standing ovation
Regular
I pulled WIRED magazine (9|2006) out of my mailbox yesterday. Buried among the tech-culture jargon was this aptly titled article on Sony. It ponders the company’s future in light of its past. :neutral:
Ironically, the article draws to a close with a couple of paragraphs it probably should have opened with, as they embody its theme and tone.
[size=-2]A COUPLE OF MONTHS AGO, Howard Stringer and Ryoji Chubashi, Sony's president, reported to a luxury hotel in Tokyo's Shinagawa district to face 7,200 shareholders at Sony's annual meeting. It was not an enviable assignment. With the company in the red yet again in its most recent quarter, Japanese investors were in an unhappy mood. "I bought shares in mighty Sony," cried a woman whose holdings had lost nearly two-thirds of their value. "What are you going to do about this?"
It was hardly an unexpected question, and Stringer answered as best as he could. Citing runaway ticket sales for Sony Pictures' The Da Vinci Code and the remarkable success of the Bravia digital TV line, he argued that Sony has entered a period of reemergence. But The Da Vinci Code will have no more lasting effect on the bottom line than earlier Sony blockbusters like Spider-Man, and Bravia relies on LCD technology that Sony ignored for years -- until finally it had to partner with its Korean archrival Samsung to get back in the TV business. So while each was good news, they don't add up to a sign that mighty Sony is back.[/size]
Historically, Sony's downfall has been its antiquated philosophy. Hit products were the result of internal competition -- cliques, if you will, jockeying for the attention of executives. But in the digital age, competition has given way to collaboration.
[size=-2]Teams of hardware engineers locked in competition: "It's the principle Sony is built on," says Shin’ichi Okamoto, PlayStation's former CTO, now a Tokyo entrepreneur. "Personally, I believe it's not such a good principle nowadays. I got this impression in the '80s, with the technological shift to semiconductors and software" -- both of which require enormous development teams that collaborate with the hardware units their work is intended for.
Phil Wiser, the former CTO of Sony's US operations, reached a similar conclusion after he was tapped to salvage Sony Connect. "With digital entertainment, you have to think about hardware, software, and services that tie them all together," says Wiser, who managed to heave Sony onto the MP3 bandwagon before leaving earlier this year for a Silicon Valley startup. "But it's very hard to quantify the advantage of good software. If you're in a hardware company and you analyze it from a financial perspective, you just want to do it as cheaply as you can. Software and services are an afterthought."[/size]
From its Cell processor to its Blu-ray disc drive, PlayStation 3 is a by-product of this mentality -- a way of thinking that has produced more spectacular failures than successes.
[size=-2]Its hit products of the '90s -- Handycams, WEGA TVs, VAIO computers -- were succeeded by stillborn wonders like the AirBoard, a $1,000 videoscreen that could be carried around like a laptop, and the Net MD Walkman, a too-little-too-late attempt to challenge Apple's iPod. Neither this latter-day Walkman nor Sony Connect, the online music store The New York Times once called "Sony Disconnect," would have anything to do with MP3 files -- only Sony's cumbersome and proprietary Atrac3 format would do.
In recent decades, though, it's become oddly fixated on imposing its own standards -- Betamax for VCRs, the MiniDisc for digital music players, the Universal Media Disc for PlayStation Portable, the Memory Stick for anything you can think of -- despite the world's unwavering rejection of those standards.[/size]
As Mr. Wiser pointed out software and services, not hardware, should be the top priority these days. Unfortunately, it's an ethos that still seems to be on Sony's backburner.
As a consequence, PlayStation 3 may have questionable utility.
[size=-2]At the root of Sony's precarious position -- not just in the industry, but with gamers at large -- is the company's overweening ambition. The PS3 is all about power. Sony has said curiously little about whether this amped-up Linux übercomputer will actually be fun to play.[/size]
By wrestling Microsoft in the living room (for a media hub), Intel in the office (with its Cell microprocessor) and DVD-using consumers (via the Blu-ray), prospects look bleak, as Sony is playing to each of their strengths.
[size=-2]Yet Sony has to do this with cash reserves of $6 billion -- compared to Microsoft's $38 billion hoard -- while losing hundreds of dollars in manufacturing costs alone for every PS3 sold. Eventually, Sony's costs will come down. But in the meantime, Goldman Sachs projects, Sony will lose nearly $2 billion on the PS3 by the end of this fiscal year in March.
"Beating Intel at its own game isn't a trivial undertaking, as companies such as Motorola, Cyrix, and Transmeta have all learned." – (defunct) Electronics Design Chain Magazine
Blu-ray is equally fraught. For starters, the whole business of high-definition disc drives seems designed to invite cynicism. With DVD players now in 85 percent of US homes, sales fell in 2005 for the first time – so some manufacturers may need a next-gen disc player, but it’s not clear consumers do.
Then there was the decision to build Blu-ray into the PlayStation 3. Sony's logic seemed ironclad: Not only would the hi-def drive's huge storage capacity allow for far-more-realistic and complex games, the PS3 would carry Blu-ray into millions of households and drive sales of HDTV's as well. As it turned out, however, Blu-ray has done nothing good for the PS3. Blu-ray was the main reason gamers weren't able to get the new machine last spring: The launch had to be postponed because the new format's digital rights management system did not yet satisfy every Hollywood studio. Blu-ray was also a big factor in the PS3's high price tag. Of course, with stand-alone Blu-ray players starting at $1,000, the PS3 is actually a bargain -- if a Blu-ray player is what you really want. If not, $600 is a lot of money. "For rich, older people it's attractive," Utsumi observes. "But I don't know if they are gameplayers." *
* Shuji Utsumi is "a former PlayStation exec who now heads the Toyko-based game developer Q Entertainment."[/size]
Ironically, the article draws to a close with a couple of paragraphs it probably should have opened with, as they embody its theme and tone.
[size=-2]A COUPLE OF MONTHS AGO, Howard Stringer and Ryoji Chubashi, Sony's president, reported to a luxury hotel in Tokyo's Shinagawa district to face 7,200 shareholders at Sony's annual meeting. It was not an enviable assignment. With the company in the red yet again in its most recent quarter, Japanese investors were in an unhappy mood. "I bought shares in mighty Sony," cried a woman whose holdings had lost nearly two-thirds of their value. "What are you going to do about this?"
It was hardly an unexpected question, and Stringer answered as best as he could. Citing runaway ticket sales for Sony Pictures' The Da Vinci Code and the remarkable success of the Bravia digital TV line, he argued that Sony has entered a period of reemergence. But The Da Vinci Code will have no more lasting effect on the bottom line than earlier Sony blockbusters like Spider-Man, and Bravia relies on LCD technology that Sony ignored for years -- until finally it had to partner with its Korean archrival Samsung to get back in the TV business. So while each was good news, they don't add up to a sign that mighty Sony is back.[/size]
Historically, Sony's downfall has been its antiquated philosophy. Hit products were the result of internal competition -- cliques, if you will, jockeying for the attention of executives. But in the digital age, competition has given way to collaboration.
[size=-2]Teams of hardware engineers locked in competition: "It's the principle Sony is built on," says Shin’ichi Okamoto, PlayStation's former CTO, now a Tokyo entrepreneur. "Personally, I believe it's not such a good principle nowadays. I got this impression in the '80s, with the technological shift to semiconductors and software" -- both of which require enormous development teams that collaborate with the hardware units their work is intended for.
Phil Wiser, the former CTO of Sony's US operations, reached a similar conclusion after he was tapped to salvage Sony Connect. "With digital entertainment, you have to think about hardware, software, and services that tie them all together," says Wiser, who managed to heave Sony onto the MP3 bandwagon before leaving earlier this year for a Silicon Valley startup. "But it's very hard to quantify the advantage of good software. If you're in a hardware company and you analyze it from a financial perspective, you just want to do it as cheaply as you can. Software and services are an afterthought."[/size]
From its Cell processor to its Blu-ray disc drive, PlayStation 3 is a by-product of this mentality -- a way of thinking that has produced more spectacular failures than successes.
[size=-2]Its hit products of the '90s -- Handycams, WEGA TVs, VAIO computers -- were succeeded by stillborn wonders like the AirBoard, a $1,000 videoscreen that could be carried around like a laptop, and the Net MD Walkman, a too-little-too-late attempt to challenge Apple's iPod. Neither this latter-day Walkman nor Sony Connect, the online music store The New York Times once called "Sony Disconnect," would have anything to do with MP3 files -- only Sony's cumbersome and proprietary Atrac3 format would do.
In recent decades, though, it's become oddly fixated on imposing its own standards -- Betamax for VCRs, the MiniDisc for digital music players, the Universal Media Disc for PlayStation Portable, the Memory Stick for anything you can think of -- despite the world's unwavering rejection of those standards.[/size]
As Mr. Wiser pointed out software and services, not hardware, should be the top priority these days. Unfortunately, it's an ethos that still seems to be on Sony's backburner.
As a consequence, PlayStation 3 may have questionable utility.
[size=-2]At the root of Sony's precarious position -- not just in the industry, but with gamers at large -- is the company's overweening ambition. The PS3 is all about power. Sony has said curiously little about whether this amped-up Linux übercomputer will actually be fun to play.[/size]
By wrestling Microsoft in the living room (for a media hub), Intel in the office (with its Cell microprocessor) and DVD-using consumers (via the Blu-ray), prospects look bleak, as Sony is playing to each of their strengths.
[size=-2]Yet Sony has to do this with cash reserves of $6 billion -- compared to Microsoft's $38 billion hoard -- while losing hundreds of dollars in manufacturing costs alone for every PS3 sold. Eventually, Sony's costs will come down. But in the meantime, Goldman Sachs projects, Sony will lose nearly $2 billion on the PS3 by the end of this fiscal year in March.
"Beating Intel at its own game isn't a trivial undertaking, as companies such as Motorola, Cyrix, and Transmeta have all learned." – (defunct) Electronics Design Chain Magazine
Blu-ray is equally fraught. For starters, the whole business of high-definition disc drives seems designed to invite cynicism. With DVD players now in 85 percent of US homes, sales fell in 2005 for the first time – so some manufacturers may need a next-gen disc player, but it’s not clear consumers do.
Then there was the decision to build Blu-ray into the PlayStation 3. Sony's logic seemed ironclad: Not only would the hi-def drive's huge storage capacity allow for far-more-realistic and complex games, the PS3 would carry Blu-ray into millions of households and drive sales of HDTV's as well. As it turned out, however, Blu-ray has done nothing good for the PS3. Blu-ray was the main reason gamers weren't able to get the new machine last spring: The launch had to be postponed because the new format's digital rights management system did not yet satisfy every Hollywood studio. Blu-ray was also a big factor in the PS3's high price tag. Of course, with stand-alone Blu-ray players starting at $1,000, the PS3 is actually a bargain -- if a Blu-ray player is what you really want. If not, $600 is a lot of money. "For rich, older people it's attractive," Utsumi observes. "But I don't know if they are gameplayers." *
* Shuji Utsumi is "a former PlayStation exec who now heads the Toyko-based game developer Q Entertainment."[/size]
