Sony reacts to PlayStation 2 shortfall with unusual plan

Sony officials today confirmed to Reuters that the company was using the expensive means of air freight to get as many PlayStation 2 units as possible onto console-starved retailer shelves in the US. The units are being flown directly from manufacturing facilities in China to US shores, according to Reuters.

The unidentified spokesperson said the practice had been going on "for some time."

The industry has been watching the PS2 shortage story play out now for months. In a memo sent to investors this morning, Friedman, Billings, Ramsey & Co. analyst Shawn Milne said, “As expected, PS2 supply remains an issue.” He projects that a shortfall of just 200,000 units would impact publishers of PS2 software to the tune of $11.6 million. That’s more than $11 million in lost revenue.

"We lowered our PS2 hardware unit assumption to 2.75 million in the December quarter from 3.1 million in the year-ago quarter and slightly reduced our PS2 software growth estimate from 10 percent to 8 percent. We believe the PS2 hardware shortfall may limit upside in software sales in the quarter," Milne said in the memo.

American Technology Research analyst P.J. McNealy told Reuters, "The additional costs could cut any margin [Sony] makes on the PS2 unit nearly in half." He commented that even in spite of the extra efforts Sony is going to take to address the shortfall, it likely won’t be enough to prevent shortages in some markets.

Industry analyst Boris Markovich of TerraNova Institutional told GameSpot today, "Sony bled the channel dry of the older PS2 systems but did not ramp the new hardware fast enough to satisfy consumer demand." Still, he didn’t sound entirely critical. "Clearly, Sony is trying to do everything it can in order to satisfy retailer demand for the hardware."

But "everything" may not even be enough. Markovich concludes that today's November revenue figures released by sales tracking company NPD reflect the ongoing shortages of PS2 consoles. "We believe that today's weaker-than-expected NPD results of only 2 percent industry growth in November were directly attributable to the PS2 shortage."