Sony Backs Estimates of 3 Million PS4 Units Sold by Year-End

Sony's PlayStation 4
Attendees take photographs of the Sony Corp. PlayStation 4 video game console at the Tokyo Game Show 2013 in Chiba, Japan, on Sept. 19, 2013. Photographer: Tomohiro Ohsumi/Bloomberg

Sony Corp., poised to release the PlayStation 4 game console this week, is confident it can meet analysts’ sales estimates of 3 million units by year-end, exploiting an early advantage over Microsoft Corp.’s Xbox One.

Sony will have adequate supplies of the $399 PS4 through Christmas and stands by earlier projections for sales of 5 million units by March, Jack Tretton, president and chief executive officer of the company’s U.S. computer entertainment division, said yesterday in an interview.

“This is a marathon, not a sprint, but getting out to a nice start is a good thing,” Tretton said. “That hurdle has been cleared. We’re very, very confident we’re in great shape.”

Tretton’s remarks suggest Sony will avoid the supply problems that slowed early sales of the PlayStation 3 in 2006. The new console hits U.S. stores on Nov. 15, followed by Europe on Nov. 29, and will reach 32 countries for the holidays. Microsoft’s Xbox One will debut in 13 countries a week later, down from an original target of 21 markets.

Colin Sebastian, an analyst with Robert W. Baird & Co. in San Francisco, last month estimated each company would sell 3 million units worldwide this year.

“We’re very comfortable with it,” Tretton said. “I’m excited about next week to be able to talk about what was sold as opposed to what we may sell.”

Pressure has intensified on Sony Chief Executive Officer Kazuo Hirai in the run-up to the PS4’s debut, after the Tokyo-based company last month shocked investors by reporting an unexpected second-quarter loss. The shares plunged, and Moody’s Investors Service warned the credit rating may be cut to junk. The cost to insure Sony debt jumped 45 basis points to 187 basis points in the month to yesterday, CMA data show.

Smooth Supply

Keeping PS4 supplies flowing is crucial for Sony as the company seeks to make the most of its early-mover advantage. Improved planning has raised production yields, collaboration and the absence of last-minute sprints -- for example, to get parts ready before shipment -- said Tretton, who’s been involved in earlier rollouts.

“This time it’s very, very smooth,” Tretton said.

Sony fell 0.5 percent to 1,641 yen yesterday in Tokyo. The shares have climbed 71 percent this year.

In August, Microsoft delayed the release of the $499 Xbox One in eight countries, including Russia and the Netherlands, until 2014 to make sure it had enough supplies for larger markets.

Online Test

Both companies have added online features to their new machines, infusing them with entertainment options such as access to movies and TV shows to make the devices the center of consumers’ living rooms.

Andrew House, head of Sony’s game operation worldwide, in September forecast sales of 5 million PS4 units by the company’s fiscal year-end in March.

Wayne Hickey, a spokesman for Microsoft, declined to comment on the company’s projection for Xbox One sales.

“The only hurdle left that is not a non-issue until it’s over is launching the thing, having people engage with the network and it all goes very smoothly,” Tretton said.

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