Sony hopes PlayStation 2 can beat back a challenge from Sega Enterprises Ltd.'s Dreamcast machine, which went on sale for $199 in the US last week to good reviews. Both the Dreamcast and PlayStation 2 boast 128-bit main chips, compared with 32-bit chips on earlier models, enabling the machines to display realistic perspective in game situations such as auto racing or boxing. Sony also competes with Nintendo Co., which plans to replace its current flagship Nintendo 64 machine at the end of 2000.

Much rides on the success of PlayStation 2 for Sony, which like other Japanese manufacturers has been hurt by falling prices and therising yen. In the year ended March 31, the current PlayStation model accounted for only 7 per cent of Sony's sales but 39 per cent of its profit.

`Home network' concept

Sony Computer Entertainment, the Sony subsidiary that makes PlayStation, says it invested 120 billion yen so far just to design and build the two main chips for PlayStation 2 - the central processing unit and the graphics chip. Sony said it plans to ship one million units of PlayStation 2 for the first two days of its Japan launch.

Sony executives also envision PlayStation 2 as the centerpiece of the company's version of the still-emerging "home network" concept. In theory, the machine will be able to hook up to the Internet and a variety of other electronic devices such as digital camcorders, although the software for these applications hasn't been unveiled yet. Also, PlayStation 2 can play digital videodisks and audio compact disks.

"We're positioning this as an all-round entertainment player," said Ken Kutaragi, thepresident of Sony Computer Entertainment Inc., at a packed news conference in Tokyo. Kutaragi said Sony plans in 2001 to begin distributing a variety of software to PlayStation 2 machines over high-capacity broadband lines such as cable TV lines. The software could include movies, high-quality music tracks and games for the PlayStation, Sony officials said.

Higher price tag

Sega's Dreamcast already offers users the chance to play games with friends at a distance using an Internet hookup. Software availability will be a key battleground in the video-game war. Sony says it already has 84 titles lined up for the PlayStation 2 in Japan, with 128 expected within six months after the March launch. The new machine can also play games written for the existing PlayStation. Sony says 46 software developers have signed licensing contracts to create games for the US market. Sega lists 19 titles now available in the US for Dreamcast on its Internet site, with seven more coming soon.

It isn't clear how thepricing of the Sony machine will affect sales. PlayStation 2 will carry a considerably higher price tag than Sega's Dreamcast in Japan, but Sony notes that its machine also will be able to play DVDs. DVD players start at around $250. Sony also redesigned the PlayStation 2's appearance. "We didn't want to design it (to look) like the older brother of PlayStation," Kutaragi said.

-- The Asian Wall Street Journal