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Summary:

In an announcement that shouldn’t surprise regular GigaOM readers in the slightest (warning signs emerged as far back as last February, and reached crescendo pitch in November and December), Sony Computer Entertainment Inc. just announced that CEO Ken Kutaragi, the “father of the Playstation”, will leave […]

In an announcement that shouldn’t surprise regular GigaOM readers in the slightest (warning signs emerged as far back as last February, and reached crescendo pitch in November and December), Sony Computer Entertainment Inc. just announced that CEO Ken Kutaragi, the “father of the Playstation”, will leave his post in June and become an “honorary chairman of SCEI”.

By most appearances, his new title will be an “emeritus” position in the sense attributed to Rupert Murdoch, when he showed a Newscorp exec the door: “The ‘e’ means you’ve been given the elbow and the ‘meritus’ means that you bloody deserve it!” Unsurprisingly, most analysts attribute the departure to the Playstation 3’s poor performance against the Wii, and worst blow of all, as compared to the Xbox 360.

Not entirely deserved, however, for despite the numerous missteps in its development, pricing, and marketing, the PS3 ultimately failed because Kutaragi succeeded with the PS2 so well. Though seven years old now, the Playstation 2 is still selling better than the Playstation 3; with a 116 million+ installed base, a massive library, and a list price under $100, there’s little incentive for Playstation fans to spend $600 upgrading. (Especially when quality backward compatibility was in doubt.)

So there’s tragic irony in Kutaragi’s departure. Having transformed videogaming into a truly massive entertainment medium, he seems to have assumed that the market he did so much to create would follow him to the next level.

As IDC analyst Billy Pidgeon put it to the AP, “Sony didn’t notice that their audience was dwindling and didn’t increase the base by playing to a wider demographic, and instead it played the old-school game of playing to the 18- to 32-year-old male early adopter.” But in those seven years, the young men who had eagerly snatched up the PS2 were now having kids of their own, making them ripe targets for a console that could appeal to their whole family. So rises the Wii– and so goes Kutaragi-san.

  1. “with a 116 million+ installed base, a massive library, and a list price under $100, there’s little incentive for Playstation fans to spend $600 upgrading.”

    cant believe they can make such a blunder. same with vista. why will anyone upgrade?

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  2. Or, his departure may have to do with his decision to incorporate the Cell processor and a Blu-ray drive into the PS3. Had he decided to go another way, the PS3 would have been much cheaper (for both Sony and its customers), would have shipped sooner, and would have been easier to develop for. And, as shown by the Xbox 360, the performance would have been just as good.

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  3. “My sentiments exactly”:

    “Howard Stringer, the Welsh-born chief executive of the Japanese company, heralded the PS3 as the key to his strategy for reviving Sony’s performance against its main rivals such as Microsoft and Apple.”

    Do I think the PS3 is the basis for even a successful product innovation, let alone a successful company transformation – NO!

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  4. I think that the PS3 is an awesome piece of work and I am surprised that Sony was not more patient. Fon was not an instant hit, our growth only seriously picked up in the last 90 days a year after our launch. Technology is not like movies that if you don´t have a hit the first week you are dead.

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  5. Sean Thompson Friday, April 27, 2007

    “Not entirely deserved, however, for despite the numerous missteps in its development, pricing, and marketing, the PS3 ultimately failed because Kutaragi succeeded with the PS2 so well.”

    By what logic do you deduce that the PS3 has failed? We’re only 6 months into a 5-6 year cycle so far too early to judge. It’s an awesome bit of equipment in my point of view. Yes Sony has made plenty of mistakes on the way to getting it out but technically it’s impressive. Would you judge Microsoft to be a failure as they’ve just released they made a $315 million loss for the quarter to March 31st in their E&D department? I don’t see the Wii as being in direct competition with the 360 or PS3 either, everyone I know has it as a second console.

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  6. I think that the truth lies somewhere in between Martin and Mark’s observations.

    The console business exists on hype and PR to some extent and Sony have been out-boxed by Nintendo on that score. By a knock-out.

    In an age in which content distribution is moving online, falling bandwidth prices, faster connectivity, triple-play, Sony were guilty of not skating where the puck’s going when they placed their bet on blu-ray.

    Fon is benefiting from Metcalfe’s Law, as many great and scalable companies do. Some recent deals have also helped fuel growth.

    Sony need to do some clever marketing. They should encourage trade-ins, perhaps bring out a stripped down PS3 for Christmas, unearth another generation-defining game franchise.

    And they need plenty of new blood. The old lot went stale years ago.

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  7. Paul McMahon Friday, April 27, 2007

    I think the media have been overly critical of Sony and the PS3 since day one. Although this announcement was widely expected i dont see it as doom and gloom for the PS3.

    People seem to forget that the Xbox 360 struggled during its launch and was consistently being outsold by the PS2 in every market worldwide. Now were seeing a shift in power as the 360 finally is producing high quality games with a massive PR and marketing strategy (The Gears Of War ad campaign was everywhere). The PS3 is only over a month old in europe and i I think the best is yet to come from Sony and i think the PS3 will take back its crown as the best selling console.

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  8. “the PS3 ultimately failed”

    How can you possibly say the PS3 has failed when it hasn’t been out long compared with the other two, and, as everyone knows, the price will fall sooner or later and then the PS3 will start selling in big numbers.

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  9. The reason the PS3 is considered a failure is simply because its too late to the game.

    this generation of consoles was always going to be slow because your not just buying a console you need the tv to make it worth you while. The xbox came out what seems an age ago and its now got a solid base and developers love it. Sonys developed a great piece of technology but they have simply over done themselves. they have released a product the development world isnt ready for.

    Saying the PS3 will come down to a reasonable price in the future is pointless because by then people will have bought a 360 or wii and buy the time developers are getting the benefits of the ps3’s hardware MS will simply release a new console.

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  10. The numbers speak for themselves and the ps3 has very few exclusive games. I can see the 360 and wii pushing out the PS3 unless a killer game title emerges. Check out some numbers below.

    http://nexgenwars.com/

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