Sony performing 360 spin

In a predictable attempt to downplay the significance of Xbox 360, Sony's Corp's CEO, Howard Stringer, made a point of announcing that he wasn't worried about a threat from Microsoft. Read more about the forthcoming battle of the consoles and why Sony can't afford to lose.

In a Bloomberg article, Stringer is reassuring about the lack of anxiety at Sony, and is keen to restate the Playstation line's very satisfactory sales figures.

The only surprise here is that Sony has decided to talk about their battle with Microsoft at all. it could be said that this outburst confirms rather than denies Sony's worries about Microsoft stealing market share from Playstation products.

The Playstation line of products have sold very well over the Christmas period, allowing Sony to boast a victory in sales figures, but this is nothing more than a restating of the status quo as we know it.

Sony have been facing financial difficulties for some time now: their lucrative Trinitron TV business having melted away as flat panel television took over the market. Sony was slow to establish a position, and is now playing catch up with market leaders like Samsung and LG. Their new product line of LCD televisions is proving successful, but has yet to realise the enormous long term success of Trinitron.

While Sony's games business has remained profitable, the Playstation 3 launch is likely to plunge even that cash-cow into the red. It's generally accepted that new consoles are sold at a loss to establish the platform, and the money is then made on levying heavy fees from publishers to allow their software onto the machine, and directly from software sales.

The upshot is that Sony will have to weather a difficult period before PS3 begins to add rather than subtract from their bottom line. If PS3 were to falter it could take the entire company with it, but clearly nobody expects that to happen. Sony's shares are on the rise, and whether they win long-term against Microsoft, the markets believe PS3 will make a lot of money.

While predictions over who will gain the advantage in the next round of the console wars vary, it is certainly possible that Microsoft could make gains against Sony in the coming months. While limits on 360 production have held back sales, there is clearly an appetite for Microsoft's new machine, and there is still time for them to sell large numbers before PS3 is available in comparable quantities.

Though the stock markets have bet on Sony's value increasing, and nobody expects PS3 to be a flop, it doesn't mean that Microsoft will not increase their market share against Sony in the months to come. Strangely enough, it is possible for both Sony and Microsoft to make money from the games business at the same time. Success of one machine does not mean failure of the other.

A poor showing in Japanese sales for 360 is being used as a barometer by Sony, but again, that choice of indicator is to their benefit. Microsoft no doubt have a line of PR spin that tells things differently. 360 has done relatively well in the US and Europe, and has yet to launch in Australia and other low-volume territories.

In their haste to launch Microsoft has dropped the ball in Japan, despite many assertions that this time they would get it right. They failed to deliver a release software lineup that would appeal to the Japanese market. Key titles are still missing, or unsatisfactory, and impairing sales of the 360 in Japan and worldwide. It's doubtful Microsoft will ever crack Japan without buying heavily into Japanese game software development.

However, Sony have yet to execute their own launch, and on their exection of that, a great deal rests. If they fail to launch worldwide with sufficient product and good software, they will leave a space for Microsoft to grow. Furthermore, it's unclear whether the BluRay specification is sufficiently mature for Sony to release a product based on it as soon as they hope.

Despite bold words, Sony knows it has a fight on its hands, and their attempts to undermine the 360 with PR attacks indicates they are genuinely concerned, rather than treating the console as beneath their contempt. Their assertion of a lack of anxiety betrays their real concern. Nonetheless, Sony remains my favourite to win the next round of the console war.