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The console wars, a cutthroat fight for a piece of the fast-growing gaming industry, are set to heat up once again with Sony’s (SNE) introduction of a new motion controller for its PlayStation 3 platform. The device, dubbed the Move, was unveiled at the Game Developers Conference in San Francisco this March and is headed for store shelves in time for the critical 2010 holiday shopping season. And it should help the company better compete with Japanese rival Nintendo, which is currently winning (as measured by millions of units sold worldwide) the latest console battle with its successful Wii machine.

The PlayStation brand has, by all accounts, been a smash hit for Sony since it debuted in 1994. In fact, for years the platform racked up sales records and was considered the gold standard of video game consoles. The numbers are quite impressive: the original PlayStation was the first gaming device to ship 100 million units; and the PlayStation 2, having sold upwards of 140 million units since its launching in 2000, still holds the title of best-selling console ever. That said, Sony’s games business has stumbled a bit lately (it has actually been operating in the red for the past several quarters), allowing principal competitors, namely Nintendo and Microsoft (MSFT), to seize the moment and gain valuable market share.

The company’s latest-generation device, the PlayStation 3 (PS3), released in November of 2006, has certainly not followed in the footsteps of its predecessors thus far. Indeed, it has only shipped around 34 million units to date. This compares with global sales of about 67 million Nintendo Wii units and 39 million Microsoft Xbox 360 units, putting Sony in a distant third place in the current console skirmish. The PlayStation 3 appears to have staying power (it is expected to be on the market beyond mid-decade), however, and the company hopes that the new motion control system will beat out the Nintendo Wii’s wand and help the platform to regain its former glory over time. We share this optimistic view, and believe that the PlayStation 3 may well outsell its rivals’ consoles when all is said and done.

The soon-to-be-released Move, to be sold initially as a stand-alone product and later as part of the PS3 console hardware itself, is a handheld controller that uses advanced motion sensors and the PlayStation Eye Camera to mimic gamers’ movements (e.g., kicks, strokes, and swings) on-screen. Unlike other devices currently on the market, it enables games to be played in high definition and with multiple participants. And, importantly, the Move will be supported by new software titles, including a new Tiger Woods golf game and a multigame package called Sports Champions, from Electronic Arts (ERTS) and other developers. These positives should make Sony’s new handheld device a hit, at least initially.

Over the long haul, the Move’s success will depend, to some degree, on what the rival console makers do from both a price and technology standpoint. Though the Move appears to stack up well against the Wii’s wand, Nintendo, which recently announced plans for a 3-D version of its popular DS handheld game player, is unlikely to stand pat for long. A new device-free motion control system, codenamed Natal, rumored to be in the works by Microsoft for its Xbox 360 machine could also alter the competitive landscape yet again. And aggressive actions on the pricing front could shake things up, especially in the U.S. market, where consumers are still navigating difficult economic waters.
Investors looking to profit off the latest console battle are encouraged to stay tuned. The Move will almost certainly get gamers excited about the PS3 again, but it remains to be seen whether the new device will make Sony king of the console hill once again.