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Technology Stocks : Sony Corp - Sony -- Ignore unavailable to you. Want to Upgrade?

To: Mike McFarland who wrote (60)	4/5/1999 6:56:00 AM
From: Neil H	Read Replies (1) \| Respond to of 497

From Forbes 4/5/99 issue Delusions of grandeur? Sony aims to zap Wintel with a gameplayer that has the power of a supercomputer. Killer sequel By Benjamin Fulford THE PlayStation took Sony from Nowheresville to Easy Street in the videogame business in just a few years. The prodigious little box has won a place in 50 million homes around the world, racking up more than a billion dollars in profit for Sony last year-more than the four major U.S. TV networks combined. Now comes Part 2. Sony hopes to parlay a new PlayStation-on-steroids into a central role in the digital home entertainment system of the future. Sony President Nobuyuki Idei hopes the new player, unveiled in Tokyo a few weeks ago and bound for the U.S. late next year, will evolve into a family of other intelligent products-digital TV sets, set-top boxes and new categories of consumer entertainment. PlayStation 2 (a sexier name could come later) is a roughly $400 hotbox that can crunch numbers as fast as a supercomputer, act as a DVD and music CD player and connect to the Internet. The muscle-bound "entertainment computer" will link up with PCs, TV sets, video cameras and myriad other digital devices. It will be able to serve as a mere word processor or a TV set-top box, video e-mail machine or cable modem. And, oh yeah, it will play video-games, too-both the 390 million copies shipped for the current PlayStation and a next generation with startling video effects. Realistic facial expressions, natural texture in hair, awesome 3-D scenes. Think A Bug's Life ( Jurassic Park is still out of reach). "We have designed it so there will be no limits on whatever marketing decisions are made for it," says Shinichi Okamoto, a vice president at Sony Computer Entertainment. Sony sees selling 20 million to 30 million units per year by 2001. At that scale Sony would be on a collision course with the home-computer business dominated by "Wintel"-Windows software from Microsoft and chips from Intel. Sony Chief Idei explicitly calls the player a threat to the Wintel forces. PlayStation and related efforts will be "the horse that pulls the Sony cart," says Ken Kutaragi, president of Sony Computer Entertainment, the game division. Some hurdles lie in the horse's path. Sony hasn't begun full-scale production, which could mean it will stumble over setbacks and delays. Rivals at Nintendo and Sega question whether enough new games will be ready for the launch in Japan this coming fall. Nintendo is working with Silicon Graphics to develop a new generation gameplayer by next year. Sega has a one-year lead in 128-bit players; its Dreamcast went on sale in Japan last Christmas and will hit the U.S. this fall. Still, Sony has world-class marketing might and technology behind it. It has forged a billion-dollar chip alliance with Toshiba to make the soul of the new machine. The graphics power comes from an "emotion engine" chip that crunches data 128 bits at a time, four times the power of "32-bit" systems such as the latest Apple Macintosh or Pentium PCs. It will run three to four times as fast as the speediest Pentium and spin out three-dimensional images at speeds rivaling the hottest motion picture industry workstations. And Sony has surprised its videogame rivals before. The original PlayStation came out of nowhere to race past both Nintendo and Sega. Kutaragi was one of the brains behind that success. A digital sound researcher, he saw huge game potential in the workstations he was using. In 1993 he persuaded a skeptical Sony board to let him set up a game subsidiary, even as it named a more senior executive to run it. PlayStation appeared late in 1994 and quickly grabbed over 60% of the world market for computer games. In the fourth quarter of 1998 it provided 16% of Sony's sales-and 44% of profits. It broadened the videogamer profile: More than 30% of PlayStation users are 30 or older; only 17% are grade-school students. By contrast, the bulk of Nintendo users are 6 to 13 years old. One key edge was an open design process that unleashed a creative outburst by the maniaku (maniacs) in the hundreds of small Japanese software companies that produce most of the world's computer games. Now more than 390 million units of PlayStation software have been sold, generating close to $20 billion total for Sony and other companies. Close to 3,000 titles are available for PlayStation, more than ten times the output for Nintendo 64, the number two machine. (Nintendo controls its software more tightly.) The bestseller, the role-playing game Final Fantasy 7, has sold more than 6 million copies. Look for more of the open-design approach as Sony pushes the new PlayStation into millions more homes. No truce with Wintel is in sight. Regards Neil