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Sony Strikes Back (Page 3 of 5)
- March 28, 2007 10:00 AM PST
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GP: Looking back, is there anything you regret about the PS3? Anything you'd change?
TRETTON: No question about it: [the delayed PS3 launches]. We're a big believer of under-promising and over-delivering. But we're a technology-driven company, so we don't take the safe road and the easy off-the-shelf solution. When you stick your neck out like that, you have aspirations that are difficult to deliver on.
The biggest frustration was not delivering the PS3 in spring of 2006. That would have taken a near-miracle and we weren't able to pull it off. Another challenge for the entire industry is to do a world-wide simultaneous launch. But the manufacturing ramp-up is so difficult that no company has ever pulled it off, including us. I would have rather said, "Coming in 2006" so that if we got it out on December 31st, we'd have delivered on the promise. And [if Sony had not promised a worldwide launch we could have been] given accolades for getting Japan and North America out at the same time. But if you say "worldwide" and you only get two of the three regions out, then you left yourself open. It's like making a Super Bowl prediction at the beginning of the season -- you're setting yourself up to fail. But that kind of bravado and confidence is what makes leaders.
Clearly we had less units than we wanted at launch, but we did catch up by the end of the year. But that's a lot of heavy lifting that we didn't necessarily need to do. I don't think the consumers held us too responsible for those early shortages, but we took our lumps from the press and those are lumps that I think were unnecessary, and I would have liked to have done it differently.
GP: What are your thoughts about the PS3's price? Is it too high?
Heavenly Sword
TRETTON: A lot of the technology that we offer consumers they may not realize they need yet. But to show them the kind of games that we'll ultimately show them, then they need this technology: the Blu-ray drive, the 60 gig hard drive. $599 is a lot of money, but it's the world's worst-kept secret that we're selling it at a significant investment from Sony. The consumer is investing for $599, but we're investing along with them. We're hoping that investment will return profitability to us over time as we manufacture more and more units.
For $599, the consumer will see that paid off in time in spades. You could get a machine that costs less money, but if you're not happy with the games or if the system becomes obsolete in less than five years, you won't think about how much you saved but how much you wasted. Those PlayStations and PlayStation 2s paid off for ten years, and so will the PS3. I'll stack our $599 price tag and our technology against our competition all day long. In the end, consumers will find they got a great deal of value. I won't deny that $599 is a lot of money. It's clearly an investment. I won't tell you I've got $599 in my back pocket. But I'm also a big believer in "you get what you pay for."
GP: If it's three, four, five years, will we ever see the PS3 any lower than its current price point?
TRETTON: There's different ways to go there. People tend to [compare historic price drops with the PS1 and PS2] and assume that's what will happen with the PS3. You can look at something like the iPod: the iPod has evolved, but the price hasn't necessarily come down. Do you really need a $99 dollar iPod to get people to buy one? People will pay more, but now their expectation is a 20, 40, 80 gig hard drive.
There's different ways to go, and there are different consumers out there. For PS3 I think you'll kind of see a dual-layer approach: there's something that drives the latest-and-greatest technology, and a value offering for those with more limited budgets. More than likely it's a multi-SKU offering, depending on their level of interest. Given the complex technology and the multimedia capabilities, that's a natural road for the PS3 to take.
Lair
GP: In five, ten years would we see a more premium version of PS3, as Apple might do?
TRETTON: It's something that's in consideration, but again, it's very early on in the PS3's life cycle. We believe that every consumer should have a hard drive, and they absolutely have to have 50 GB Blu-ray drives. For the gamer, Blu-ray video may not be desired today, but we went through the same thing with the PS2. People didn't buy it for the DVD player, but in many instances the PS2 was the first DVD player they ever owned. A lot of them still use it as their DVD player today. I don't think Blu-ray is the reason why gamers would buy the PS3, but I will guarantee you that every consumer will see value in that over time. You may not own a 1080p television today, but how many of us have HD TVs now when we didn't even know what it was three years ago? Technology moves quickly, and people tend to live in the here and the now.
With including the Blu-ray in the PS3, we're taking some lumps in the short term so we can say "I told you so" in the long term.
GP: Are the PS3 sales what Sony has expected to see?
TRETTON: Absolutely. That's another thing -- perspective. We've talked about the tremendous numbers on past PlayStation systems. Considering those lofty sales heights, our initial PS3 numbers hit one million faster than the PS2. So I would love to fast-forward to the end of the story. But critics are microscopically looking at the first sixty or eighty days. In reality, the fact that people were paying thousands of dollars for the PS3 on eBay supports the message that they see the value in it and they want it.
We're getting a lot of inventory out there, and some good sell-through numbers. We're very pleased with how things are going so far.
GP: So this is exactly what you expected to see? Fast-forwarding a few years from now, these recent PS3 numbers are absolutely in keeping with a monster hit system?
It's very much according to plan. The next stage is to get production cranking and get millions of units to Europe and Japan. Ultimately we want to cost-reduce the system to the point where it's profitable, and ideally to the point where we could enhance the technology at the same price, or reduce the price.
That's the goal, to build that large install base that keeps developers excited. Now that the technology and tools are out the door, we want to go into high gear. That's what we hope to do this year: get the production up to speed, get the greatest games, and evolve the online experience. We still have one launch to go -- Europe -- so really we kick into high gear in April, the start of our fiscal year. That's when we get past the launch stage and to the execution stage.
GP: Who's buying a PS3 right now? Early adopters?
TRETTON: We're getting new consumers. You've got a lot of young families who are shifting from hitting the nightclubs to marriage and more time at home, playing games on Friday nights. Or they've got young kids. We continue to expand into a wider and wider demographic. It's more and more becoming a form of family entertainment.
GP: Now that consumers have changed so much, is it easier to sell systems?
TRETTON: Definitely easier. With PlayStation 2, the biggest challenge is just to manufacture it. We just upped our PS2 production numbers another couple of million. Sometimes you can doubt yourself. We said, "yeah we're doing great with the PS2, but new competitive systems are coming out." But[outside of next-gen, a lot of other consumers think that, right now, PlayStation 2 is what works for them.
