Microsoft's XBox 360's core technology was essentially funded and developed by Sony without them knowing, as detailed in the excellent book 'The Race for a New Games Machine' by David Shippy and Mickie Phipps.
Sony partnered with Toshiba and IBM in 2001 to begin creation of the 'Cell' processor - a powerful, state of the art chip that would redefine PC scale power. Co-author David Shippy was in charge of designing the processing core - the 'brain' of the Cell.
Sony, IBM & Toshiba committed to spending $400 million over five years to design the Cell at IBM's Austin Texas offices, with the chips planned debut in the next generation PlayStation 3 scheduled for Christmas 2005.
Unbeknown to Sony, Microsoft started planning the rival XBox console in 2002 and approached IBM about making a chip for their product. I expect you can guess what happened next...
From the Wall Street Journal's review of 'The Race for a New Game Machine' by Jonathan Last:
All three of the original partners had agreed that IBM would eventually sell the Cell to other clients. But it does not seem to have occurred to Sony that IBM would sell key parts of the Cell before it was complete and to Sony's primary videogame-console competitor. The result was that Sony's R&D money was spent creating a component for Microsoft to use against it.
Mr. Shippy and Ms. Phipps detail the resulting absurdity: IBM employees hiding their work from Sony and Toshiba engineers in the cubicles next to them; the Xbox chip being tested a few floors above the Cell design teams. Mr. Shippy says that he felt "contaminated" as he sat down with the Microsoft engineers, helping them to sketch out their architectural requirements with lessons learned from his earlier work on Playstation.
The deal only got worse for Sony. Both designs were delivered on time to IBM's manufacturing division, but there was a problem with the first chip run. Microsoft had had the foresight to order backup manufacturing capacity from a third party. Sony did not and had to wait another six weeks to get their first chips. So Microsoft actually got the chip that Sony helped design before Sony did. In the end, Microsoft's Xbox 360 hit its target launch in November 2005, becoming its own success. Because of various delays, the Playstation 3 was pushed back a full year.
Collaboration vs Secrecy
From a collaboration perspective, clearly there were some interesting meetings between IBM and Sony after they found out about XBox where if you were a fly on the wall you might have been scorched to death Godzilla style.
For me this is another example of the great value of openness.
One of the great ironies of obsessive corporate secrecy is the likeliness of not being able to see threats due to operating within very constrained conditions.
Clearly protecting core strategic assets is important, but obsessive secrecy has caused many other catastrophies in the past. Congenital, obsessive secrecy tends to breed monumental incompetence instead of much needed wisdom and foresight, as recent financial and political events have shown.
Secrecy and permissions management is very expensive and complex with questionable value beyond protecting core intellectual property. A culture of contextual awareness goes a long way to broadening collaboration and creating greater 360 degree awareness of the tactical topography.
Command and control management plus secrecy tends to create blind leading the blind communication, while breeding insecurity and encouraging the skillfully willful to build cynical fiefdoms.
The PlayStation 3 Prognosis
The figures for the PS3 make grim reading as the numbers in this PC Magazine article entitled 'Is the Playstation 3 in a Death Spiral?' demonstrate. In summary they say:
Sony's PS3 is in dire trouble. It's notoriously difficult to program, which doesn't endear it to developers. Games don't sell as well on the PS3 as other consoles, which makes publishers skittish. Sony's flagship console needs a big price cut, but it's unclear if the PS3 can be cost-reduced enough to support it, given the continuing high cost of its components. The company may have no choice, if it wants to remain in the game.
Sony President Howard Stringer today in the UK Times:
“The big problem is that we have been handicapped by the hardware costs and they have made the PS3 look rather sad against the Wii. The PS3 is an extraordinary machine and we have not been able to realise those qualities.
“We have been in this phase where the more we sell, the more money we lose but we are beginning to pass that. The energy of this machine and its relationship with the content business will get better.”
With the clock ticking and the meter running, it might be better to cut losses and focus on rebuilding infrastructure to support development of a more viable, next generation PlayStation 4.