Sony's Holiday Rush

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An interesting bit of news has come out of Japanese consumer electronics giant Sony (NYSE: SNE) in recent days. In order to hit the stores in time for the Japanese version of the holiday rush, it appears that the first shipments of its semi-next-generation PSX entertainment console will be sold with features significantly scaled back from what the company originally disclosed.

According to a range of reports, the device's hard drive-to-DVD dubbing speed is being cut. It won't play MP3 files or CD-Rs. Perhaps most interestingly, it won't come with a broadband socket that would have allowed users to play the online games currently available to PlayStation 2 users. (Sony says many of the "missing" features will be available for download, presumably using an adapter like the PlayStation 2's, in the future. Some may be built into subsequent shipments.)

The rush to get Japanese stores stocked with the PSX (which will make its U.S. and European debut next year) highlights the pressure the game business is experiencing as it tries to regenerate enthusiasm on the downslope of a hardware cycle. Holiday season reports from retailers Best Buy (NYSE: BBY), Electronics Boutique (Nasdaq: ELBO), and GameStop (NYSE: GME) have all underscored this.

Reports have the PlayStation 3's chip coming out in late 2005. (While the PSX packs loads of new functions into the box, it doesn't advance the PlayStation system itself.) News discussing Microsoft's (Nasdaq: MSFT) second Xbox, rumored to be a multifunction machine in some ways similar to the PSX, is also starting to pick up. But we're still years away from either machine.

Given that, it's easy to understand why Sony would be eager to get PSX into stores -- it needs to put excitement back into the business. I'm inclined to dismiss the machine as an overpriced mishmash, though it will be interesting to see what form the PSX takes when it hits American stores -- and whether we're still taking about the machine in two years.

Will the PSX pack enough punch to encourage gamers to replace thir PS2s, or Xboxes? See what Fools are saying on the Sony discussion board.

Dave Marino-Nachison can be reached at dmarnach@fool.com.