PS Vita Delay Gives Sony Time to Strategize Against Apple

Sony 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 didnt 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 2011s
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 wont 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
Sonys potential for success during the holiday season, theyre wise to push back
the devices 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. Nintendos 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 Apples 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
Apples 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, its possible the consumer market has simply left behind devoted
handheld gaming machines and Sonys 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