CNN Money: Where Sony Went Wrong

[Master of Ossus]

Wow.

Where Sony went wrong
It's a sad coda for Ken Kuturagi, the creative genius behind Sony's videogame consoles. He's stepping down at a time when rival Nintendo is teaching its rival important lessons about consumers, writes Business 2.0's Chris Taylor.

(Business 2.0 Magazine) -- Pity poor Ken Kuturagi. The creative genius behind Sony's videogame consoles -- the PlayStations 1, 2 and 3 -- announced Thursday that he would step down as CEO of the company's games division, which means his career there will end on a sour note, the sound of defeat.

As noted in the latest issue of Business 2.0 Magazine, the eagerly-anticipated PlayStation 3 has already lost this round of the console wars to its Japanese rival, Nintendo's Wii (See "Why Wii Won," May). Since late last year, when both consoles were released, the Wii has consistently outsold the PS3 in every major market.

For Nintendo, the number 3 company in the videogames business, it's a David-vs.-Goliath turnaround. For Kutaragi's team, who ruled the roost of this industry for 12 years, it's a shameful final defeat.
"Father of PlayStation" says "Game over"

There are a number of lessons we can glean from this -- not just for the future of videogame consoles, but the future of consumer electronics. Decades from now, PS3 vs. Wii will be remembered as a cautionary business tale: how pride, politics, and an overabundance of technology can blind you to the simple truth of what consumers want.

Kuturagi chose to pack the PS3 with as powerful a technological punch as possible. It contains a 60 GB hard drive, a state-of-the-art graphics chip, and the ultimate electronic brain, the Cell processor. Developed by Sony (Charts), Toshiba and IBM (Charts, Fortune 500), the Cell is an amazing beast that can do seven tasks at the same time.

It also helped drive up the cost of the PS3 to $600, a record price for a console, and put Kuturagi's division in the red to the tune of $1.7 billion. The Wii cost just $150.

For all that innovation in the PS3, one thing didn't change: the controller, that handheld mess of buttons so confusing to non-gamers. Sure, Kuturagi made it work wirelessly, which has no doubt saved the world from a few broken ankles and smashed glasses, but the controller itself looks identical to the one found on the PS2.

Why change something that is already installed in 200 million homes worldwide? Answer: because there are more people in those homes that don't play games, and hundreds of millions more homes to win over.

Nintendo's answer to Ken Kuturagi -- Mario Bros. creator and games world legend Shigeru Miyamoto -- knew this better than most. That's why he designed a revolutionary controller that is sensitive to motion, not button-mashing. Everyone knows how to swing a golf club or a boxing glove in a Wii game. You just swing the controller.
More from Chris Taylor on his Future Boy blog

Over at Sony, Kuturagi was too busy thinking about how to push the company's other technologies. The PS3 was to create a vast installed base for Blu-Ray DVD, one of the rival formats in the ongoing high-definition DVD wars. All well and good if you're thinking about buying a PS3 as a DVD player, but gamers complained that the speed of the Blu-Ray drive was too slow when doing what drives in consoles are supposed to do: load games.

Indeed, the PS3 may be the chrome-trimmed headstone on the grave of convergence. It has been a long-held, oft-stated dream of both Sony and Microsoft (Charts, Fortune 500), creator of the Xbox and the Xbox 360, that videogame consoles are little Trojan horses.

You buy them for the games, but once inside your home, they take over your life. They become the brains of your TV, your entertainment center, even your main communications device with IP telephony and chat functions. They converge all your technological needs in one box. (Microsoft, at least, didn't assume that we would only want to use its technology in this converged device; it allowed you to plug in your iPod to the Xbox 360.)

Nintendo took a different tack. When you buy a videogame console, the company says, you want to play games. Period. A console is not a Swiss Army knife. It makes sense to squeeze more functionality into your cell phone because you carry that device around everywhere. When it comes to the interactive fun box in your living room, however, it makes sense to simply make that more fun. If you want a DVD player, you'll buy a DVD player.

The Wii may not be the most powerful console ever built, but it is the smallest and lightest. Its chip is not faster than Sony's cell, but it does use less electricity. In short, it looks more like the future.

As Ken Kuturagi moves into the next phase of his career at Sony, as the company's senior technology adviser, he would do well to play a few games on the Wii, and consider how the lessons of this device can help drag Sony away from an even greater defeat.

[Admiral Valdemar]

The awesome ability of Sony and MS to miss the whole point of a games console cannot be overstated.

I was fed up with Kutaragi-san's bullshit multi-media schtick long ago, and whoever still pushes Xbox was equally tiring. I want GOOD games on a system that doesn't cost the Earth because, strangely, it just plays bloody games. If I want to watch HD movies, I'll fork out for a HD disc player, not that I can stomach their extortionate costs for not exactly amazing increases in quality.

I'm not holding my breath though. No one will learn from this, like they didn't when Atari went bust themselves. It's like arrogance from market domination always leads to such delusions and before you know it, wham, back into final place for them.

[Darth Wong]

Sony is a particularly annoying case because it's not just their game console. The quality of Sony products has been going downhill across the board lately. And yet people still think highly of them. There's a sizable lag in public perception between the onset of shitty quality and public awareness of it. Of course, this is not new. Cadillac started sucking quality out of their cars in the early 70s and the public didn't seem to wake up to this until the late 80s.

[Stormbringer]

The awesome ability of Sony and MS to miss the whole point of a games console cannot be overstated.

I was fed up with Kutaragi-san's bullshit multi-media schtick long ago, and whoever still pushes Xbox was equally tiring. I want GOOD games on a system that doesn't cost the Earth because, strangely, it just plays bloody games. If I want to watch HD movies, I'll fork out for a HD disc player, not that I can stomach their extortionate costs for not exactly amazing increases in quality.

I'm not holding my breath though. No one will learn from this, like they didn't when Atari went bust themselves. It's like arrogance from market domination always leads to such delusions and before you know it, wham, back into final place for them.

I've got to agree with Valdemar here, the PS3 is trying to be a home electronics swiss-army knife with the result that it's priced out of the reach of much of it's target demographic. The PS2 was decent and the DVD player add-on wasn't bad, it wasn't too overpriced. But the PS3 is horribly overpriced compared to the other consoles and especially the budget friendly Wii. If they were to have toned it down price and function wise it probably would have made a decent entry.

Personally, I would like to have gotten one for things like Devil May Cry or Metal Gear Solid but they price is going to have to come down, way down, for it to be even considered. And I doubt I'm the only potential customer that thinks like that.

[Faram]

I would love to have a PS3 and I can afford one, but it is way to expensive anyway. I do not like to feel that I am being cheated.

When the PS3 costs 1/3 of it's current price I will get one but untill then, no way.

My Wii works quite nice but it could use more fun titles and I am not buying a 360 untill the Elite is out.

All in all it seems like I have to spend a big part of this summer outside, horror of horrors.

[Darth Wong]

I suppose I could go on a rant about how overpriced the PS3 is, but then again, I spent about the same amount of money on a new sex toy. Of course, I'm sure Rebecca and I will enjoy that thing far more than we ever would have enjoyed a PS3.

[Admiral Valdemar]

I suppose I could go on a rant about how overpriced the PS3 is, but then again, I spent about the same amount of money on a new sex toy. Of course, I'm sure Rebecca and I will enjoy that thing far more than we ever would have enjoyed a PS3.

What?

...

What?!

[SAMAS]

I suppose I could go on a rant about how overpriced the PS3 is, but then again, I spent about the same amount of money on a new sex toy. Of course, I'm sure Rebecca and I will enjoy that thing far more than we ever would have enjoyed a PS3.

Do I even want to know how a sex toy could cost six hundred bucks?

[Ace Pace]

Hey guys, Checking ARSE is a good thing.

[Admiral Valdemar]

Hey guys, Checking ARSE is a good thing.

Those things are great. I've a few vids on my HDD of girls bound to a bed and having one of these work on them for ages.

Ah, yeah, it would be more fun than a PS3. I just need $600 and the girl willing (only one I know into toys is far more into being dominant and there's no way in hell I'm getting on the receiving end of one of those).

And now back to your scheduled thread.