Sony will win video game battle, says Yankee Group

Sony Corp. should win the latest battle in its war with Microsoft Corp. and Nintendo of America Inc. for dominance in the video game console business, but that victory will come with plenty of bruises.

That's the word from a study on the sector released today by the Yankee Group, a Boston technology research firm. The report predicts that Sony's PlayStation 3 console will ultimately control a larger market share than Microsoft's Xbox 360 and Nintendo's planned Wii, but that Sony will likely be forced to slash prices for the expensive system and will be faced with a slimmer lead over Microsoft than with previous game consoles.

PlayStation 3 is due on retail shelves later this year after a delay disappointed many customers who expected it in stores in the spring. Microsoft, whose current Xbox lags the PlayStation 2 in sales by a wide margin, put the Xbox360 on sale last November, giving it a year's head-start on sales. By 2011, though, the Yankee Group report predicts that Sony will have sold 30 million PlayStation 3s, controlling 44 percent of the market, compared with an estimated 27 million Xbox 360 units, which would account for 40 percent of the market.

Nintendo is expected to stay in third place with 11 million Wiis sold, claiming 16 percent of the console buying market.

The report also says that Microsoft, which launched the Xbox 360 at $399, is poised to deeply cut the retail price of the machine next year, putting price pressures on Sony, which plans to launch the PlayStation 3 at roughly $600, the highest price ever for a video game console.
(Keith Reed, Globe staff)