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To: richard surckla who wrote (35571)	12/4/1999 11:41:00 PM
From: Don Green	Respond to of 93625

Richard> I thought... There you go again, you just can't keep your hand out of that cookie jar. Don

To: richard surckla who wrote (35571)	12/5/1999 7:18:00 AM
From: Stuart Steele	Respond to of 93625

Sony's PlayStation Legacy fool.com By Dave Marino-Nachison (TMF Braden) December 3, 1999 I've come to crave those fleeting, quiet moments after work before my roommate comes home, when I can lay my legs across the coffee table and drift into escapist fantasy courtesy of my Sony (NYSE: SNE) PlayStation and the hard-fighting teenage mercenaries of Final Fantasy VIII. But that's just one game geek's story; consider my roommate and his girlfriend, who surreptitiously rent Bugs Bunny games for long weekend afternoons of giggly fun -- there are worse things you could walk in on -- or my colleague who lets off her excess steam vicariously through the head-to-head grapplings of Bloody Roar's shape-shifting samurai. The lure of home electronic entertainment, considered a $20 billion worldwide market, has its hooks in everyone from detached fanboy teens to sports-mad thirty-somethings to conversation-starved partiers. Today, Japanese consumer products giant Sony put the PR stamp on its leadership position in the business with the announcement that worldwide PlayStation shipments had hit 70 million in five years. The geographic breakdown: 17 million to Japan, 26 million to North America, and 27 million in Europe. Sales have been slowing post-Dreamcast and in anticipation of the next system as well as Nintendo's in-the-works Dolphin. Still, the total for the first-generation PlayStation -- if sales don't taper off drastically when the company launches the PlayStation 2 next year -- could easily approach 100 million. The impact of the PlayStation on Sony's business has been incredible. For fiscal 1999 (ended March 31), the company reported a slowdown in nearly all of its business segments as Asian economies dulled. Games division strength in the U.S. and Europe were among the year's few bright spots for operating income -- and it showed on the income statement, the division accounting for nearly 20% of its sales and almost as much in operating income as the company overall showed in losses. Also telling has been the dedication of company capital: Sony plans to dedicate nearly one-fourth of its fiscal 2000 capital budget to development of the PlayStation 2 alone. Through fiscal 2001 Sony expects to lay out more than $1 billion to ensure that there'll be enough state-of-the-art moving parts -- including the poetically named "Emotion Engine" PlayStation 2 CPU -- to meet demand. What's most amazing to me, though, is how different things might have been had Nintendo and Sony not squabbled in 1992 over the makeup of a joint venture to develop a CD-based gaming product (which PlayStation is, as opposed to Nintendo's cartridge-based system) along the lines of the Super Nintendo. They parted ways, Nintendo going to work with Dutch electronics power Philips (NYSE: PHG) and Sony going off on its own in an attempt to take down Nintendo with a machine of its own. The PlayStation was born just three years later. What I have always found somewhat remarkable about the PlayStation's success is that it has been achieved without the help of a "star" virtual endorser. Sega has long called on -- and has come back to with the launch of its Dreamcast system -- the assistance of the elusive hedgehog Sonic, while Nintendo brought plumber Mario (who duked it out with Sonic in the early 1990s) to the silver screen and now bombards us with all 150-plus pocket monsters on a regular basis. As investors and shoppers have caught on over the last 10 years, the need for console makers to have a grinning, digital flagship persona standing behind their machine like a hostess at a car show has diminished significantly -- particularly as the game licensees themselves have become more proactive about marketing their wares. A rapid rise in the level of gaming technology has also made this possible -- after all, less than 10 years ago the system of choice was still the cute little Nintendo Entertainment Systems (NES), which bleeped and blooped and might, in retrospect, be the Mac Classic of home video gaming. Instead of attempting to ubiquitize a character or two in hopes of convincing users that a game was worthwhile, distinctions were made through an arms race in which bits replaced bombs. Certainly big-name video game characters are still around; they abound, in fact. But that they are so plentiful and powerful only cements a seeming redistribution of power toward the software companies and away from the console makers. Sony, though, has managed to rise to the top of a crowded pack in a relatively short time with smart marketing, good technology and design, great software, and the consumer focus that has made the company perhaps the world's most important company that makes items requiring electrical outlets. Though there's an awful lot going on at Sony, it's quite likely the game operation first and foremost that's helped the stock to more than a double this year.