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Sony's PlayStation2 shortage
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September 27, 2000: 5:53 p.m. ET
Only half the predicted number of consoles will be available at launch
By Staff Writer Chris Morris
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NEW YORK (CNNfn) - Being the first on your block to own a PlayStation 2 is going to be a lot harder, as Sony confirmed Wednesday that it will ship only half as many units as expected when it launches the product in the United States in October.
The electronics giant said Wednesday that it would have 500,000 PlayStation 2s on sale its first weekend -- 500,000 less than expected. To make up the shortfall, Sony plans to stagger in additional shipments of 100,000 units per week, which the company says will allow it to reach its goal of 1.3 million consoles by Christmas. Sony (SNE: Research, Estimates) still plans to have three million PlayStation 2s in the United States by the end of March.
Production problems are behind the delay. Sony says it is one month behind in production of the PS2 due to component shortages. The delays are not expected to affect global shipments of the console. To help meet demand, the company said it is ramping up its production capacity from 400,000 units per month to 1 million per month this fall. It hopes to increase that to 1.4 million per month by the end of the year.
 Software development hasn't been as fast as the company had hoped, either. There will be 26 software titles available at the PS2's launch, a significantly lower number than the 50 Sony promised at the Electronic Entertainment Expo in May. The company now hopes to have more than 50 games on the shelves by the holiday season. Some 270 titles are currently in development for PlayStation 2, with 301 content developers and publishers signed up to create games for the system. The console is also "backward compatible," meaning it will play any of the 800 games currently available for the current PlayStation.
Rumors of the shortage hit Wall Street early Wednesday, driving Sony shares down $9.63 to $99.37, nearly a 9 percent drop. Software companies whose financial future is tied closely to the launch of the PlayStation 2 also suffered. Electronic Arts (ERTS: Research, Estimates) was down $5.69 to $45.19, while THQ Inc. (THQI: Research, Estimates) dropped $3.38 to $21.06.
"We really don't see any affect on our business at all," said Brian Farrell, president, CEO and chairman of THQ Inc.
The PS2, which will retail for $299, is more than just a game machine, as the console will allow consumers to watch DVD films or listen to music CDs. Analysts predict this integration of entertainment modes will be a model for the future. Rather than several separate machines, you'll be able to own one that can take care of all of your home entertainment desires.
Sony's not the only player in the industry, however. Microsoft is currently working on the Xbox, a console/home entertainment unit of its own, which is scheduled to launch next year. And Nintendo's next generation console gaming system, the GameCube, is slated to go on sale in July 2001. (The GameCube will not include a DVD player.) 
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