Will PlayStation 3's cutting edge cost Sony dear?

In the 1980s, Sony's Betamax system lost out to VHS in the battle of the videos. Now its expensive PS3 is under threat from the recently launched Nintendo Wii (left). Could history be about to repeat itself?

Could history be about to repeat itself for Sony? Back in the 1980s, the electronics giant backed a loser in the great VHS versus Betamax video battle. Although the latter system was technically superior in many respects, it didn't win the consumer vote, dooming it to a slow death and eventual obsolescence. Two decades on, the group's expensive and much-delayed PlayStation 3 games console could similarly have its thunder stolen by Nintendo's recently launched competitor, the Wii. A previous clash between the two giants saw Sony come out on top; the PlayStation 2 outsold Nintendo's GameCube, launched in 2001, by a margin of more than five to one. But this time around, the omens are less propitious.

The PlayStation 3 is the most eagerly awaited gadget of recent years, says Tim Webb in the Independent on Sunday, and is "already selling by the planeload" in the US and Japan. The trouble is, while the "sleek $500 black machines" are a hit with retailers and consumers, manufacturing problems have limited supplies in the US and Asia. In Europe, the PS3 will miss out on this year's Christmas market after Sony delayed the launch until next Spring, leaving the field open for the Wii and Microsoft's Xbox 360. Not only has Nintendo ensured plentiful supplies of the Wii and a retail price of just under $250 half the price of the PS3's cheapest version it is also beefing up its global advertising budget by 10bn ($85m) to steal an early march on its rival, says the FT.

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Graham Buck

Graham has spent the past three years as a cash management editor at Deutsche Bank. Graham started off as a Risk Management Professional editor at Perspective Publishing for two years, then became a writer at The Treasurer for 5 years and then an editor at gtnews.com for 5 years. He then freelanced for 5 years where he reported on corporate treasury issues, risk management, insurance/reinsurance and pensions. Graham has a degree in English Literature from the University of Bristol and he has contributed to MoneyWeek’s share tips.