Sony Quells Rumor Of Card Recall For Playstation2

A variety of troubles have been reported for the Playstation2 game console since it debuted in Japan March 4, 2000, prompting rumors that all memory cards in the early purchases would be recalled. Sony Computer Entertainment Inc. (SCE) denied there would be a recall on March 10, 2000, but the stock price of parent Sony Corp. dropped nearly 10 percent in the past two days on the Tokyo stock market in reaction to the reports and rumors.SCE said that an insufficient supply of components for the Playstation2 memory card led to a short supply of the system in its first three days of availability, when SCE sold 720,000 units, or less than the original one million unit target. SCE will ship one million Playstation2s by March 15, 2000, a company spokesman said. The console's memory card was behind other reports of trouble. Of more than 12,000 inquiries SCE received from initial purchasers, 337 were about trouble with the memory card. Some users reported that game data or the DVD-Video player program in the memory card had disappeared. A separate source reported that about 1 percent of Playstation2s could not play games and DVDs properly. SCE, which is now conducting an investigation, estimates that the troubles have been caused by defects in individual cards, not by software in the Playstation2. The memory card follows a proprietary format for the Playstation2, and contains firmware essential to operations, including DVD driver software. ""The initial lot is subject to bugs. For its first stage, PS2 operates steadily. Even if there is trouble, it's not a big matter,"" said Takayasu Ichikawa, Senior Editor of Dengeki-oh, a leading game magazines in Japan. ""To use a memory card to update PS2 functions was SCE's original plan. So the bugs can be fixed by software through the memory card."" Analysts were also cool about the stock price drop. ""The expectation to the game console was too big,"" said Masashi Kubota, Analyst at ING Baring Securities (Japan) Ltd. ""Such initial defects were also found in the first-generation Playstation. The defects won't cause a large amount of loss."" Kazuharu Miura, Analyst at Daiwa Institute of Research Ltd., said, ""The stock price drop caused mainly from a technical factor of the stock market - Sony will divide the stock. But the memory card trouble has some impact, too."" But even in the worst-case scenario, where the memory cards of 1.5 million Playstation2 units needed to be recalled, ""the total cost should be at most 3 billion yen [$28.6 million],"" Miura said. ""It is relatively small compared to the expected 100 billion [$952.4 million] profit. If the worst case should take place, damage to the sales matters more than the cost of recalling. But as demand for PS2 is very strong, sales won't slow down even in the worst case,"" he said.