Nov. 17 (Bloomberg) -- Sony Corp., the world's largest maker of video-game players, began selling the PlayStation 3 in the U.S. in a debut marred by production delays and software glitches.

Machines sold out in minutes at stores across the country after Sony restricted sales to 400,000 units. Some stores opened at midnight to sell the consoles to buyers who had lined up for as long as four days. The limited supply guaranteed a sellout today, said Josh Martin, an analyst at Yankee Group.

``Short term, the launch is a success,'' said Martin, who is based in the research firm's Boston office. ``In the context of the delays and reduced initial units, though, the launch is not that successful.''

Sony's ability to ramp up production will determine whether it will sell enough machines in the weeks through Christmas to maintain its lead in the $20 billion console market. Nintendo Co. releases the Wii in the U.S. on Nov. 19. Microsoft Corp.'s Xbox 360 began selling last year.

Sales will get off to a slow start, Martin predicts. The PlayStation 3 will account for 12 percent of new game console sales in the U.S. this year, lagging Xbox 360's 74 percent and Nintendo Wii's 14 percent, he said. By 2011, the PlayStation 3 will have captured 44 percent of the market, compared with 40 percent for the Xbox 360 and 16 percent for the Wii.

``It's more a marathon than a sprint,'' said Kaz Hirai, chief executive officer of Sony Computer Entertainment America. ``The most important thing is to have great software, compelling entertainment content that's really immersive and fresh.''

Shares Rise

Sony's American depositary receipts rose $1.05, or 2.6 percent, to $40.99 at 10:39 a.m. in New York Stock Exchange composite trading. They had advanced 60 yen, or 1.3 percent, to 4,770 yen in Tokyo.

Sony is selling PlayStation 3 for $500 to $600 in the U.S., compared with $250 for the Wii and $300 to $400 for Xbox 360. ISuppli Inc. estimates Sony will lose more than $300 on every $600 console it sells as it ramps up production. The company plans to make up the difference with software sales.

While Sony wouldn't say how much it cost to develop the machines, the company spent $1.7 billion alone to develop the processor for the consoles.

Sony built production of the previous PlayStation to about 1 million units a month within a few months of its introduction in 2000, Hirai said. He said he wasn't able yet to forecast a monthly production rate for the PlayStation 3.

Mobs, Shooting

The shortages of the PlayStation 3 prompted customers to line up for days outside stores across the U.S. The demand created mob scenes when some stores opened their doors. Police were called to a Best Buy store in Boston to control a crowd of at least 250 people.

A man was shot during a scuffle with two men trying to rob customers who had lined up outside a Wal-Mart in Putnam, Connecticut. The man, who refused to give up his money, was taken to hospital and is in serious condition, police said.

Sony made the first U.S. sale at its Madison Avenue store in New York during an event hosted by hip-hop artist Ludacris. Customers started lining up the store as early as Nov. 13 to be among the first to own one of the consoles.

Angel Paredes was first in the line of about 1,500 people that formed outside the Sony store.

``I'm going to go shower, nap, rest, hook up the system and play a little bit,'' Paredes said.

Paredes, a 31-year-old day trader living in New York, planted himself at the store on the spur of the moment after hearing that people already were waiting at other stores.

Sell Outs

Toys ``R'' Us stores pre-sold all their PlayStations and have none to sell customers who walk in, said Kathleen Waugh, a spokeswoman for the Wayne, New Jersey-based company.

The Best Buy in Altamonte Springs, Florida, sold all its 30 consoles within 20 minutes, general manager Loay Dehneh said. Further north in Westland, Michigan, the Best Buy has already sold its 34 consoles, general manager Adam Karras said.

PlayStation 3's release in Japan last weekend was followed by the discovery that videos may freeze if users play games made for older versions.

``From a PR point of view, this is another black eye for Sony at a time when it doesn't need one,'' said Van Baker, an analyst at market researcher Gartner Inc., in an interview. ``Will it impact demand this week? Absolutely not.''

Revenue Constraints

Sony's revenue from the release will be constrained by the limited availability of consoles. Tokyo-based Sony, which planned to ship 4 million units by the end of this year, reduced the target by half in September and postponed the PlayStation 3's European debut until March 2007 because of the parts shortage.

The games business generated 918 billion yen in sales for Sony in 2006, 12 percent of revenue. Sales at the games unit gained an average 31 percent in the past two years.

More is at stake than just consoles. Sony and Microsoft plan to use the machines in battles over the next home-video format and to establish an online pipeline into the homes of consumers for the sale of games, music and video content, Yankee Group's Martin said.

``They have a lot riding on the technology,'' Martin said. ``The next generation of consoles is going serve as a digital media hub.''

To contact the reporter on this story: Michael White in Los Angeles at Mwhite8@bloomberg.net.

Last Updated: November 17, 2006 11:13 EST