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Sony's latest financial report confirms PSP sales slowdown

Is the promise of PSP 2 a possible positive spin?

Sony's latest financial report confirms PSP sales slowdown
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PSP

What's going on with PSP? Nintendo's selling gazillions of DS Lites, but according to Sony's latest financial figures – released today – the turnover in PSP hardware seems to have hit a brick wall.

In the three months ending December 31st – the critical period that included the run up to Christmas – Sony shipped a mere 1.76 million PSPs worldwide, compared to 6.22 million in the same period in 2005. That's a staggering fall of 72 per cent.

Total PSP hardware shipments in the three quarters so far recorded for this financial year total 7.67 million units. The company is now forecasting total PSP hardware shipments of 9 million for this financial year – a huge plunge from the 14.06 million it shipped in financial year '05, and from its prediction last April of shipping 12 million units, too.

Now importantly – and confusingly – these are officially 'shipment' figures, rather than sales figures.

Sony defines such shipments as follows: 'Production shipment units of hardware and software are counted upon shipment of the products from manufacturing bases.'

But other sections of the report confirm the obvious conclusion – that the PSP is indeed under-performing in sales terms, just as you'd expect from Sony sending out far fewer units to retailers.

"PSP sales declined due to a decrease in unit sales compared with the same quarter in the previous financial year," is how the snappily titled Consolidated Financial Reports for the Third Quarter puts it.

The territory breakdown (an appropriate word here, sadly) makes particularly grim reading for PSP's US fans.

PSP shipments for Q3 in Japan were 0.9 million (compared to 1.4 million in the same period in 2005), Europe took 0.9 million (compared to 3.2 million in 2005), but the real stinker was America.

Previously swallowing up almost 1.7 million PSPs in Q3 2005, the run up to Christmas 2006 saw Sony ship a mere 100,000 PSPs to the territory.

It's such a low figure we're tempted to think one of Sony's beancounters has put the decimal point in the wrong place!

But in reality, the conclusion seems clear. Throughout 2006, pundits pointed out that while Sony was boasting of large 'shipments' of PSP hardware, that didn't mean it was selling them.

Now the chickens appear to have come to roost, with unsold PSPs clogging up retail channels across the globe due to sluggish sales of the hardware.

PSP 2.0 on the way?

The only positive spin we can think of is Sony might be clearing out its inventory as it prepares to launch a re-designed PSP, perhaps even PSP 2. One might then interpret these figures as reflecting Sony shuffling unsold PSPs around each territory, rather than shipping new hardware from the factories.

Timing-wise it would make sense: Nintendo announced DS Lite during January 2006 for example.

But this seems a far-fetch intrepretation. Would Sony really restrict supplies so much during its key selling period? And surely a notably-absent price slashing of PSP would be a key part of such a strategy, given the hardware has stalled so much? Time will tell.

At least those people with PSPs are buying games. Total PSP games sales to date are around 85 million units; with 21.7 million PSPs shipped, that works out at a rough tie-ratio of four games for each PSP sold.

Not great, but no banana skin either for a format still – we presume – only halfway through its natural life.