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PS Vita Delay Gives Sony Time to Strategize Against Apple

Sony must learn from Nintendo 3DS' failures


Playstation VitaSony‘s (NYSE:SNE) video game business could use a booster. The company had a tumultuous second quarter following the high-profile hack of the PlayStation Network, its online gaming network and community on the PlayStation 3 and PlayStation Portable game consoles.

While the security breach didn’t cost the company the billions some expected it to, the loss of consumer confidence did translate to poor console sales. Sony sold just below 2 million PlayStation 3s in the second quarter, down from close to 2.5 million during the same period in 2010. The company suffered a net loss of nearly $200 million and could use a major new product to spice up sales in the back half of the year. Its new portable device, the PlayStation Vita, fits the bill nicely as one of late 2011’s biggest gadgets. That is, it would if it were coming out this year.

Sony executive vice president Kaz Hirai confirmed in an Associated Press report Thursday that the PlayStation Vita won’t arrive in Europe or the U.S. until 2012. It still will release in Japan before the calendar year is out, but Hirai said his company wants to make sure the device has a solid lineup of games to release alongside the system.

As much as delaying Vita into the next year might hurt Sony’s potential for success during the holiday season, they’re wise to push back the device’s release. Nintendo‘s (PINK:NTDOY) new portable device, the Nintendo 3DS, demonstrated handily how devastating a mediocre selection of games can be when a gaming machine is first released. The 3DS sold so poorly during the past quarter that Nintendo was forced to drop the price of the machine from $250 to $170 not even five months after it hit the market.

A 2012 release for Vita means more than just a stronger selection of games for Sony, though. Nintendo’s failure with the 3DS has given Sony a clear test case of how not to sell a devoted portable gaming machine in a market ruled by multipurpose portables like Apple‘s (NASDAQ:AAPL) iPhone. The iPhone and Google (NASDAQ:GOOG) Android phones have created a market where consumers are only willing to spend a few dollars on portable video games, compared to the $40 titles sold at retail on the 3DS and eventually on the Vita.

Sony already has gone out of its way to make the Vita a device that caters to all audiences. The device plays both the sort of high-definition titles with traditional controls that typify home consoles like Microsoft‘s (NASDAQ:MSFT) Xbox 360 and the PlayStation 3, as well as the simple, downloadable, touchscreen-based titles that have turned Apple’s App Store into such a financial powerhouse.

The Vita was priced at $250 ($300 for a 3G-equipped model supported by AT&T (NYSE:T), putting it in the range of Apple’s family-friendly iPod Touch line, but given how Nintendo struggled at that price point, Sony now has time to reassess how it enters the market.

Even with the delay, it’s possible the consumer market has simply left behind devoted handheld gaming machines and Sony’s Vita will struggle no matter what. Right now, though, the delay is a sound strategy, even if Sony needs a big win in the back half of 2011.

As of this writing, Anthony John Agnello did not own a position in any of the stocks named here. Follow him on Twitter at @ajohnagnello and become a fan of InvestorPlace on Facebook.

Article printed from InvestorPlace Media,

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