SONY GETS BACK INTO GADGET GAME WITH PSP LAUNCH

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White wires are so last season.

At least, Sony hopes that's the conclusion following the launch of its long-awaited PSP, which unofficially bowed on the catwalk in Los Angeles. The sleek, ultra-shiny device was the star of an L.A. Fashion Week design show, dangling from the hands and belts of designer-decked models like Kirsty Hume and Alex Wek.

PSP, short for PlayStation Portable, marries sophisticated video gaming and the ability to play music and movies in an unabashed bid to unseat the Apple iPod as the coolest gadget on the market. Sony and Apple, the twin titans of tech, have both strived to hold the cool design and premium-price brand position in their respective consumer electronics and computer categories for years.

Thanks to the digital revolution and electronics convergence, those two categories have commingled and meshed into one big messy grouping of traditional brands and upstarts. With Apple and Sony each vying for the same kind of upmarket design and brand-conscious consumer, a head-on clash appears unavoidable.

NEXT BIG THINGS

"This is the fight for the next big thing and PSP is what's hot," said analyst Rob Enderle of the Enderle Group. "Apple is definitely watching and sweating bullets big time."

They've been firing salvos at each other for years. Sony's Vaio computer is the closest thing in the PC world to an Apple computer. Apple's iPod was a direct charge at Sony's Walkman dominance. Sony came back with not only an MP3 Walkman, but its own online music store, Sony Connect, to challenge Apple iTunes. Sony just announced a tiny flash music player to take aim at Apple's shuffle flash player, but added a display screen.

"We've set out with the PSP to establish a new brand voice," said Andrew House, exec VP, Sony Computer Entertainment America, who oversees marketing. "I told my team, `We are now officially in the fashion business."' He added that the overall marketing message is meant to show the PSP as much more than a gaming platform, while understanding that the predominant share of early adopters will be gamers. Sony's job is to "make sure they talk up the other functions," Mr. House said.

Sony has sold about 1.2 million PSP devices in Japan and with the U.S. launch, hopes to be at a total of 3 million devices worldwide by the end of March.

Even though they've been dancing in the same arena for quite a while, a real Apple/Sony showdown has never materialized. That is in part because of the two different worlds the companies come from. Apple has been the underdog aggressive player in the computer world that always had to fight its way up for mass acceptance, while Sony has long been the dominant high-end consumer brand that sold product on attributes and style. Only recently has Sony had to fight to hold onto its market share.

"With the PSP, what's on Sony's mind is to regain the mind share and wallet share they've lost to Apple and others, like Samsung," said Michael Cai, analyst with Parks Associates. "They're leveraging the considerable strength of the PlayStation brand to create their own kind of ecosystem around PSP."

Sony's U.S. marketing strategy, in fact, does just that, building on the enthusiasm and early adoption of PSP by video gamers. A two-pronged ad campaign approach with both video-game-focused ads and broader entertainment ones created by TBWA/Chiat/Day, Los Angeles, began last week.

Hurdles are still in the way for the PSP before consumers flock to it as an everything-entertainment device. The unit costs $249 plus games and movies. Sony is also using a proprietary UMD format for the PSP films, a move that has been criticized by some.

Still, the true battle between Apple and Sony products matching function to function is likely a generation or two of devices away. Apple CEO Steve Jobs has dismissed the value of portable video publicly, although many say Apple is quietly experimenting and researching it.

"The PSP is no more an iPod killer because it has music than the iPod is a PSP killer because iPod has solitaire," said Jupiter Research analyst Michael Gartenberg. "Sony is going to have to do more to unlock the media-centric experience going forward."

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