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To: Estephen who wrote (46021)	6/25/2000 7:40:00 PM
From: Estephen	Respond to of 93625

PlayStation II Blockbuster Unless Sony self-destructs, its grip on the game console business looks secure as it begins to roll out its phenomenal new PlayStation II device. With it Sony hopes to both increase market share and continue its dominance of the game business. More interesting is the fact that the machine also bends the rules for game consoles by acting as a multifunction device, thus impacting other market segments. Specifications. The machine is impressive. It utilizes a new 128-bit, 292 MHz specialty processor that has 32 megabytes of high-speed Rambus memory (3.2 gigabytes per second bus speed). The processor can perform 6.2 gigaflops of floating point operation and transform 66 million polygons a second as it renders 3-D images. It has a built-in DVD drive, a dedicated graphics synthesizer as well as a dedicated sound processor that can output 48 channels of 48 Khz DAT sound quality. There is a provision for a 3.5-inch hard disk subsystem as well as a provision for full networking. There are two controller ports as well as two USB ports and a 1394 high-speed port. One add-on called the Multi-tap Adapter allows the machine to run eight controllers and players at once. PlayStation II rolls out in the U.S. on October 26. The company will have one million units available on that date and will make two more million machines through March 31, 2001, according to its press announcement. It's backward-compatible with the PlayStation I, which has over 800 software titles already. Home Entertainment. Here are some interesting aspects to the unit. First of all, Sony (nyse: SNE) has made the device into a home DVD player (as well as home audio CD player). Selling for $299, this is about the price you would normally pay for a stand-alone DVD player. The sales pitch is obvious: "Why buy a DVD player when you can have a PlayStation II for the same price and get DVD for free!" Makers of DVD-only players are quickly going to have to lower their prices to $199 or even $150 because game consoles tend to drop in price as production ramps up. The PlayStation II may actually impact manufacturers of DVD players more than its normal competitors Sega and Nintendo (adr: NTDOY) since those two have already been affected. One hope for conventional DVD makers is to add new features to their players (see "Interactivity Drives DVD Sales") but this may come too late. Computer. There is also some evidence that Sony will enter the computer side of the business with this machine. Adding a keyboard and mouse to this machine is easy and there has been a lot of talk that Sony intends to turn this into a general-purpose computer. It's ready for a hard disk already and its not difficult to add networking. Sony hopes to use it to move into fee-based online gaming, which has become increasingly popular with computer users. (See "Microsoft's Game Plan.") Downside Risks. Sony seems overly concerned with emulators such as the Connectix and Bleem! products which allow PlayStation game titles to run on Macs and Windows machines. (See "Doomed.") This may expose their rather heavy-handed developer policies which preclude most developers from cross-developing titles for other platforms. And Sony's recent court losses in its lawsuit against Connectix may actually give the green light for Sega and Nintendo to develop emulators for their individual machines. The marketing fear is that if, say, Sega could play both Dreamcast and PlayStation games, then people would flock to that console for its versatility. This would undermine the Sony marketing strategy. On the computer side of the equation the risk is more complex. Sony has a marketing group that has consistently botched attempts to penetrate mainstream computing despite an array of quality products. This goes back to the days of 8-bit computing when Sony failed miserably. More recently the company has received some attention for its VAIO line of computers and laptops after a rocky start. I recall the initial VAIO rollout of its desktop line some years back. Sony, at the time, did not give the mainstream computer press any machines to even review since it felt that the line of machines was for the general public and the new buyer. So they reckoned that it was a waste of time and, in fact, thought it would be a disadvantage to be mixed in with the Dell Computer (nasdaq: DELL)-IBM (nyse: IBM)-Hewlett-Packard (nyse: HWP)-Gateway (nyse: GTW) crowd. The company wanted to stand alone as a paragon of uniqueness. Of course the public wanted computers that the "experts" used and Sony appeared to be ignored by the experts. Sales were horrible. Sony's computer side of the business is still mediocre and indications are that many of these same poorly performing executives are getting more involved with the PlayStation II. But Sony has so much momentum as a game console that it may take years of bad decisions to self-destruct. It achieved most of its lead thanks to superior PR and superb in-house promotional efforts at both Sony Computer Entertainment America and its game division, 989 Studios. I have been very impressed with the doggedness of these operations. And when compared to the rather mediocre PR efforts of both Nintendo and Sega, you can see why those two brands continue to fade. For example, while I only occasionally write about this market segment, Sony's game people have always flooded me with product. Sega, on the other hand, is anything but aggressive. For example, it sent reviewers an early version of the Dreamcast over a year ago, but it was the Japanese version that would not play American titles due to location-specific codes built into the machine. They never followed up with a real machine leaving a lot of people with this odd piece of expensive equipment that was nothing more than decoration. Right now, only the X-box from Microsoft (nasdaq: MSFT) has a prayer in this market, but Microsoft has other issues to worry about. Sega and Nintendo appear finished. forbes.com