Is the PlayStation Doomed?

Is the PlayStation Doomed?

Summary: Sony, putting aside the human toll of massive restructuring, is a fascinating example of the carnage happening in the business world today, and the stifling of innovation in large companies. Today's multinational conglomerate had humble origins in post WWII Japan: Masaru Ibuka started a radio repair shop in a bombed-out building in Tokyo, and was joined by his colleague Akio Morita a year later.

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TOPICS: Hardware, Mobility
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PS3

Sony, putting aside the human toll of massive restructuring, is a fascinating example of the carnage happening in the business world today, and the stifling of innovation in large companies. Today's multinational conglomerate had humble origins in post WWII Japan: Masaru Ibuka started a radio repair shop in a bombed-out building in Tokyo, and was joined by his colleague Akio Morita a year later.

These two innovators built Japan's first tape recorder and went on to experiment with transistors, a new invention at the time. The resulting transistor radios and subsequent creativity produced an explosion of consumer and professional products synonymous with quality. It's hard to overstate how innovative the company was in its youth: even the name Sony - a made up word which could be copyrighted and was one of the first global consumer brands - was hugely controversial in Japan, where it was unheard of not to have a company name in Kanji, and wildly creative and attention getting in the western world.

So how did this creative dynamo deteriorate into the opaque bureaucracy that is Sony today - a company which is ubiquitous on the planet but unfocused compared to for example Apple, who claimed the next generation of personal audio - and the massively lucrative content market - after Sony's hugely successful WalkMan?

The most played games console on the planet last year was the PlayStation - but not the PS3, the PS2, which has a massive installed base.

Worryingly for Sony though, this is rear view mirror stuff in terms of strategic planning and significant fresh profits in the future. In the modern era, this time it's hard to overstate how hard Ken Kutaragi, 'The father of the PlayStation' had to hustle inside Sony to get the original PlayStation skunk works project off the ground back in the late '80's, as documented in John Nathan's 'Sony - The Private Life' book. PlayStation was a multi billion home run in the 90's and arguably Sony's last major innovative consumer product, propelling the renegade Kutaragi to near the top of the global Sony command and control hierarchy. As PlayStation matured, the next generation PS3, replete with the proprietary technologies and DRM technologies Sony are currently synonymous with, was launched. In November 2006 enthusiasts waited until midnight to buy this exciting next generation PlayStation on launch day, fighting for available product and with robberies occurring as people left stores, such was the demand.

Seems a long time ago now, with the PS3 firmly in third place in the console world behind the lightweight (and priced) Nintendo Wii and Microsoft's Xbox 360, and PS product stacked on the shelves of retailers. In 2005 Kutaragi was demoted and is now ceremonially the Group Executive Officer of the Sony Computer Entertainment gaming development division - the blades that make all the money if you think of the PS3, which costs more to make than it retails for, as the razor.

Where the XBox 360 is relatively easy to develop games for, the PS3 is considered a mysterious black box. In many ways this lack of transparency, along with Sony's Darwinian, Samurai warrior style of adversarial competitive internal and partner bureaucracy, are the cultural aspects most urgently in need of fixing.

Today, Sony is at an inflection point, with massive upheaval and potentially entire divisions being closed or sold, one of which could conceivably be PlayStation. As is the case with most mature companies, there is lots of dead management wood a fire in the metaphorical capitalist forest would wipe out, which would clearly be a good thing for the health of the business, but the cultural issues run deeper than that.

The analysts - who think Sony have left it much too late and see carnage ahead - broadly want Sony to focus on driving earnings in the content business. Sony's current president Howard Stringer appears to be increasingly winning the backing of investors to take on the old guard and clear out some of the legacy management thinking.

The challenge is Sony's current lack of success in the content business - video games, films, music - and now also of the electronic vehicles they create to play that content (TV,s Blu-Ray, PlayStation). There is a startling lack of symmetry between Sony's many divisions for cross pollination, in fact there are many stories of open hostility and antagonism between silos and fiefdoms. Clearly this must change, and doesn't bode well for the sort of innovation needed to drive both the player and the content sides of the equation. A Ken Kutaragi today would have a hard time rising through the political ranks, and a bland lack of creativity in content (remakes of films, 'shoot 'em up version VIII' game franchises don't capture the consumer's imagination in tight times).

ZD Net editor Larry Dignan wrote before the holidays about the need to break vast companies into smaller, nimbler entities. The challenge for companies like Sony is not just this, but allowing those units to collaborate effectively together, however disparate.

As the UK Times Asia Business correspondent Leo Lewis said,

It is globalisation versus insularity; it is shareholder interests versus “the Japanese way”; it is, ultimately, change versus stagnation.

The question on everyone's minds, as Sony decide what to chop and how, is what happens after that - how Sony revert back to being the innovative, open and dynamic company of their youth.

Topics: Hardware, Mobility

About

Oliver Marks leads the Global Digital Enterprise Team at HP, having previously provided seasoned independent consulting guidance to companies on effective planning of business strategy, tactics, technology decisions, roll out and enduring use models that make best use of modern collaborative and social networking tools to achieve their business goals.

These are Oliver's views and not those of his employer HP.

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31 comments
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  • Sad

    It's sad that the PS3 isn't doing as well as its predecessor (sounds like a problem Microsoft is having too). The Playstation 3 is years above anything else on the market and the games are better than any PC game I have ever played, in terms of both graphics and content. In fact, the PS3 is becoming the cheap mainframe of choice by researchers and scientists looking for immense processing power for a few bucks - in fact, 5-10 times more powerful than a top desktop PC (and for less than $400!)
    sgtgary@...
    • Wow

      It's been a while since I have read a post where almost 100% of the "facts" are incorrect.

      The one about a PS3 being 5-10 times more powerful than a top desktop PC was particularly funny. Good stuff! I'd [b]love[/b] to see your evidence on that! A link would be nice, thanks!

      You sound like your typical Mac Fanboy. Only for the PS3. It is not very common to find a PS3 fanboy that is as clueless as your typical Mac fanboy.
      Qbt
      • Wishing

        Wishing you had something constructive to add. It must be hard to be so superior and surrounded by such inferior people. Seem awfully full of yourself, or something...
        Cubbie
      • True

        The commenter doesn't understand the difference between raw power and the ways the PS3 is being used.

        The PS3 CPU is as powerful as a low-end PC, but its ability to link units together is (I guess) what the commenter is indirectly referring to.

        Sony has implemented a nice feature that will enable the PS3 to be linked into a network of PS3s over the Internet when its not being used to play games or watch movies. I'm not sure what they use the processing for, but I recall hearing something about scientific work.

        Something about the cell processor in the PS3 allows it to be used in that way.

        A recent research paper about breaking the MD5 hash mentioned that the team used a bank of 200 PS3s to perform the calculation. I believe these 200 units (in Sweden or Switzerland?) can be rented by researchers.

        I must say, as someone who purchased the PS3 to use as a Blu-Ray player, the PS3 is a wonderful little piece of engineering. In fact, I heartily recommend it to anyone seeking a good Blu-Ray player. You'll get the leading-edge features before any stand-alone player, and it operates faster than any other player out there. You don't have to endure any of the long loading delays that stand-alones have.

        It's a shame that Sony continuously squanders its power, but I think the headline of this blog post may be a bit alarmist.
        Speednet
        • Folding@home

          [i]Sony has implemented a nice feature that will enable the PS3 to be linked into a network of PS3s over the Internet when its not being used to play games or watch movies. I'm not sure what they use the processing for, but I recall hearing something about scientific work.[/i]

          It's called Folding@Home. It's a program run by Stanford University School of Medicine. But it's also available to PC users who own X1600, X1800, and X1900 series GPUs from ATI; or any NVidia GeForce, Quadro, or Tesla card that supports CUDA.

          PS3s are bought in bulk and linked up to crunch numbers becasue they are super cheap for the processing power they offer. Sony also makes it very easy to install alternate OSs on the PS3s.
          tikigawd
          • Brief folding@home explaination

            What folding@home does is crunch data. There are several diseases that researchers believe have to do with the way that protein "folds".

            I'm not an expert, but what they're using the ps3's AND the PC's for is to help with that research.

            This is nothing new, SETI has done SETI@HOME for years as well.

            Both Folding and SETI provide a screensaver that when activated grabs data from the main site automatically and processes that data on your computer, then uploads it back to the mainframe. This basically allows for 100's of thousands of processors to work in tandem, creating the ultimate supercomputer.

            There are dozens of other projects like this around the world as well.
            lnfinity@...
          • It's not just folding at home

            It's being used for numerous mass and internet computing solutions.
            Spiritusindomit@...
      • Sheep talk

        Somebody must still be in love with their PC.

        When the PS3 cell processor first came out it was 10x
        faster than desktop processors. It can process 10
        instructions simultaneously which in 2005 intel was
        maxed out at 2.

        http://news.bbc.co.uk/1/hi/technology/4242447.stm

        What's the old saying: 'Better to remain silent and be
        thought a fool than to open your mouth and remove all
        doubt'.

        Well PC Fanboy you were wrong about the PS3, and as
        far as Mac's go Windows has been trying to copy Mac's
        UI for 20 years. Vista was a close copy of Tiger, only 4
        years later... They still haven't matched the usability
        or stability . MS has done a great job with marketing,
        they've obviously sold you.
        kkevilus
    • Umm...

      Sure, the PS3 might be the cheapest processing unit you can buy for the money they sell it, but it's hardly 5-10 times more powerful than [b]all[/b] PCs out there...

      [i]the games are better than any PC game I have ever played, in terms of both graphics and content[/i]

      Hahaha, I'm still laughing at this one.
      Care to give any examples?
      What was the last PC game you played?

      Each platform has its good games, ite exclusive games, etc. But you will always have games with more capability available for PCs. Once a console is released it remains stagnant for its life, save a few improvements here and there regarding power consumption, stability, and such. The PC platform is always moving, so the latest games usually take advantage of the latest technologies available. Some even require technology that's not even available to run at maxed-out settings (Crysis is an example).
      tikigawd
  • Doubt the PS3 is doomed, but...

    As a console with an installed base of 20 million it is doubtful the PS3 is "doomed" to a fate much worse than being a respectable third in a three horse race, but what it definitely is is the poster-child for the dysfunctional hodge-podge of separate, disconnected (feuding?) businesses that make up Sony Corporation.

    Its basic architecture is a perfect reflection of its patent company; a check-list combination of first-rate bits and pieces (nvidia graphics chip, bd-rom drive, highly touted cell processor, etc) that just don't work together as well as they should because of bottlenecks, partitions, and arcane linkages that limit the overall productivity of the aggregate package.

    There are simply too many instances of the "right foot" not telling the "left foot" what it is doing, leading to unnecessary and embarrising stumbles.

    There are too many clearly-documented cases of the "do your part and flip it over the wall to the next guys" assembly-line thinking at Sony for a contemporary organization. A thorough house cleaning is indeed in order.

    Just consider the way the PS3 was designed and built, with the engineers designing cost *into* their flagship product that the CEO office was not aware off until the factories started churning out product (hence Kutaragi's banishment) at the same time the marketting guys were touting features the enginering guys had no hope of delivering (dual, simultaneous HDMI at 1080p? Riiiggghhttt!) while the logistics department struggled to find enough critical-path components (blue laser diodes) to build even pilot batches of the product...
    Or how the software guys provided state-of-the-art SACD/DVD-audio playback capability (of which Sony has sold, what? hundreds?) while neglecting to provide scaling capabilities for 1080i crt TVs (of which Sony has sold millions). Great thinking, dudes!

    Someday (soon?) a Harvard Business School study will probably use the Sony PS3 development process as a semester-long textbook example of how *not* to design and launch any electronics product.

    No matter what happens, Stringer and Kutaragi and co, the big honchos, will of course all do well, but the rank and file... Not looking good.
    fjtorres
    • Better Read Than The Story

      I occasionally fish a ZDnet email out of my spam when I'm bored enough for some idle reading, which isn't very often, so I'm not familiar enough with all the contributors to know if, say, Torres is one. In any case, I found Torres' "talk back" more readable and interesting than the "original story". :)
      swampdweller@...
  • RE: Is the PlayStation Doomed?

    The problem is Sony's no longer japanese
    Sony Corporation of... America
    A company where morons like Kutaragi have no place.
    johndifo
  • RE: Is the PlayStation Doomed?

    Not doomed for me. I have the PS3 and the Wii and have used the 360. Each has a different strength (and I do not care about the technology, only how well they perform for me). I use the PS3 for blu-ray with some games. Sony perfectly matched the PS3 to their 14 bit high end televisions. Wii and 360 quality are crud in comparison. Try it and see.
    dony_z
    • 360 Quality

      We have a ps3 and the 360--the 360 is in a box heading back to the repair shop for the 3rd time in a couple of years--although it is still covered under warranty. This gets very tiresome--Wish there were more games for the ps3 and at lower prices but what are you going to do.
      skyking@...
  • RE: Is the PlayStation Doomed?

    Well, I walked into a store to buy a PS3 and walked out with a 360 because the salesman told me the PS3 didn't play the old games anymore. turns out he lied, but that doesn't do me or Sony any good now. I haven't seen an ad for PS3 recently - even over christmas. So when he told us the bios for PS# had changed to be incompatable how would we know better?

    PS3 is probably not doomed unless this kind of 5417 goes unanswered.
    zclayton2
  • RE: Is the PlayStation Doomed?

    The PS2 is still the dominant game system in my house. Having played friends' PS3 I am still not convinced it was a major upgrade. My PS2 goes through an upconverter to my TV and the graphics are great. There are still a gillion games to play, and I don't think Sony has done much to promote enough games for my 11 year old (he has a Wii but likes the PS2 more). If Sony hadn't dumped reverse compatability I think it would be doing better. I have also had a PSP for years and would never think of getting a DS (for heaven's sake, how long can you milk Mario?!)
    tpatric99
  • Most don't know or care the inside-baseball stuff

    Price. Wii is cheap, 360 is now cheap, PS3 isn't. PS3 has blu-ray, but no one cares about Blu-ray, so to most it looks like just extra cost.

    I was in the market for another system recently. Wii was out of the running already because of the weird controller & relative lack of games I actually wanted to play, so it was between 360 & PS3. The 360 dropped far enough where getting it was no big deal, so it won by default.

    Show me games that seriously take advantage of BluRay (and a decent sized HDTV that doesn't cost rent-payment numbers) and Sony will have a chance later. Until then, pass.
    longbongsilver
  • PS3? What? Who? How?

    PS3? Never heared that before. ;-)
    Gradius2
    • 20M People know it enough to buy it even if you don't

      At least that's the estimate by the competition: Microsoft.
      http://www.gamespot.com/news/6202751.html?tag=recent_news;img;1
      tikigawd
  • RE: Is the PlayStation Doomed?

    The thing everyone misses, when they say the Xbox is easy to design for is that it is virtually an underpriced PC in the guise of a console.
    PS3 isn't going anywhere once the unenlightened people still playing with their PS2s get a freaking clue they will move into the future with the PS3, so it will be back on top again...just not until after this recession has run it's course :)
    tentaro@...