May 8 (Bloomberg) -- Sony Corp., the world's largest maker of video-game players, will begin selling the PlayStation 3 on Nov. 17 in the U.S. and said it will cost at least $100 more than Microsoft Corp.'s Xbox 360.

A version with 20 gigabytes of storage will cost $499 in the U.S., Kazuo Hirai, Sony Computer Entertainment America's chief executive, said today at the Electronic Entertainment Expo in Los Angeles. A 60-gigabyte version will cost $599. Sony will ship 4 million of the new game consoles by the end of the year, he said.

Sony is betting consumers will be willing to pay more for the PlayStation 3's high-definition Blu-ray DVD player and the option of a larger hard disk drive than Microsoft's Xbox 360. Hirai demonstrated the PlayStation 3 today, showing titles including Electronic Arts Inc.'s ``NBA Live'' and ``Tiger Woods PGA Tour.''

``Early adopters will buy the console even if it's expensive,'' said Fumio Osanai, an analyst at UBS Securities Japan Ltd. Osanai said Sony will need to cut prices in the future to make the machine appeal to a wider audience.

Air Controller

Ken Kutaragi, group chief executive officer of Sony Computer Entertainment, unveiled a new wireless controller that lets users control games by waving it around in the air. The device is similar to a controller used by Nintendo Co.'s Wii game console due for debut in the fourth quarter and which Xbox 360 doesn't have.

Tokyo-based Sony's American depositary receipts rose 14 cents to $50.38 at 4 p.m. in New York Stock Exchange composite trading and have gained 23 percent this year. Redmond, Washington-based Microsoft fell 7 cents to $23.73 in Nasdaq Stock Market composite trading and has dropped 9.3 percent in 2006.

Sony said it probably won't make money on the PlayStation 3 initially.

``The start-up costs are such that you may not make money on every single unit from day one, but you will'' ultimately make money, said Phil Harrison, president of worldwide studios at Sony Computer Entertainment, in an interview. ``We've always made money from hardware.''

The PlayStation 3 will be available in Japan on Nov. 11 and the 20 gigabyte model will sell for 59,800 yen, Hirai said. Retailers will be able to set their own price for the 60 gigabyte model, he said.

The machine will be available in Europe on Nov. 17 at 499 euros or 599 euros, he said.

Microsoft's Lead

Sony in March delayed the PlayStation 3 until November, giving Microsoft a year's head start with Xbox 360. Microsoft's device came out six months ago.

Sony will make 2 million consoles available when it is released and will have shipped 6 million by March 31, Hirai said.

Microsoft in March more than doubled Xbox 360 shipments to retailers to help satisfy demand. The announcement came a week after Sony delayed the release of PlayStation 3. Microsoft plans to sell 5 million to 5.5 million Xbox machines by June 30.

Microsoft's Xbox 360 costs $399 for a version with a hard disk drive and $299 for a version without.

``We didn't see a lot of innovation'' in Sony's presentation today, said Shane Kim, general manager of Microsoft Game Studios. He said there is a ``significant'' difference in the price of the PlayStation 3 and the Xbox 360 and that Sony's controller appeals to a ``niche market.''

New Games

Sony also demonstrated new games for the PlayStation 3 including racing game ``Formula One 06'' and ``Sing Star,'' a karaoke-like game that lets consumers sing along with tunes. Users with consoles connected to the Internet will be able to download new songs.

Sony also touted online features. Consumers will be able to buy PlayStation cards, letting them acquire additional content such as extra characters. Players will also be able to chat online and form communities similar to those at News Corp.'s MySpace.com, Hirai said.

Sony, the second-largest maker of consumer electronics, has sold more than 103 million PlayStation 2s since their March 2000 debut. The company had 64 percent of the market for that generation of consoles, Merrill Lynch & Co.'s Kash Rangan said in a May 2 note. Microsoft garnered 16 percent and Nintendo Co. had 13 percent.

``There's a lot of advantages that Microsoft has,'' said Mike Goodman, an analyst at Yankee Group Research in Boston. ``They're in second-generation software, they have an installed base, they're out before Sony.''

Goodman predicts Sony will hold onto 45 percent of the market share for this generation of game consoles, versus 40 percent for Microsoft.

``This is a fascinating strategic chess match that is going on between Sony and Microsoft,'' Goodman said. ``It's punch and counterpunch.''

To contact the reporters on this story: Michael White in Los Angeles at mwhite8@bloomberg.net; Jonathan Thaw in Los Angeles at jthaw@bloomberg.net.

Last Updated: May 9, 2006 00:02 EDT