Government efforts to control software piracy have led Sony to launch the PlayStation 2 gaming system in Hong Kong next month, more than a year after it was made available in the United States, Japan and elsewhere. The move comes after Sony estimates tens of thousands of its gaming consoles and an even higher number of games have been illegally sold in Hong Kong during a period when the Customs and Excise Department claimed to have all but eradicated intellectual property theft. Consoles imported on the grey market and pirated copies of PlayStation 2 games have been openly sold in Mongkok and Shamshuipo computer malls since shortly after the system was launched late last year. But a Sony spokesman said the company was still pleased with what he called the Government's positive approach to dealing with intellectual property. 'We see progress in intellectual property rights in Hong Kong as very much a process or direction rather than being dependent on specific milestones,' said Keiichiro Kondo, general manager of Sony Computer Entertainment Hong Kong. Mr Kondo was unable to point to any specific achievements by the Government, but said Sony was now 'comfortable' with the piracy situation in Hong Kong. He said the major reasons for PlayStation 2 not being released until now were concerns over piracy and high demand elsewhere. Sony's new gaming arch-rival, Microsoft, has yet to decide if it will release its Xbox console in Hong Kong. Microsoft has scheduled launch dates for Europe and Japan over the next four months and began selling the Xbox in North America earlier this month. Microsoft regional general manager Mark Phibbs said the decision to enter the Hong Kong market would not be based on the piracy rate. Other sources gave conflicting information, saying Microsoft lost money on each console it sold and made its profit on software. If consumers were not buying legitimate games because pirated versions sold for as little as one-tenth of the price, the sources said it would not make sense to enter the market. Pirates had upstaged Microsoft on all its key product launches this year by having cheap illegal copies of software in stores before the legitimate versions were available, but Mr Phibbs said 'in many respects, Hong Kong should be a model for other markets in their efforts to address this problem'. Nintendo and Sega both said they had not pushed retail sales of their consoles in Asia because of piracy. A Nintendo spokesman told Asiaweek that selling consoles in markets where there was high piracy, such as Hong Kong or the mainland, boosted demand for, and availability of, illegally copied games. Mr Kondo acknowledged that Sony would face some difficulties in Hong Kong but said the company was willing to take on the challenge. 'PlayStation 2 is clearly going to be the target of pirates but that's really just one of the costs of market leadership,' he said. 'Our production will be fully able to meet this demand and we certainly will not use any concerns over intellectual property as an excuse to delay launch.' Sony has no immediate plans to release PlayStation 2 on the mainland. An immediate goal in Hong Kong appeared to be taking on the grey-market console importers. Mr Kondo said Sony would overcome parallel imports by selling the official PlayStation 2 console for HK$1,980 with a one-year warranty, while the grey-market import cost HK$2,600. Sony also would offer cut-price games to lure gamers away from the illegal copies. 'For game software, we will sell game titles cheaper than in the Japan domestic market since partial assembly will be done in Asia,' Mr Kondo said.