP has sold some 61 million.
Shinichiro Matsushita, an equity analyst at Daiwa Securities, said Nintendo succeeded in widening the attraction of computer games to older people and women. He said Sony's product might appeal more to core gamers.
I wonder if Sony wants to attract the same user categories with the new product, said Matsushita.
Investors will now focus on a planned Sony Ericsson event in Barcelona on February 13, with growing expectations a PlayStation phone could be unveiled.
Next week, Sony is expected to post a fall in profits for the October-December quarter, underscoring the challenges facing Sony's Welshborn CEO Howard Stringer, who has struggled to recreate the magic of Sony's past hits, such as the Walkman cassette player and the Trinitron TV.
(Additional reporting by Ayai Tomisawa; Editing by Anshuman Daga and Nathan Layne)