Will Sony Bite Apple?

• Email
• Share
• Print

Last week, when Sony (NYSE: SNE) announced that it was rolling out a line of flash-based portable digital music players, Apple Computer (Nasdaq: AAPL) wasn't exactly quivering in its market-stomping Cupertino boots. As Dave Marino-Nachison rightfully pointed out, "Investors have to wonder about the relevance of most things Sony does these days outside the video game business."

But the iPod may now have some tougher competition on the sales floor, courtesy of Sony's more relevant new offering -- the PlayStation Portable. The $250 handheld devices have been selling briskly, and they don't even hit the market until next week. On Thursday, Best Buy (NYSE: BBY) set up a special Web page for its Reward Zone card-carrying members to preorder the PSP, and the device was sold out within hours. This month, Sony will be shipping out a million units, and they're already being gobbled up by gamers who recognize how Sony's dominance in video game consoles may be duplicated on the portable front.

Why should the Apple digital-music behemoth worry about a gaming machine? Well, the PSP will be able to play back all forms of media, including music, through Memory Stick Duo storage devices. No, the capacity doesn't match that of Apple's iPod, and the PSP certainly doesn't feel as stylish, but if Sony starts releasing some of its popular-music acts in the system's UMD format to go along with the rewritable Memory Stick, things would start to get interesting. Sony clearly has a hot toy on its hands, and while the first few million units that will sell this year may be earmarked for the 100 games in development, the device may eventually fill the need for listening to digital music on the go.

Sony is already looking to make a splash in the video market; the company is even including a copy of its studio's successful Spider-Man 2 with every PSP. With Lions Gate (NYSE: LGF) throwing its support behind the format, the system is sure to give the portable DVD player market some heated competition. But what about digital music? If the PSP grows to be appreciated as a true multimedia appliance, Apple may finally have some real competition in this sector.

More related content on the Sony PSP:

• Learn about the flash-memory Network Walkman devices that Sony is releasing.
• Lions Gate already has release dates for some of its more popular films for the PSP.
• Get to know the PSP a little better.

Longtime Fool contributor Rick Munarriz does have a Nintendo DS lying around the house -- though his kids rarely give him the chance to check it out. He may have to buy a PSP and keep it out of their reach. He does not own shares in any of the companies mentioned in this story. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.