Sony pushed hard to have as many as 1 million units available for the U.S. launch, postponing the device's European debut indefinitely so it could have enough hardware to meet that U.S. goal. Supplies have been thin in Japan as well, where the PSP debuted in a frenzy late last year.
The PSP, which also plays movies and music in addition to games, is Sony's first entry into handheld gaming, a market controlled since 1989 by Nintendo Co. Ltd. . Nintendo's established Game Boy Advance SP sells for $79, and its new dual-screened DS sells for $149.
Analyst P.J. McNealy said the specialty gaming retailers have already sold through two waves of hardware, but "big-box" retailers like Target Corp. and Wal-Mart Stores Inc. got more units than expected at launch and have inventory remaining.
McNealy estimated the PSP sold as many as 575,000 units in its first week, with up to 300,000 left in the inventory channel.
"The PlayStation Portable (PSP) has been solid but not spectacular. We believe that the PSP launch, while not the blow-out event expected, will be considered successful as retailers continue to sell through existing inventory levels," McNealy said in a note.
With sales of console games slowing as manufacturers prepare for the next generation of game hardware, the industry is counting on the handheld market to pick up much of the sales slack in calendar 2005. Most analysts expect U.S. software sales growth to be flat to up 5 percent this year.