In a recent interview with The Financial Times, Kunitake Ando, president and CEO of Sony, said that the Microsoft Xbox, which comes with a hard drive and Ethernet adapter out of the box, could force the company to transition to the PS3 earlier than intended. "The biggest threat to the PlayStation 2 is that the Xbox changes the industry's life cycle," said Ando, who feels that it is unclear whether the current PS2 business model is sustainable and that its console life cycle could be reduced to three years as a result. Although sales of the PlayStation 2 console remain strong, Ando said that the company is still in the process of recuperating its high front-end chip manufacturing costs.

Given his comments, it is not surprising that Ando feels that Microsoft has replaced Nintendo as the biggest competitor for his company's games division. "Nintendo's GameCube has been a disappointment in Japan, they have sold only a third of what they had hoped," he said. "The PlayStation 2 is viewed by gamers as the games console to own." Ando further stated that although there was interest within Sony to enter the handheld business to compete directly with Nintendo's Game Boy Advance, Ken Kutaragi, president of Sony Computer Entertainment, requested that the company remain out of that market in order to focus its efforts exclusively on the PlayStation 2.