The statistics are sexier than those of a Hollywood starlet's measured in centimeters. Since Sony launched its PlayStation video game player in December 1994, it's shipped more than 50 million consoles worldwide. The price tag in 1994 was \39,800; today it's \15,000 and falling, based on Sony's strategy of "giving away the razor to sell the blades," (i.e. software). That strategy's working: 10% of Sony's overall profits are now generated by this computer and the software it uses. The playstation is more than a phenomenon: it's an industry. By Sony's own estimates, the combined global sales of 3,000 video game titles and associated hardware is more than $15 billion. Sony reckons its share of that is $6 billion, and with the recent announcement of a super PlayStation 2 set to hit stores in 2000, even those lofty numbers could skyrocket. "All this in four and a half years makes it equal to the Internet in [terms of] growth," says Ken Kutaragi, group executive of Sony Computer Entertainment, the entity responsible for the PlayStation. "It's become the benchmark [for success] inside Sony." Kutaragi can be forgiven for boasting. It was he who conceived the PlayStation in 1991, after Nintendo suddenly reneged on a deal to work with Sony on a new CD-ROM-based game player he proposed to carry on from the best-selling Super Nintendo. "Nintendo wanted total control," is how Kutaragi explains the sudden reversal. But he had already gathered a group of engineers from across Sony to work on the new player. Rather that give up, he got his friend - Shigeo Maruyama, head of Sony Music - to help him present a proposal to Sony's chairman, Norio Ohga, that Sony should create its own game machine. In the face of stiff competition from the well-entrenched Nintendo and Sega game machines, Ohga wasn't convinced Kutaragi and Maruyama could make much of an impact. But he was deeply stung by Nintendo's slap on the face, so he gave the go-ahead anyway. Equally important, he allowed the would-be entrepreneurs a free hand to do what they could. Sony Computer Entertainment (SCE) was established in November 1992. It actively courted software houses and distributed their games; programmers also found CD-ROM an easier medium than game cartridges to work with. You know the rest of the story. Yet, could too much success be the PlayStation's undoing? Amidst a major corporate reorganization, Sony is suddenly pulling the free-ranging SCE back into the fold. Sony's move parallels how IBM gave a free hand to an independent business unit (IBU) back in 1980 to build one of those newfangled personal computers. The resulting IBM PC became a colossal hit and created an industry. So what did IBM do? It reigned the IBU back into its bureaucracy to regain control ... and look what happened. Similarly, SCE - a 50-50 joint venture between Sony Corp. and Sony Music - has enjoyed a good deal of autonomy out on the periphery. But under corporate restructuring, it's been divorced from the joint venture and is being reestablished as one of four new electronics divisions that will be directly under the eye of headquarters. Kutaragi hints this move could have been a problem if it had happened several years ago. But he says, "Sony is changing 180 degrees. Life in the old Sony cells is dying. We see it [SCE's new status] as a natural move." Now he's full of plans for PlayStation 2. Sony is investing $1 billion on new chips, including a 128-bit graphics engine that Sony is developing with Toshiba, to power the new console. Kutaragi claims the PlayStation 2 will deliver three times the power of a current 500MHz Pentium III PC. To get an idea of the coming graphics quality, Kutaragi says go and see Disney's Bug's Life. Yet despite these advances, the console will still be able to play current software - a smart move when you have a user base of over 50 million. "We've created the first stable global platform," he says. By comparison, he argues the PC is unstable because the industry is forever jacking up the speed, memory capacity, and complexity of the operating system, making older software and hardware obsolete. Read that paragraph again, then consider the PlayStation 2's Internet connectivity, potential to receive live broadcasts, and its easy-to-use Universal Serial Bus (USB) interface, especially in view of Sony's emerging HAvi (home audio visual interface) network standard. While Kutaragi downplays the possibility, it would be ironic if the PlayStation, and not the PC or smart TV, gets to be top dog in the battle for control of living rooms after 2000. John isn't playing around with that last remark. What do you think? Let him know at boyd@gol.com.

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