Only a few million users had obtained consoles by the end of 2000 due to manufacturing delays. The PlayStation 2 was such a hot item after its release that it was near impossible to find one on retailer shelves, leaving those wanting a PlayStation 2 to either wait or purchase the console online at sites such as eBay, where the console was being sold by many people for twice and sometimes five times as much as the manufacturer's listed price. Developers also complained that it was difficult to develop for the system, with little in the way of reference material from Sony for its exotic architecture. The PS2 launch seemed unimpressive and gaffe-prone, compared to the well-planned launch of the Sega Dreamcast, which was making a genuine attempt to woo developers and which had better launch titles.
Yet, the PS2 initially sold well solely on the basis of the strength of the PlayStation brand and its backwards compatibility, selling over 900,000 units in the first weekend in Japan. This allowed the PS2 to tap the large install base established by the PlayStation. Another major selling point over the Dreamcast was the PlayStation 2's ability to play DVDs, which gained it a presence in electronics stores which did not formerly sell video game consoles. Later, Sony gained steam with new development kits for game developers and more PlayStations for consumers.
Many analysts predicted a close 3-way matchup between the PS2 and its soon-to-be-released competitors Microsoft Xbox and Nintendo GameCube, noting that the PS2's graphics were inferior but that it had the advantage of a head start, and had a wide assortment of games of every genre (Xbox's strength was in its hardware; GameCube was the cheapest of the 3 consoles). However, the release of several blockbuster games during the 2001 holiday season pushed the PS2 far in front even as the Xbox and GameCube made their impressive debuts. Shortly afterwards, Sony also slashed PS2 prices greater than expected in order to maintain momentum and hold off its potential rivals.
Although Sony placed little emphasis on online gaming during its first year, that changed upon the launch of the online-capable Xbox. Sony rolled a PS2 online adapter in late 2002 to compete with Microsoft, with several online first party online titles released alongside it, such as SOCOM US Navy SEALS to show its active support for Internet play. Sony also advertised heavily, and its online model had the advantage of being supported by Electronic Arts. Although Sony and Nintendo both started out late and although both followed a decentralized model of online gaming where the responsibility is up to the developer to provide the servers, Sony's attempt made online gaming a major selling point of the PS2.
Hardware sales remained strong until 2004 saw the console apparently approaching saturation point, causing it to lose the top sales position for a time. The heavy dependence of Sony on its Computer Entertainment division was shown when dropping PlayStation 2 sales caused the parent's profits to fall 89%. During that year, game sales fell from $8.2 billion to $7.5 billion. Its operating income slid to $650 million from $1 billion, losing $25 million in Q4 of 2004. According to NPD Group, the Xbox outsold PS2 during 5 months of 2004: April, July, August, November and December. Despite this, Sony console won the total 2004 sales by 600,000 units of difference.
In September of that year, in time for the launch of Grand Theft Auto: San Andreas (the best-selling game during the 2004 Holiday season), Sony revealed a new, smaller PS2 (see Hardware revisions). In preparation for the launch of a new, slimmer PlayStation 2 model (SCPH-70000) (Also known unofficially as the "PSTwo".), Sony had stopped making the older PS2 model (SCPH-5000x) sometime during the summer of 2004 to let the distribution channel empty out stock of the units. After an apparent manufacturing issue caused some initial slowdown in producing the new unit, Sony reportedly underestimated demand, caused in part by shortages between the time the old units were cleared out and the new units were ready. This led to further shortages, and the issue was compounded in Britain when a Russian oil tanker became stuck in the Suez Canal, blocking a ship from China carrying PS2s bound for the UK. During one week in November, sales in the entire country of Britain totalled 6,000 units — compared to 70,000 a few weeks prior. Shortages in North America were also extremely severe; one retail chain in the U.S., GameStop, had just 186 PS2 and Xbox units on hand across more than 1700 stores on the day before Christmas.