Sony's newest handheld device the PlayStation Vita will not be launching this year instead the gaming giant has pushed back the release of the gaming system into 2012.

Sony Executive Deputy President Kazuo Hirai told Bloomberg on Thursday that the new gaming system which was expected to hit retailers during the lucrative holiday season in the U.S and Europe will be released next year. He added that the Vita will still launch in Japan before the end of the year.

The delay could mean big losses to a company already grappling with financial losses from its Bravia TV unit and hacking attacks that cost more than $172 million in damages. The company has also suffered losses from the devastating earthquake and tsunami that struck Japan in March. 40% of its revenue from the last fiscal year came from Christmas sales in Europe and the U.S.

"The PlayStation business is a key pillar," Hirai told Bloomberg. "The video-game industry is evolving constantly. My expectation is for the PlayStation business to remain at the forefront of this very dynamic industry."

Vita's delay will come as good news to Sony's rival Nintendo who now has the only new gaming console to entice shoppers this holiday season in Europe and the U.S. Nintendo's sales of the 3DS has fallen short of expectations but with the release of the console's big name games like Super Mario and Mario Kart coming out this holiday, Nintendo could regain lost ground.

Sony not only has to deal with Nintendo but with a dropping market base that is now shifting to other platforms, namely Apple and Android smartphones. Apple will release the iPhone 5 in September or October and demand for phone-based games could seriously cripple Sony and Nintendo.

Even with the market getting more competitive Sony isn't dropping the hefty price tag for the Vita. At $300 with 3G and $250 without, the Vita should be a hard sell to even the most dedicated Sony gamers.

"There is no need to lower the price just because somebody else that happens to be in the video game business decided that they were going to lower their price," Hirai added that the Vita has unique features and is affordable for what it offers.

Sony will have to make those features work if it wants to recoup its losses by sitting out the holiday season.