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Electronics Companies Battle for Share of Holiday Consumer Market


The holiday season is here in the United States. For many, it is a time for seeing family and friends, and exchanging gifts. But in the electronics business, the holiday season means war, as industry giants battle for consumer dollars.

In recent weeks, it has become a familiar scene across the United States -- hundreds of people lined up for days outside electronics retail stores, waiting for the newest product.

At this Circuit City store in New York, they were waiting for Sony Entertainment's PlayStation 3, PS3 for short. One man admitted, "I took three days off work, so if my boss finds out, I get fired, but PlayStation 3 is worth it, so hey."

The PS3 sells for approximately $600 in the U.S. A high price tag, yet gaming experts say Sony is losing $300 per console because of the high definition video technology and delays in putting the product out on the market.

Despite Sony's short-term losses, Jean-Pierre Auffret, Director of Technology Management Programs at George Mason University, says Sony had to look long-term, and put the console out now. "Having the games available, having a broad range of games, for a broad set of ages. By having the Play Station on the market, it encourages publishers to develop games for them."

The video gaming industry is a $20 billion a year business. Rival companies, like Microsoft and Nintendo, are battling Sony for a piece of the market.

Nintendo released its new game console, the Wii, in time for holiday shoppers. Visually, it is not as sophisticated as the PS3. But Nintendo's strategy is to focus on game content, not graphics.

Auffret explained. "The Nintendo is more strictly a game console. Their target market, the Nintendo, is a younger market than perhaps, the Microsoft market, or the Play Station market."

Another advantage for Nintendo: the Wii is the lowest priced game console on the market.

Electronics wars are not just limited to video games. Last Tuesday, Microsoft launched the Zune. The Zune is a portable music player and digital music storage device -- similar to rival Apple's popular iPod.

At a pre-launch party, Microsoft chairman Bill Gates said the Zune, with its music sharing capabilities, offers something special the iPod does not. "We think that music fans like you will really appreciate this ability to share things with each other. So in fact when you open the Zune box what it says is welcome to the social because that is something new and different we are bringing to this space."

In addition, the Zune has a larger screen than the iPod, and an FM radio, but Auffret says there are disadvantages that may hinder initial sales.

"I think it [Zune] is going to be slow to start, because the number of songs Microsoft has available for downloading is a lot fewer than Apple."

From games to music, there is much for the electronics manufacturer and consumer to consider, as the busy holiday purchasing season begins.