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"Playing the Fool" -- WSJ article about the PS3's failure


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Like dynasties rising and falling, videogame systems enjoy periods of ascendancy and popular support, only to be thrust aside by a new and conquering power. First came Magnavox Odyssey (in the 1970s), then Atari consoles, then Nintendo, which dominated the market for the better part of the 1980s. In the early 1990s, Nintendo's Super NES and Sega Genesis battled each other for supremacy. Each found enough competitive room to lay the groundwork for the modern videogame console, which has become something like a dedicated personal computer.

It was in the mid-1990s that Sony dropped Playstation into the console market -- a graphics powerhouse that featured games for adults as well as for kids. Playstation was a huge success, selling more than 100 million units. Its 2000 sequel, the Playstation 2, was an even bigger one.

For the system's ambitious third iteration, though, Sony wanted an entirely new processing architecture. Most computer processing chips are built on the foundations of the chips that are already in use. Designing a new chip from the ground up is a costly and time-intensive process. So in 2001 Sony partnered with Toshiba and IBM to create the so-called Cell processor -- a chip so powerful that it would redefine PC-scale power.

David Shippy, as it happens, was in charge of designing the brains of the Cell, the processing core. In "The Race for a New Game Machine," he and his co-worker Mickie Phipps tell the story of the whole effort to build the Cell. They also describe how the project went off the rails, ending up with IBM engineers creating the processing chips for two rival videogame consoles and, along the way, delivering to Sony Corp. one of its greatest business failures.

The Race for a New Game Machine

By David Shippy and Mickie Phipps

(Citadel, 240 pages, $21.95)

When the companies entered into their partnership in 2001, Sony, Toshiba and IBM committed themselves to spending $400 million over five years to design the Cell, not counting the millions of dollars it would take to build two production facilities for making the chip itself. IBM provided the bulk of the manpower, with the design team headquartered at its Austin, Texas, offices. Sony and Toshiba sent teams of engineers to Austin to live and work with their partners in an effort to have the Cell ready for the Playstation 3's target launch, Christmas 2005.

But a funny thing happened along the way: A new "partner" entered the picture. In late 2002, Microsoft approached IBM about making the chip for Microsoft's rival game console, the (as yet unnamed) Xbox 360. In 2003, IBM's Adam Bennett showed Microsoft specs for the still-in-development Cell core. Microsoft was interested and contracted with IBM for their own chip, to be built around the core that IBM was still building with Sony.

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.

Mr. Shippy and Ms. Phipps view the delivery of the Cell processor and the derivative Xbox chip as victories for both companies. "Both Sony and Microsoft were extremely successful at achieving their goals," they write. But this is true only in the narrowest sense. The new chips certainly set the standard for technical virtuosity. Yet the current generation of videogame console has been dominated not by Sony or Microsoft but by the Wii, Nintendo's modest machine that relies on an older, cheaper and less powerful chip. With an input device that allows players physically to interact with games, the Wii has been yet another runaway success, selling almost as many consoles as the Xbox 360 and Playstation 3 combined.

In fact, the Playstation 3 now runs a distant third in sales. (And the trend is downward: On Monday, The Wall Street Journal reported that "U.S. sales of the PS3 fell 19% last month from a year earlier, while sales doubled for the Wii console and rose 8% for the Xbox 360.") For Sony, the Cell processor was such a debacle that two weeks after the Playstation 3 finally appeared in stores, the company fired Ken Kutaragi, the head of its gaming unit, who had championed the Cell and built the Playstation line. The lesson, lost on Mr. Shippy and Ms. Phipps, is that technical supremacy divorced from sound strategic vision is no virtue. It can even end up in disaster.

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I have a Wii and the ps3. The Wii is fun , but comparing the two systems...there IS NO COMPARISON. The ps3 at my home is the dominant system ...always on watching a blu ray, playing games, surfing the net, LOOKING great in HD. The wii is fun and a matter of fact, we just finished playing mario kart. But I FEEL, just my own opinion is its cheaper. It is at a price point where people can afford it and even though its 250 bucks, that doesnt seem that much.

The ps3 is a great system and when the price cut comes, it will move lots of units.

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The PS3 has years and years of growth ahead of it as its price continues to decline.

It's just saddening to see such short-sighted mentalities. I guess I can't expect everybody to not have a shallow way of thinking. That's what led to the demise of GM and Ford. While Toyota had a long-term perspective, they didn't, and now they're paying the price.

The PS3, through its first two years and at a higher price, has outsold the X360 in its first two years.

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The PS3 has years and years of growth ahead of it as its price continues to decline.

It's just saddening to see such short-sighted mentalities. I guess I can't expect everybody to not have a shallow way of thinking. That's what led to the demise of GM and Ford. While Toyota had a long-term perspective, they didn't, and now they're paying the price.

The PS3, through its first two years and at a higher price, has outsold the X360 in its first two years.

The Wall Street Journal supports ignorance and deceit!!! :(

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This article is really irrelevant. There are plenty of PS3's already installed to keep the console afloat until the next price drop. The 360 did the same thing until the price dropped, it held steady and then sales boomed when the prices began dropping. When I can get online on COD W@W and there are 140k people online playing that game alone, the PS3 is not in dire straits. It'll be fine, just like everything else. Price drives consumerism. When the price drops, consumers go up. Some love their 360, some love the PS3. The PS3 hasn't dropped enough for some people to put it in their budget yet, the 360 has. That's the difference.

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i have a PS3 and a Wii and my best friend has a 360. so i play it on the regular. All i can say is its just a matter of preference. he likes the PS3 and i think the 360 is ok. My issue with the 360 is i dont like the feel of the controller. His issue with the PS3 is all the exclusive games he likes are on 360. My issue with the 360 is the whole having to pay for online access and the points (getting cards and stuff bites). his issue with the PS3 is you cant play music off your harddrive while you are in a game. That is about it. its a toss up.

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i have a PS3 and a Wii and my best friend has a 360. so i play it on the regular. All i can say is its just a matter of preference. he likes the PS3 and i think the 360 is ok. My issue with the 360 is i dont like the feel of the controller. His issue with the PS3 is all the exclusive games he likes are on 360. My issue with the 360 is the whole having to pay for online access and the points (getting cards and stuff bites). his issue with the PS3 is you cant play music off your harddrive while you are in a game. That is about it. its a toss up.

He probably hasn't played many exclusive PS3 games, if that's what he thinks. There have been several people on here who used to defend the X360 against my arguments, and now they're pro-PS3 after they gave it a try.

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He probably hasn't played many exclusive PS3 games, if that's what he thinks. There have been several people on here who used to defend the X360 against my arguments, and now they're pro-PS3 after they gave it a try.

I'm Pro XBOX Live. I don't mind paying about $4 a month for XBOX Live because my opinion is that it is better than PSN. The only games I play on PS3 are exclusives.

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I'm Pro XBOX Live. I don't mind paying about $4 a month for XBOX Live because my opinion is that it is better than PSN. The only games I play on PS3 are exclusives.

same here. my ps3 is a great multimedia device. i play blu rays, PIRATED VIDEO IS ILLEGAL music and videos from my computer, upscale my regular dvds through hdmi, etc, but when it comes to games, unless it's exclusive to ps3 (or single player, i'll play some single player games on the ps3) then i play on xbox 360 only for live.

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I'm Pro XBOX Live. I don't mind paying about $4 a month for XBOX Live because my opinion is that it is better than PSN. The only games I play on PS3 are exclusives.

Microsoft used to make Live for Windows fee-based too... until it saw there aren't enough gullible people to pay. Now it's free.

Microsoft could make Live free, but there are too many gullible people paying.

I say gullible because Microsoft is using P2P for you to play games. The same technology people use to illegally download/share music. You're paying so that you can connect to another X360 and play. You're also paying for the internet service to pay for that P2P service.

I have never paid to play online, nor will I ever start. It's like paying to use the entrance door to your apartment. You're already renting the apartment.

When you pay 60 dollars for a game, you can't enjoy it fully as you would on PS3, since you have to pay more to enjoy it fully.

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Microsoft used to make Live for Windows fee-based too... until it saw there aren't enough gullible people to pay. Now it's free.

Microsoft could make Live free, but there are too many gullible people paying.

I say gullible because Microsoft is using P2P for you to play games. The same technology people use to illegally download/share music. You're paying so that you can connect to another X360 and play. You're also paying for the internet service to pay for that P2P service.

I have never paid to play online, nor will I ever start. It's like paying to use the entrance door to your apartment. You're already renting the apartment.

When you pay 60 dollars for a game, you can't enjoy it fully as you would on PS3, since you have to pay more to enjoy it fully.

So, if Sony started charging would you quit playing console games online?

I'm sure Microsoft could stop charging if they wanted to but they won't. You call us that pay for Live gullible because we choose to pay for Live. Live is just a better online experience. It's more user friendly than PSN when it comes to getting into games with your friends. I was forced to use PSN for about a month wile my XBOX 360 was being replaced and it just wasn't as much fun. You play COD on PSN and half the people don't havea mic so there is no team work. PSN is good for a free online gaming service but Live is still better IMO. I guess I am just gullible but I don't find $4 a month to be a big deal.

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So, if Sony started charging would you quit playing console games online?

I'm sure Microsoft could stop charging if they wanted to but they won't. You call us that pay for Live gullible because we choose to pay for Live. Live is just a better online experience. It's more user friendly than PSN when it comes to getting into games with your friends. I was forced to use PSN for about a month wile my XBOX 360 was being replaced and it just wasn't as much fun. You play COD on PSN and half the people don't havea mic so there is no team work. PSN is good for a free online gaming service but Live is still better IMO. I guess I am just gullible but I don't find $4 a month to be a big deal.

1.) I would not pay to play if Sony went fee-based, but they won't go that route this generation. They're making and will make good revenue from PlayStation Home and the PlayStation Store (movies/TV shows/games/other paid content).

2.) How many people own or use mics doesn't have anything to do with paying for Live. That's not what you're paying for. You're paying to use a P2P network.

I have two mics, but rarely use them. I like to play my games in peace laying on the floor. I like to play my games subconsciously, with minimal thinking. My record in games, whether it's win percentage of K/D ratio, is just fine.

Even while playing with friends, I let them talk as I play with eyes half shut.

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1.) I would not pay to play if Sony went fee-based, but they won't go that route this generation. They're making and will make good revenue from PlayStation Home and the PlayStation Store (movies/TV shows/games/other paid content).

2.) How many people own or use mics doesn't have anything to do with paying for Live. That's not what you're paying for. You're paying to use a P2P network.

I have two mics, but rarely use them. I like to play my games in peace laying on the floor. I like to play my games subconsciously, with minimal thinking. My record in games, whether it's win percentage of K/D ratio, is just fine.

Even while playing with friends, I let them talk as I play with eyes half shut.

I never said people using mics had anything to do with paying for Live. It just makes the experience better when you have people that communicate during games that are more suited for teamwork. That is my preference. When I play sports games I don't use a mic because I don't care to carry on a conversation while playing. When I play COD I like to be able to inform my team where someone from the other team is if I need to. It's all preference. PSN isn't bad but XBOX Live just suits me better when it comes to online gaming experience.

I have met people on Live and we have a blast when we play together. It's all about having fun. The only people on my PSN friends list are people from Live that also have a PS3.

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i have a PS3 and a Wii and my best friend has a 360. so i play it on the regular. All i can say is its just a matter of preference. he likes the PS3 and i think the 360 is ok. My issue with the 360 is i dont like the feel of the controller. His issue with the PS3 is all the exclusive games he likes are on 360. My issue with the 360 is the whole having to pay for online access and the points (getting cards and stuff bites). his issue with the PS3 is you cant play music off your harddrive while you are in a game. That is about it. its a toss up.

There are some games like MLB '08: The Show where you can play music off your hard drive while playing the game.

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