The first conceptions of the Playstation console date back to 1988. Nintendo had been attempting to work with disk technology since the Famicom, but the medium had problems. Its rewritable magnetic nature could be easily erased (thus leading to a lack of durability), and the disks were a piracy danger. Thus, when word came out of a new optical storage technology being developed by Sony and Philips, Nintendo was interested. Nintendo approached Sony to develop a CD-ROM add-on, tentatively titled the "SNES-CD". A contract was struck, and work began.
In 1991, the SNES-CD (now titled the Play Station) was to be announced at the June CES. However, when Hiroshi Yamauchi read the original 1988 contract between Sony and Nintendo and learned that it allowed Sony 25% of the profits from the machine, he was furious. He deemed the contract totally unacceptable, and secretly cancelled all plans for a joint Nintendo-Sony SNES CD attachment.
Indeed, instead of announcing their partnership, at 9AM the day of the CES, Nintendo chairman Howard Lincoln stepped onto the stage and revealed that they were now allied with Philips, and were planning on abandoning all the previous work Nintendo and Sony had accomplished. Lincoln and Minoru Arakawa had (unbeknownst to Sony) flown to Philips headquarters in Europe and formed an alliance of a decidedly different nature- one that would give Nintendo total control over its licenses on Philips machines.
The 9am CES announcement was a huge shock. Not only was it a complete surprise to the showgoers (Sony had only just the previous night been optimistically showing off the joint project), but it was seen by many in the Japanese community as a massive betrayal- a Japanese company snubbing another Japan-based company in favour of a European one was considered unthinkable in Japanese business.
Initially, Nintendo's abandonment of the joint project caused Sony to consider halting their research, but ultimately the company decided to use what they had developed so far and make it into a complete, stand alone console. This led to Nintendo filing a lawsuit claiming breach of contract and attempted, in U.S. federal court, to obtain an injunction against the release of the PlayStation, on the grounds that Nintendo owned the name. The federal judge presiding over the case denied the injunction. Thus, in October 1991, the first incarnation of the new Sony Playstation was revealed. As for the deal between Philips and Nintendo, it fell through as well. However, because of the deal, Philips was able to create games for its CD-i computer based on Nintendo licenses. The games were terrible, and seen as another attempt by Philips to market the ill-fated computer.
