The first thing that experts in the gaming industry will point out about the new Sony (NYSE: SNE) portable NGP video game console is that it cannot succeed in a market crowded by similar products from Nintendo and the Apple (NASDAQ: AAPL) iPhone that can be used to play games. Sony says it will also make its PlayStation games available on other devices including some portable machines which work on the Google (NASDAQ: GOOG) Android OS.

Sony has hedged its bets by extending the platforms on which its PS games can run. That hedge will mean very little if the NGP is a failure. Sony may create its own competition for the NGP when it releases a smartphone which can be used for gaming.

Sony has had little success in the video game hardware business since new machines like the Microsoft (NASDAQ: MSFT) Xbox began to eclipse the sales of the old-line PS2. Sony now has to play catch-up. The results may simply be mediocre and the NGP may have very modest sales. It is just as likely that the product will go the way of the failed Microsoft Zune or the successful Nintendo Wii.

Sony still has one of the best known brands in consumer electronics. The brand took decades to build although it has recently been tarnished. But, the PS3 has helped raise the awareness of Sony’s game products. The NGP will need to piggy back on that success if it has any chance to be a leading player in the portable game market.

Sony also has one other advantage. Some company or companies have to take the top spots in the portable video game player market. There is a powerful argument that smartphones will eventually be the favored place for people to play games. But, smartphones are not well-suited as game devices. Their screen designs, processors, and multi-function capacities are disadvantages.

Sony will also have to compete with wounded giant Nintendo, which has lost the lead in the major console market that it held because of the Wii’s blockbuster sales. The new Nintendo 3DS has received bad publicity, which should benefit the NGP as it reaches the market.

It is naive to say that there are winners and losers in every market. However, Sony may have invented a device that falls between smartphones, which are not properly suited to handle complex games, and portable gaming products from Nintendo. The door is narrow for Sony, but the time is right. Games have migrated quickly to the handheld world and Sony for once has a product that will reach the market at the right time.

Douglas A. McIntyre

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