Sony's Brand New Box

The celebrities at the premiere (Carmen Electra, Tommy Lee) were hardly A-list, but the party at the Pacific Design Center in West Hollywood was still a smashing success. The guest of honor was the PlayStation 2, Sony's eagerly awaited videogame console, and no expense was spared: the venue was lit with swirling neon blue PS2 logos; inside, a crowd of 1,500 scarfed down tiny morsels of sashimi and sipped cocktails through neon blue straws, while models in short silver lame dresses and purple wigs shimmied to the tunes of three ultrahip DJs. But no one could take their eyes off the PlayStation 2. Guests stood transfixed around huge video screens, trying out new games like the first-person shooter, TimeSplitters, and an Electronic Arts' pulse-quickening snowboarding game, SSX. "This is what the PS2 represents," said Doug Perry, an editor for the Web site who was clearly having a blast. "It's a merger of music, movies and games all in one system. There's never been anything like this before, and it's going to be huge. I guarantee it."

Parents, start your wallets. This week Sony's PlayStation 2 videogame console finally goes on sale across the country, accompanied by 26 new games. But unless you've got a close relationship with Santa Claus--or PlayStation head honcho Ken Kutaragi--don't expect to have one of these machines under your tree. Sony originally planned to have 1 million units available for the PS2's U.S. launch. But that was already an insufficient number, since it took just 48 hours to sell a similar amount when it launched in the smaller Japanese market. And lower-than-expected quantities of key components have forced Sony to cut the initial supply to 500,000; which means most stores will likely sell out within a few hours. Kmart, for instance, has been allotted 25,000 machines, which they say works out to six per store. When asked what advice Wal-Mart is offering parents who can't get one in time for the holidays, a company spokesperson suggested the following: "Take a picture of a PlayStation 2, put it in an envelope and stick it under the tree with a note saying that you'll buy your children one as soon as it becomes available." Or a lump of coal.

Like Cabbage Patch Kids, Beanie Babies and Furbys, the PlayStation 2 is this year's It Toy, destined to become that impossible-to-get gift that your kids--and everyone else's--will swear they can't live without. And while the folks at Sony are elated by the almost-certain success of their brand-new baby, they're also concerned about the potential for a backlash if consumers become frustrated by the shortage. That's why the ad campaign--which includes billboard teasers, racy print ads and trailers at movie theaters--may be scaled back if demand radically outstrips supply. PlayStation CEO Kutaragi sympathized with parents and fans ("We ask that consumers be patient just a little while longer," he told NEWSWEEK, "if they can't get one right away") and stressed that they were trying to meet the demand by shipping an additional 100,000 machines every week.

Since Christmas is not a season for delayed gratification, the major beneficiary of Sony's shortage is the competition. Sega's year-old Dreamcast currently costs $149, just half the price of a PS2. It's also pushing the envelope with the recently launched SegaNet, which lets console gamers from all over the country play against each other over the Web. While PC gamers have done this for years, it's the first time their console counterparts have been able to compete online. For kids still suffering from Pokemon fever, the Nintendo 64 costs only $99. And if Sony keeps half-stepping, next fall's double-barreled blast of the Nintendo GameCube and Microsoft Xbox could knock the industry leader off its feet, since industry veterans say that both machines are easier to make games for than the devilishly complicated PS2. "We have a lot of people cheering for us," says Microsoft senior VP Robbie Bach. "Developers, publishers and retailers want to balance in the ecosystem. A world in which Sony is the only big company has no balance." That's pretty rich coming from Microsoft, but with a $500 million marketing budget and 100 games already in development, it's clear that Xbox will be a formidable new foe.

Still, most people in the industry believe that these are just minor setbacks for the reigning console champion. Babbage's, Etc., a chain that specializes in computer entertainment, has already taken more than 200,000 PS2 pre-orders, along with orders for three to four games and accessories per device. "Long term, I see no [negative] effect on software sales," says Chris Mike, VP of marketing at game publisher Konami. "It will be a hot system." Electronic Arts, America's biggest independent developer, has already published six PS2 launch titles, and quickly dismisses the charge that PS2 is any more difficult than previous consoles. "The people who think it's hard to develop on PlayStation 2 either didn't take the time to understand it, or they cut corners," says Don Mattrick, president of EA's worldwide studios. "The future is PS2." And the future involves more than just games; last week Sony unveiled digital cameras and printers designed to work with its multimedia machine.

Now if you're determined to get your hands on a piece of the future this Christmas, it's going to take a little work and a lot of luck. First, if you haven't pre-ordered a unit, don't bother going to specialty stores like Babbage's or Electronics Boutique; they're already back-ordered through next spring. Instead, line up early at one of the chain stores like Wal-Mart, Kmart, Target and CompUSA, all of which have a first-come, first-served policy. If you still can't get one the first week, try to get the store manager to give you a heads-up before the next week's shipment arrives. And for those of you with money to burn, several eBay-ers are already auctioning the units they expect to have--at two to three times the retail price. So much for the Christmas spirit.