Stringer on PS3: WSJ Interview

[OuterWorldVoice]

Really compelling and scary stuff. Sorry if olde. Couldn't find it with a search.

Howard Stringer, Japanese CEO Caught between two worlds, the Sony chief tightens his management grip. Will it work? By YUKARI IWATANI KANE and PHRED DVORAK March 3, 2007; Page A1 TOKYO -- Howard Stringer is annoyed. Since becoming Sony Corp.'s first foreign chief executive almost two years ago, he has been slammed by Japanese financial analysts and Sony employees for being disconnected from the company's daily operations, especially during two big crises. Investors in the U.S., meanwhile, have put him under constant pressure to fix Sony's problems more quickly. And he was hearing conflicting advice from both sides. "Look, in America, I was told to cut costs," Mr. Stringer says. "In Japan, I was told not to cut costs. Two different worlds. In this country, you can't lay people off very easily. In America, you can." In a series of interviews at the end of a tumultuous year for Sony. Mr. Stringer says he balanced those competing demands to squeeze 4% growth out of Sony's electronics business and beat earnings estimates for four successive quarters. Sony's stock price has risen 44% since he took over in June 2005. He bristles at criticism, mostly from Japanese, that he lives in a hotel when in Tokyo and spends too much time in New York and London to run the company effectively. Says Mr. Stringer, sitting in a conference room in Sony's Tokyo headquarters: "If I'm not running the company, who the hell is?" Fixing this iconic Japanese company is one of the biggest challenges in business. Mr. Stringer's dilemma is that he is caught between different management styles and cultures. He says he recognizes the risk of falling behind amid breakneck changes in electronics. But he says there's an equal risk in moving too aggressively. "I don't want to change Sony's culture to the point where it's unrecognizable from the founder's vision," he says. "That's the balancing act I'm doing." Whether he can pull it off is still an open question. For the Welsh-born executive, the task is complicated by having to navigate a sea of obstacles, from uncommunicative top executives -- one surprised Mr. Stringer with bad news at a board meeting -- to poor public-relations advice. The risk to Sony from his management-through-persuasion is that the company could fall further behind nimbler and more aggressive rivals. Mr. Stringer has already shifted gears once, adopting a more assertive stance after his softly-softly approach faltered. When he became CEO, Mr. Stringer started cautiously. He knew that despite its global brand name, Sony remained a traditional Japanese company, full of employees with lifetime tenure who were suspicious of change. Japan had opened up to the idea of having foreign managers run Japanese companies, notably Carlos Ghosn at Nissan Motor Co., but it hadn't necessarily embraced the Western style of management. Mr. Stringer, 65 years old, stuck with the executive team he inherited. He tried gently persuading managers to cooperate with one another and urged them to think about developing products in a new way. The dangers of that approach quickly became clear. Two big missteps -- a delayed launch of the PlayStation 3 videogame console and an embarrassing battery recall -- tarnished Mr. Stringer's first years in charge. In both cases, managers tried handling problems in the traditional Sony way: quietly and without informing top executives. Last fall, Mr. Stringer put together an executive team more to his liking. The reshuffle included moving an uncommunicative star executive, Ken Kutaragi, from his position running Sony's videogame unit. Mr. Stringer now receives every report about manufacturing problems -- "more emails than I care to read," he says. In one of the interviews, Mr. Stringer counseled patience to his critics, noting that his turnaround of Sony's U.S. operations took five years to complete. "You can't go through a Japanese company with a sledgehammer," he said. In another interview, conducted just after the battery-recall crisis, Mr. Stringer's forbearance was wearing thin. "I'm going to do what I want to do now," the chief executive said. "I'm not going to be following everybody's suggestions. I've got to be true to myself in some ways. Mr. Stringer says nothing has changed in his management style. The perception of him as a hands-off manager, he says, was fueled by his decision to live in a Tokyo hotel. The CEO says he now regrets that decision, but also rejects as "insane" the notion that he wasn't firmly in control. He says his response to the crises wasn't a change of heart but a quickening of his long-term plans. He adds that his record has been obscured by the battery crisis, "which took too long for bizarre Japanese reasons that I don't want to spend the rest of my life discussing." Mr. Stringer started life as a TV reporter. He spent nearly three decades at CBS Inc. -- he became a U.S. citizen in 1985 -- eventually rising to become head of broadcasting. He made his name at Sony leading a turnaround of its U.S. entertainment operations, including streamlining its movie and music businesses, slashing hundreds of jobs. Engineers in Charge When he was named CEO, Sony was in a poor state, a company built on hardware engineering that was floundering in the age of software. For decades, Sony had produced the gold standard of consumer gadgets such as televisions and tape players. Sony made products the old way, first developing hardware, then, almost as an afterthought, adding software to make it run. The Walkman, the epitome of the company's success, was a triumph of electronics engineering; ever since, Sony's innovations have focused largely on hardware design -- making products smaller, thinner and lighter. As Apple Inc. has shown, most spectacularly with its iPod music player, nifty software is the ticket to creating hit gadgets these days. In 2005, it wasn't only the iPod that was vexing Sony. Competitors such as Microsoft Corp. -- a software company -- were eating into Sony's gadget business, especially its famed PlayStation. One of Mr. Stringer's goals was to encourage Sony's hardware engineers to treat software seriously when developing products. But Sony's culture celebrates proud innovators who do what they want. Many still quote an admonition by one Sony veteran: If you have the misfortune to be under a clueless boss, don't tell him about new ideas -- just execute them. For example, last summer, more than 100 Sony colleagues attended a mock funeral thrown by famed engineer Toshitada Doi. He had resigned after his pet project, the Aibo robotic dog, was axed, one of many activities Sony deemed superfluous. At the ceremony, the 42-year Sony veteran recalls saying that the Aibo was a symbol of a risk-taking spirit that was now dead. Mr. Stringer didn't know much about electronics, Sony's core identity, when he took over. His careful approach, a hallmark of his time in the U.S. as well, was evident from his first days, notably when he decided to keep -- and defer to -- the Japanese executive team chosen for him by his predecessor, Nobuyuki Idei. The executives were electronics veterans familiar with Sony's operations in Japan. But soon after, Mr. Stringer was upset he couldn't unveil cuts in the company's product line because his top executives had not finalized their plans. The executives "were all put in place," says Mr. Stringer. "What was I supposed to do? Show up on Monday and say, 'I don't like who you've given me?'" Sony President Ryoji Chubachi emerged as Mr. Stringer's right-hand man. Mr. Chubachi, 59, was promoted at the same time as Mr. Stringer after having spent his career overseeing components such as videotape. His primary experience in software was the programs Sony embedded in hardware devices, not the kind of modern outlook Mr. Stringer was after. "To be honest, it didn't click with me at first when Howard first talked about the importance of software," Mr. Chubachi says in an interview. One casualty of Mr. Stringer's early hands-off style was Connect, a unit set up before his arrival that he nonetheless championed as an example of collaboration between hardware, software and services. Connect's task was to create a portable music player and online music service under the Walkman and Connect brands to challenge Apple's iPod and iTunes. Connect had two presidents -- Sony hardware veteran Koichiro Tsujino in Tokyo and Philip Wiser, an online music pioneer, in New York. The two clashed. Mr. Tsujino wanted to build a new type of software from the ground up, while Mr. Wiser wanted a more conventional approach. As the feuding intensified, they complained to Mr. Stringer about the dual-president system, say people familiar with Connect. Mr. Stringer declined to intervene, asking the two to work out the problems on their own, the people say. The new software packaged with the Walkman, a compromise solution, was so error-prone that U.S. executives refused to sell it. Sony eventually abandoned the software in Japan, too. By mid-2006, Messrs. Tsujino and Wiser had both quit Sony, and the Connect unit had been disbanded. Mr. Stringer concedes backing off. But he says Connect was a vestige of the old Sony way of doing business, where executives ran independent fiefs. "We learned from the lesson that we are not developing software that way anymore," Mr. Stringer says. After the Connect unit was disbanded, the entire business, including hardware, software and services, was moved to Sony's audio devices group under the control of Yutaka Nakagawa, an executive who was openly skeptical of the Connect music service, according to Sony managers. He told colleagues that Sony should concentrate on its strengths in hardware. Mr. Nakagawa declines to comment, other than to say that Connect "didn't seem quite right." Hard Work on PlayStation Another stumbling block was Mr. Kutaragi, the renegade head of Sony's videogames division who invented the PlayStation videogame consoles, the company's most successful marriage of cutting-edge electronics technology and software. Mr. Stringer hoped Mr. Kutaragi would come up with similar hit ideas for Sony's other products. Mr. Kutaragi was notorious within the company for his reluctance to communicate with his bosses or other units. In 2005, Mr. Kutaragi hosted an event at a big electronics conference in Las Vegas to celebrate the U.S. launch of the PlayStation Portable handheld game machine -- one of the company's biggest products that year. He didn't invite executives from Sony's electronics division, which provided the parts. In developing the PlayStation 3 console, the device's latest iteration, Mr. Kutaragi went over budget on development costs without informing Mr. Stringer, according to a person familiar with the situation. When Mr. Stringer urged Mr. Kutaragi to have dinner with the heads of the electronics division, he did so just once a year, this person said. A spokeswoman for Mr. Kutaragi declined to comment. Mr. Stringer tried to win Mr. Kutaragi's cooperation with patience. "I've had dinner with [Mr. Kutaragi] more times than I've had dinner with my wife, and that's not really healthy," Mr. Stringer says. In September, Mr. Kutaragi announced Sony was halving shipments of the new PlayStation to the U.S. and Japan and was pushing back its European launch. At a news conference, Mr. Kutaragi blamed Sony's electronics group for failing to produce enough of a critical component, exposing his tense relationship with the division. "If we're asked whether Sony's quality of manufacturing has declined, I would have to say 'yes,'" Mr. Kutaragi told reporters. At a board meeting a few weeks later, Mr. Kutaragi sprang another surprise on Mr. Stringer, suggesting he drop the price of the entry-level PlayStation 3 console by 20% to just under 50,000 yen (about $420) to make it more competitive. "It wasn't financially one of my best moments," Mr. Stringer says. "The budget implications were self-evident. [But] I agreed because I wanted the launch to be successful." The price cut will help double videogame-related losses for Sony's year ending March 31 to about $2 billion, erasing many of the efforts made by other units to boost profitability. "I think it's fair to say that any time you're aiming for the stars, you're running the risk of falling a bit short on your timetable," Mr. Stringer says. A Battery of Problems Meanwhile, another crisis was bubbling over. In August, Dell Inc. announced it was recalling 4.1 million laptop computer batteries made by Sony after the PC company decided they posed a danger of overheating and catching fire. Dell's recall triggered a stampede by other computer makers and prompted Sony to launch a voluntary global recall program in late September. Mr. Stringer says he first heard about the magnitude of the problem not from his own managers but from Dell founder Michael Dell. The problem: In Sony's typical independent fashion, the battery subsidiary, Sony Energy Devices Corp., tried solving the issue itself, says Mr. Stringer. Instead of treating the matter as a public-relations challenge, the battery executives saw it as one of engineering. Mr. Stringer says he erred by deferring to his Japanese deputies' suggestion that he avoid public comments about the battery recall. The idea was to contain the problem in the components division, but Mr. Stringer's silence gave the impression among Japanese press and employees that he wasn't taking responsibility for one of Sony's worst public-relations disasters. The constant stream of reports about battery fires was "a kind of Chinese water torture," Mr. Stringer recalls, and prevented the company from putting a lid on the matter. Within Sony, Mr. Stringer's silence disappointed some employees, several executives say. Some questioned Mr. Stringer's commitment to the electronics business because of his living arrangements in Tokyo, a complaint echoed among local financial analysts. "Mr. Stringer has no background and he's not in Japan managing the day-to-day, so it's impossible" to run the company effectively, says Tatsuya Mizuno, an electronics analyst for Fitch Ratings. "Sony's DNA is in electronics...so the top management needs to understand what's going on there." Home, Sweet Home Mr. Stringer bristles at the idea that he isn't committed to Tokyo. "I have a home in England and I have a home in New York -- I'm already bloody cross-cultural -- and I just didn't want to be in a lonely apartment somewhere in Tokyo even for symbolic reasons." At the same time, Mr. Stringer says he should have "faked it better -- I mean that seriously." He says Mr. Idei warned him about what might happen if he didn't establish a home here. "I should've put the flag up the flagpole and said here's my residence in downtown Tokyo -- I'm here! -- even if it's less practical than living where I live, and much less comfortable and friendly." He still lives in a hotel. The two crises were a wake-up call. In videogames, Mr. Stringer says he persuaded Mr. Kutaragi to give up day-to-day control of the division in December; he remains chairman and chief executive, focused on next-generation games. Mr. Stringer replaced him with the U.S. head of the videogame unit, a longtime ally. In electronics, Mr. Stringer moved Mr. Nakagawa, the executive who questioned the role of software, to a unit overseeing batteries, chips and other components. Messrs. Stringer and Chubachi receive daily emails alerting them about manufacturing problems companywide via a product-safety officer who was appointed in the fall. Mr. Stringer also put all of Sony's consumer gadgets under Katsumi Ihara. Mr. Ihara played a key role in jump-starting the mobile-phone joint venture between Sony and Telefon AB L.M. Ericsson of Sweden, which has built a reputation for style. Mr. Ihara has set up a task force, based in the U.S., to develop products that will allow users to download content from the Internet onto Sony products like the Walkman and PlayStation. He also created a center in Tokyo to develop software. One early effort: a module for TVs that allows users to watch video from the Internet using a remote control. It uses some of the same software as the PlayStation 3 console. Mr. Stringer says the rough experience of the past few months gave him an opening to speed up his plans. "All crises create opportunities," he says. "While we were being beaten up on the one hand, it was an opportunity to accelerate the transformation."

[ghostlyjoe]

Wow.

[Smokey]

I'm not too surprised by the Kuturagi comments. He always seemed to be off the wall so to speak with his comments and such, and obviously he was the same way within company walls.

[Midas]

I wonder what the PS3 price would've been if Kutaragi could've decide all that by himself.

[OuterWorldVoice]

I wonder what the PS3 price would've been if Kutaragi could've decide all that by himself.

It's amazingly frank about how much horror and turmoil still exists. Some of these things are historical, but most of this is apparently still going on. The hotel thing is baffling though. Cultural difference I suppose.

[Bad_Boy]

I wonder what the PS3 price would've been if Kutaragi could've decide all that by himself.

Your vital organs.

[Treo360]

Wow. Interesting read.

[Y2Kev]

Kutaragi has probably crossed from "genius" to "madman" sometime after the PS2 launched. Eesh.

[Emotep]

They need to fire Stringer and hire someone from Japan.

His first mistake was listening to the Americans.

[Oldschoolgamer]

They need to fire Stringer and hire someone from Japan. His first mistake was listening to the Americans.

*sigh*

[p2535748]

Read this over breakfast this morning. Really a fascinating article, and a good example of why the WSJ is worth the subscription price.

[ghostlyjoe]

I wonder what the PS3 price would've been if Kutaragi could've decide all that by himself.

Sounds like he did decide it all himself. he just kept the big dogs out of the loop until the PS3 specs and price became an either/or proposition: Either do this and lose LOTS of money, or don't do this and lose LOTS of money.

I'm just surprised by how disorganized the comapny seems, based on that article, and all the competing internal cultures. Interesting stuff, and probably many scenarios you'd find in other large corporations. You just don't usually get this kind of window on a comapny's corporate culture.

[Chris_C]

Stinkles, what's your job again?

EDIT: Not being smart, I can't remember whether you work at Bungie or MS.

[ethelred]

That is a fascinating and remarkably frank take on the company and its management. Very good read.

[Y2Kev]

So what can Stringer do really? The article makes him sound rather helpless. If Stringer can't be allowed to just go in and rip out the guts, he's pretty ineffectual.

[FlightOfHeaven]

Wow. Who knew?

Sounds like Stringer has way too much on his plate. Sounds like it's mostly due to the lack of communication towards him, and he's fixing that. On the other hand, he needs to live in Tokyo for a while. It'll bolster company morale.

[drohne]

i think this is the first information we've seen as to why kutaragi was demoted -- or promoted out of the way, as the case may be. sounds as if it was primarily a clash of styles and personalities, though obviously sony can't be happy with the losses ps3 has sustained. interesting stuff.

[MightyHedgehog]

They need to fire Stringer and hire someone from Japan. His first mistake was listening to the Americans.

Nah. They need to fire Kutaragi if he doesn't want to play ball with Stringer's plan. Stringer was brought on board to make Sony more profitable and more competitive...Kutaragi made that task more difficult by not communicating. I'm sure there's a lot of equally talented engineers that could head Sony's Playstation hardware division while working with the guy they went out of their way to bring in to fix the company. You need clear lines of communication and a willingness to work together on all details if you're going to cost the company a boat-load of money and affect their chances for success in a highly competitive market, like the console business.

[blindrocket]

That was a great read and it really sheds light on the little snips and headlines we had been reading the past year or so.
Sony is an amazing company with a great history so I hope that Stringer can get everything working well.

[OuterWorldVoice]

Stinkles, what's your job again? EDIT: Not being smart, I can't remember whether you work at Bungie or MS.

I'm just like you, I put on my pants one leg at a time. But the difference is, then I make hit records.

[open_mouth_]

In retrospect, I'm sure Sony would do *alot* of things differently if they could. Some things that might've been different:

1) PSP delayed a tad to include touch screen and built to be sold at a starting price of $199. Games released on memory stick type storage (cheaper) and every accessory sold separately to keep costs low (memory stick, case, etc.)

2) One version of PS3 only, with no built-in HD @ ~$399. Blu-Ray still built-in, but streamlined to only have 1 memory slot (which would require anyone who wanted to save anything to buy a $50 memory "drive" sata at 2 Gigs to start off). Only component out to start, 720p/1080i support for movies and games. HDMI version could've been offered later when the system's costs were cut (65nm, etc.). That system would've sold like gangbusters worldwide and it would've been cheaper to make and much easier to sell.

3) six-axis is fine, but rumble should've been settled prior to ps3 launch.

Right now, while the PS3 is a damn fine piece of hardware, it's just priced out of this world for the console market and Sony will never be able to recover from that huge blunder. I mean, we're looking at potentially 50% cut in total units sold when all is said and done vs. the PS2.... wow. That means *alot* less profit from one of the few divisions that was actually profitable for Sony.

[Bad_Boy]

I'm just like you, I put on my pants one leg at a time. But the difference is, then I make hit records.

[Tieno]

Wow, sounds like an epic undertaking. Nice interview!

Stinkles, what's your job again? EDIT: Not being smart, I can't remember whether you work at Bungie or MS.

His job is playing Halo 3.

[garrickk]

It seems like Stringer has a lot of damn work ahead of him (and behind him).

Does anyone have a good article detailing how Stringer was brought into power to begin with? That was a bold move and must have been done SPECIFICALLY to create many of these confrontations.

[jgkspsx]

Stringer sounds extremely arrogant. "I'm already bloody cross-cultural!" because he owns homes in the US and UK? WTF is that supposed to mean for the president of a Japanese company?

I dunno, I've never understood how Carlos Ghosn does what he does, either.

[Luckyman]

Stinkles, what's your job again?

[Chris_C]

I'm just like you, I put on my pants one leg at a time. But the difference is, then I make hit records.

And there you're wrong, I don't bother with pants, haven't since 1969, the year of our birth.

Anway, that was a really fascinating read. I wonder if he's got the the stuff to stick it through and really shake things up. Based on what little I know of his past, I'd imagine he does, I can really see Sony becoming much, much better at software if they had someone like Harrison to look over and unify their hardware/software approach. Over the past decade Harrison has transformed Sony's software division from mediocre to the strongest and most prolific in the industry (first party of course).

EDIT:

Maybe I was being a little smart there, but I seemed to remember him being some sort of MS community liason, then I confused him with someone from Bungie who posts here... then I confused him with Arne. I'm totally at a loss as to what he does though, all I know is he wears pants, which I find a tad old fashioned.

[Bebpo]

I'm just like you, I put on my pants one leg at a time. But the difference is, then I make hit records.

lol

[Bad_Boy]

And there you're wrong, I don't bother with pants, haven't since 1969, the year of our birth.

you guys

[crazyscreenwriter]

Kind of amazing Sony is still functioning as a company given all the internal strife...

[SRG01]

Stringer sounds extremely arrogant. "I'm already bloody cross-cultural!" because he owns homes in the US and UK? WTF is that supposed to mean for the president of a Japanese company? I dunno, I've never understood how Carlos Ghosn does what he does, either.

Stringer's arrogant, but he gets the job done. Stocks are going up and they're making lots of profits!

All in all, his gripes about the old Sony management were right.

[Stealth]

Wow. We all knew that Sony was in trouble last year, but after reading this you really get a picture of just how chaotic things must have been inside the company. Glad to see they seem to be getting themselves back on track, though. Krazy Ken indeed.

[Manmademan]

In retrospect, I'm sure Sony would do *alot* of things differently if they could. Some things that might've been different: 2) One version of PS3 only, with no built-in HD @ ~$399. Blu-Ray still built-in, but streamlined to only have 1 memory slot (which would require anyone who wanted to save anything to buy a $50 memory "drive" sata at 2 Gigs to start off). Only component out to start, 720p/1080i support for movies and games. HDMI version could've been offered later when the system's costs were cut (65nm, etc.). That system would've sold like gangbusters worldwide and it would've been cheaper to make and much easier to sell.

Wow this is a terrible idea. No built in hard drive standard means no amazing download-only content like Tekken 5: DR, GT:HD, or the upcoming Warhawk.

plus, a Ps3 with the "memory slot" idea means the true cost is "$450 if you actually want to play anything. How is this better than a 20 gig hard drive included plus HDMI at $499?

What Sony needed to do was drop the $599 SKU entirely. Wifi is nice and all and so is the extra space, but the PS3 would be selling a hell of a lot better if consumers could actually FIND the 20 gig version.

[OuterWorldVoice]

I'm totally at a loss as to what he does though, all I know is he wears pants, which I find a tad old fashioned.

I work at Bungie, but I post at leisure. I wear my conflict of interest on my sleeve, like a glittering cufflink.

I'm a writer in charge of Bungie's in house writing stuff, so I work on game scripts, and manuals, and IP stuff, and novels, and comics and stuff like that, but I also work on Bungie web and community stuff.

Which is about 20% of why I post on gaf. The other 80% is the sheer enjoyment of stuff like the current spat about 1UP's motorstorm review.

I own all the consoles so I can justify my trolling (you should try it, it's exhilirating) and I don't like FFVII, but I do like Rez.

[Emotep]

Bungie games = mind rotting filth.

Brain Age is better for you.

[MightyHedgehog]

Bungie games = mind rotting filth. Brain Age is better for you.

Looking at your posts so far, I'd be surprised if you last through the week. Stay on topic, dude.

[Emotep]

Perhaps if someone more competant was in charge, the Playstation 3 wouldn't be polluted with mind rotting filth like Resistance: Fall of Man.

[ethelred]

Kind of amazing Sony is still functioning as a company given all the internal strife...

Well, every large corporation has internal strife. This stuff is a bit extreme, though. The lack of communication, one division disparaging other divisions within the company, no one working together, everyone doing whatever they want, and again, the lack of communication... yikes. Stringer's really got his work cut out for him, but it seems like he's got the strength needed to really take the reigns at the company and make the changes needed. Best of luck to him.

Looking at your posts so far, I'd be surprised if you last through the week. Stay on topic, dude.

I'd be surprised if he lasts the day.

Perhaps if someone more competant was in charge, the Playstation 3 wouldn't be polluted with mind rotting filth like Resistance: Fall of Man.

Make that "I'd be surprised if he lasts the hour."

[davepoobond]

Bungie games = mind rotting filth. Brain Age is better for you.

i take offense to this. you did not captialize the G in "Games"

[OuterWorldVoice]

Perhaps if someone more competant was in charge, the Playstation 3 wouldn't be polluted with mind rotting filth like Resistance: Fall of Man.

Don't you have a Phoenix Wright cosplay-con you need to be at?

[Tieno]

Perhaps if someone more competant was in charge, the Playstation 3 wouldn't be polluted with mind rotting filth like Resistance: Fall of Man.

Go away you mind rotting filth.

[davepoobond]

Perhaps if someone more competant was in charge, the Playstation 3 wouldn't be polluted with mind rotting filth like Resistance: Fall of Man.

mind-rotting filth has a hyphen in it.

[Emotep]

Don't you have a Phoenix Wright cosplay-con you need to be at?

It is funny because in order to enjoy Phoenix Wright, you need to be able to read. Is that too hard for Bungie game players?

[open_mouth_]

Wow this is a terrible idea. No built in hard drive standard means no amazing download-only content like Tekken 5: DR, GT:HD, or the upcoming Warhawk. plus, a Ps3 with the "memory slot" idea means the true cost is "$450 if you actually want to play anything. How is this better than a 20 gig hard drive included plus HDMI at $499? What Sony needed to do was drop the $599 SKU entirely. Wifi is nice and all and so is the extra space, but the PS3 would be selling a hell of a lot better if consumers could actually FIND the 20 gig version.

OK, the PS2 didn't have a built-in HD like the Xbox and it absolutely dominated last-gen, anyway. Every PS2 owner had to buy a memory card eventually so they didn't think, "OK, so the PS2 is $299 plus $40 for a memory card, making it $340 in reality"... It's the initial price that people think about and that's what's important. For Sony, every single PS3 owner would *have* to have at least 2 gigs in their system to save games or download content so that'd be a virtual 100% attach rate, resulting in a high level of developer support regardless. Selling the memory or HD separate gives users the option of going for less space (2 gigs) or more (up to 200 gigs, for example) while it allows Sony to competitively price the console for maximum impact.

The reason you see more $599 versions is probably because A) Sony loses less on those units and B) there's more demand for those units. The 360 is seen as "$399" and the PS3 would've been seen as $399 as well and it would've wiped the floor with the 360 worldwide at that price and it would've probably retained 75% or more of its marketshare.

[davepoobond]

It is funny because in order to enjoy Phoenix Wright, you need to be able to read. Is that too hard for Bungie game players?

i think its time for you to go back to your bathtub-sarcophagus

[Smokey]

Bungie games = mind rotting filth. Brain Age is better for you.

GAF please tighten restrictions on who can get into this forum and who can't.

I don't know how, just find a way.

It is funny because in order to enjoy Phoenix Wright, you need to be able to read. Is that too hard for Bungie game players?

Your time is ticking.

[Captain Glanton]

Wow this is a terrible idea. No built in hard drive standard means no amazing download-only content like Tekken 5: DR, GT:HD, or the upcoming Warhawk. plus, a Ps3 with the "memory slot" idea means the true cost is "$450 if you actually want to play anything. How is this better than a 20 gig hard drive included plus HDMI at $499? What Sony needed to do was drop the $599 SKU entirely. Wifi is nice and all and so is the extra space, but the PS3 would be selling a hell of a lot better if consumers could actually FIND the 20 gig version.

Agreed about the $499 SKU. People complained a lot about MS's approach to having two SKUs, but it turns out that there really is a dumber way to do it--have two SKUs and then bury the one that people want to buy but you don't want to sell.

Anyway, very interesting and illuminating article.

[Chris_C]

I work at Bungie, but I post at leisure. I wear my conflict of interest on my sleeve, like a glittering cufflink.

Oh, well that's cool then. Although the fact that you wear sleeved shirts bothers me...

I'm a writer in charge of Bungie's in house writing stuff, so I work on game scripts, and manuals, and IP stuff, and novels, and comics and stuff like that, but I also work on Bungie web and community stuff.

Neat, sounds like an awesome job.

Which is about 20% of why I post on gaf. The other 80% is the sheer enjoyment of stuff like the current spat about 1UP's motorstorm review.

I started avoiding those threads after the "so X game is better than Y game" comments became increasingly popular.

I own all the consoles so I can justify my trolling (you should try it, it's exhilirating) and I don't like FFVII, but I do like Rez.

I figured I'd do that this gen, traditionally been a PlayStation gamer, so I bought a 360 first and played through the original Xbox games that I missed out on last gen. Unfortunately, I discovered why I never bought an Xbox, the majority of the games simply don't interest me very much. Really liked the functionality of the machine itself, but aside from a small handful of titles... eh. So I sold it.

I don't have all three platforms, so I'm not legally allowed to troll. That's fine though as I generally don't feel inclined to.

Aaaanyway, better get back to work. Nice meeting you and all, and great find on the article.

[sillymonkey321]

I can picture it now:

" You're over budget on the PS3, AHHHHHHHHHHHH!"

" You want to lower the price on PS3 BEFORE you release in Japan? AHHHHHHHH!"

" Let's have dinner."

[Chris_C]

Perhaps if someone more competant was in charge, the Playstation 3 wouldn't be polluted with mind rotting filth like Resistance: Fall of Man.

Hmm... you spelled your username wrong. Unless it's a play on words and you're actually an 800 year old undead priest with a affinity for the musical stylings of Jimmy Eat World... are you?

Also, you misspelled "competent", which I find highly amusing given your comments thus far.