For the moment, Sony actually has something to worry about in Sega's success, which was not so much a concern when the original PlayStation matched up against the Saturn some years ago. Today, Sega has a less expensive product than Sony, impressive underlying technology, and a solid lead on software development - all of which are exceedingly important. Price is perhaps the most important weapon in Sega's favor; Sega's price leadership was among the factors that kept the Genesis competitive with the Super NES some years ago. Under optimum conditions, Sony might sell the American PlayStation 2 for $299, which is $100 more than the current Dreamcast price - but Sega will be in a position to lower the DC's price even further if it desires. And though some might argue that the price difference between the DC and PS2 machines is irrelevant considering how much more powerful Sony's product is, the first crop of PS2 software doesn't conclusively illustrate the power discrepancy. Sega already has an excellent library of Dreamcast software - a number of popular arcade games (Crazy Taxi, Soul Calibur, Dead or Alive 2), impressive original titles (Shen Mue, Sonic Adventure, Sega GT), and cutting-edge sports titles (NFL2K, NBA2K) - much of it looking similar though not superior to software readied for the PS2. Plus, only Sega guarantees that its console and games are Internet-ready out of the box, a factor that in the present marketplace is likely to receive more than its fair share of media attention.

Practically speaking, do these factors really matter? One could argue that Sega is not strong enough to hold on to the Japanese market, even if it has done respectably well there and has a far more solid foothold in the United States and Europe. It could also be noted that Sony has more than enough quality software in the pipeline to eventually present a solid challenge to Sega in the western hemisphere, once the software is released, and that its prices and Internet strategy are sure to improve soon enough to remedy present concerns. Despite all this, history would suggest that Sony will have early competitive problems in at least the United States and Europe. First, little of the PlayStation 2 software currently ready for release will be appealing to Western consumers, even though Sony, Namco and Square are each preparing a few standouts. Sony will probably need at least six months, if not a year, to catch up to Sega in terms of diversity of software offerings and exploiting the differences between the PS2 and DC hardware. Secondly, one of Sony's biggest strengths in the PlayStation's launch was its unconditional support from developers such as Namco, Psygnosis and Midway; these developers are now either platform agnostic or somehow lacking the punch they once offered Sony. Many of the people behind the biggest games of the PlayStation's launch have left their big-name companies for comparatively unknown start-up houses, and which console(s) they'll be developing for is anyone's guess.

Pricing is a far more important concern. Sony is unlikely to have a free hand in price flexibility, somewhat because of their exceedingly expensive ($100) PS2 chipset, but primarily because of the PS2's DVD drive. Because Sony derives so much of its revenue from sales of traditional consumer electronics, they can't afford to sell a full-featured DVD movie player inside of a cutting edge game machine at a dramatically lower price than their standard consumer DVD models. As a result, they'll probably find PS2 price drops hard to swallow, and unimaginable the eventual possibility of a $99 DVD-equipped PS2 console. (Early word has it that Sony is stripping down the DVD functionality of the PS2 console to bare-bones DVD playback; perhaps the company will attempt to make extra money by selling software-based DVD-playback upgrades.) Finally and somewhat related, Sony's present Internet strategy is pricey, depending on eventual cable modem or other high-bandwidth solutions that are out of the reach of the mainstream game consumer. Don't underestimate the impact of pricing; in the consumer electronics market, lower-tech solutions (VHS, Game Boy, etc.) frequently prevail over even clearly superior but more expensive technologies.

What of other factors? Sony, of course, is in a far better financial position than Sega to lose money on the sales of consoles, and should they decide to wage a price war, Sega faces the legitimate prospect of bankruptcy - their losses are already considerable, even though the Dreamcast today is not directly competing against another real console, rather only PlayStation 2 and Nintendo Dolphin-related media buzz. (Given Nintendo's recent track record of delays and underwhelming third-party support, there's no great reason at the present moment to consider their plans a major threat to Sony's growth in the marketplace.) And even though Sony is positioning the PlayStation 2 as more than just a games console - equipped with USB ports, a PCMCIA card slot, optical digital output and digital video input - we can't forget that Sony has bulked up its in-house software development houses enough to churn out major hits such as Gran Turismo, Parappa the Rapper, Twisted Metal, NBA ShootOut and NFL Gameday, even in the absence of industry support - support which the company already has. Finally, Sony has built up a considerable reputation with the multiple successes of the PlayStation, and will have enough good will in the marketplace to attract plenty of repeat customers.

Will they mind paying $299 or more for the next Sony console? Probably. Sony's initial sales of 100,000 units at that price were considered impressive for the day; Sega sold over 500,000 Dreamcasts in a comparable time period for $199. But regardless of whether or not the PlayStation 2 is a sales hit right out of the gate, there's no doubt that it's the games console to beat in terms of raw horsepower and exciting graphics. Sega has one last chance to avoid becoming just another home software development company; now it's up to Sony to decide whether or not that's going to happen.