Sony Stumbles, Microsoft Pounces in Console Wars

The next-generation game-console war officially kicks off in the United States this month as Nintendo and Sony launch their new consoles–nearly one year after Microsoft introduced its Xbox 360.

The launch of next-generation consoles has become geometrically more interesting since the late 1990s because modern consoles have become so much more than just gaming machines. Today, they come equipped with high-speed broadband connections, virtual communities, DVD and CD playback capabilities, and hard drives.

The result: an all-in-one home entertainment system that provides a gateway to the living room for whichever company sells the most units.

And owning the living room is the Holy Grail for Microsoft. If its Xbox 360 becomes the de facto gaming machine this time around, Bill Gates and company will have reached a goal they have been striving for for years.

Until now, though, there has always been a roadblock: Sony. The PlayStation franchise has consistently–and handily–beaten Microsoft in this arena.

But each next-generation console season, which comes roughly every five years, restarts the game. Winning in 2001 doesn’t promise winning in 2006.

So it’s significant that the PlayStation 3 (PS3), which, as Sony puts forth, is one of the company’s most important strategic moves, has been plagued by production delays, according to the Associated Press.

Production problems meant that only 100,000 PlayStation 3 machines were in time for its debut in Japan. When it goes on sale in the United States on Nov. 17, some 400,000 PS3 consoles will be available there.

The console’s European launch has been pushed back until March. That was the second delay, as PS3 had been initially promised for spring of this year.

The production problems have helped create a “grey market,” according to the BBC, in which brokers have purchased large swaths of available inventory and then resold the consoles on auction sites.

Assuming Sony overcomes the production issue, a problem the company has previously dealt with, there is still another looming issue: the PS3’s backward compatibility–which allows games from the PS2 to play on the new system–is broken.

More than 200 older games don’t work–and many expect that number to continue to increase, which means gamers who upgrade to the PS3 will be left with a stack of worthless discs.

And that’s a problem for Sony.

Each console generation stays on the market for five years; however, the last 18 months of the old system’s life cycle–and the first 12 months of the new system’s life cycle–are marked by a dearth of new game products as game makers rush to build products that use all of the new features of the upgraded console.

If the new PS3 continues to have both production and backward-compatibility issues, there is little incentive for customers to upgrade their systems. And that gives Microsoft–which launched its Xbox 360 last year–a full one-year jump on the competition.