Sony Looks to Challenge Wii

Highlights include Sony Corp. (SNE - Analyst Report), Microsoft Corp. (MSFT - Analyst Report), Best Buy Co., Inc. (BBY - Analyst Report) and Wal-Mart Stores, Inc. (WMT - Snapshot Report).

The trade press has reported that Sony Corp. (SNE - Analyst Report) will introduce motion sensor capabilities in the PlayStation 3 that may be introduced at E3 in June. Although Sony does offer a DualShock 3 wireless controller as an accessory for the PS3, the new controller is rumored to be better than the current Nintendo Wii system.

Nintendo is still the leading seller of game consoles with its two products with the Xbox from Microsoft (MSFT - Analyst Report) being third and the PS3 and PlayStation Portable being fourth and fifth. Nintendo's growth in Wii sales is flattening as there is a shortage of new games and the whole industry is suffering due to the current economy.

The current trends of consumer trading down in LCD TV brands is a benefit to Best Buy (BBY - Analyst Report) and Wal-Mart (WMT - Snapshot Report), both of which are selling in-house brands. This, and the shortage of flat panels, is expected to have a negative impact on Sony's business.

Demand for consumer electronics is a function of declining prices and performance improvements. The flat panel shortage is not likely to end over the next three months which will impact the major year-end selling season.

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