Ballmer and Kutaragi "don't matter," says Business 2.0
by Christopher Grant 
{ Jun 22nd 2006 at 1:28PM }
In addition to running a list of the top-50 people who do matter (including Blizzard's Mike Morhaime), Business 2.0 compiled its counterpart as well: a list of "10 people who don't matter" in business.Included in this dubious roundup are both Microsoft CEO Steve (FrankenSteve) Ballmer and Sony Computer Entertainment President Ken (what'd he say?) Kutaragi. While Ballmer's role at Microsoft clearly affects the relatively isolated Xbox group, Kutaragi's role at SCE is much more entangled. Business 2.0's criticisms of Kutaragi are, therefore, rather pointed:
"Remember the Betamax debacle? Sony seems to have forgotten all about it. Under Kutaragi, who is the power behind Sony's PlayStation videogame consoles, the company is launching another format war with its Blu-Ray high-definition videodisc, the successor to the venerable DVD. Unfortunately, the PlayStation 3, which was supposed to put Blu-Ray into millions of living rooms, is months late and hundreds of dollars more expensive than competing consoles from Microsoft and Nintendo - largely because it includes one-of-a-kind technologies like Blu-Ray. The delays and cost overruns are likely to make both the PS3 and Blu-Ray nonstarters."
Ouch! So Sony gets rapped on their knuckles, Microsoft gets detention, and Nintendo ... well, looks like Satoru Iwata and co. managed to go unnoticed, like the shy, likable kid who sat at the back of the classroom.
Reader Comments (Page 1 of 1)
Zacky V @ Jun 22nd 2006 1:40PM
lol when ever i see steve ballmer all i think of is....DEVELOPERS DEVELOPERS DEVELOPERS!!
Jeff @ Jun 22nd 2006 1:41PM
Like everyone else, Business 2.0 seems to be mixing messages on the PS3.
I don't know how many times it needs to be said that the delay only affects Japan, where the PS3 was initially pegged for Spring. It was always going to be a Fall launch in the US. So, talking about the delay (and the price, for that matter) and then saying it gives Microsoft a leg up in the same sentence just doesn't follow - because MS is doing absolutely nothing in Japan, the only country where a delay exists.
Now, if you want to talk about the US, you can still talk about price, but you take the delay out of it. And price alone has never been enough to sell one system over another. You can still debate whether $499/$599 is too much, but you really can't make the argument that cheaper systems always sell better. Otherwise, we'd all be playing Dreamcasts right now instead of PS2's and Xboxes.
So really, their criticisms - as they have made them - are invalid. That doesn't mean the PS3 is immune to *any* criticism, just that their particular criticisms are about as well thought-out as an average Nintendo fanboy comment on Joystiq. You can criticize the PS3 for its inclusion of Blu-Ray in the first place, and you can criticize its price in absolute terms, but you can't make the delay argument when talking about North America and you can't argue that cheaper systems sell better.
epobirs @ Jun 22nd 2006 1:44PM
OTOH, if PS# and Blu-ray are great successes, Kutaragi becomes the consumer electronics hero of the decade under whose leadership $Billions in profits are raked it.
Bit early to call that one, guys. You should save calling someone a failure for when they've actually failed.
As for Ballmer, if he was down on the whole console business, there would be no Xbox 360. Having that much sway over a major market entry from a company of Microsoft's size seems like something that cannot be casually dismissed.
Eagle @ Jun 22nd 2006 1:46PM
I don't lend much credibiity to an author who acts as if he EXPECTED a PS3 launch in the spring. He must be clueless, or just plain stupid...
And if BluRay is such a poor decision, why has Samsung claimed "incredible" demand for their coming-soon BlueRay player? This is supposed to be "Business 2.0," but they don't have an ounce of business sense.
EvoG @ Jun 22nd 2006 1:47PM
The delay affects product volume. Whereas if it shipped in Spring, Sony would only have to worry about Japan, US and Europe in the Fall, they now have to spread out their shippments worldwide all at the SAME time. They can't magically make more units in such compressed time, so the delay absolutely matters when it comes to sell-through. Look what happend to the 360 with shortages.
epobirs @ Jun 22nd 2006 1:48PM
Not so, Jeff. They'd previously comitted to a 2005 launch for Blu-ray and Spring 2006 for the PS3. The ongoing delays of Blu-ray would have pushed back the PS3 if it had been otherwise ready but it wasn't.
Of the two, the Blu-ray delays are much more of an issue since it has been Real Soon Now for far longer while the PS3 has only had one major delay from the public perception. And even that is only among those who follow the industry news.
martin @ Jun 22nd 2006 1:50PM
I called Lady Cleo and she told me that Sony was in ruins in a few months and Nintendo buys out all their developers. Real sword action in God of War 2.5!!!
existonfile @ Jun 22nd 2006 1:55PM
Jeff, what you need to remember though is that the delay WILL effect America because of supply issues. Having a staggered launch would have alleviated some of the shortage pains that Sony is sure to face come this fall when they try to split the 4-6 million units between 3 major territories. My belief is that Microsoft should have staggered the launch of the 360 with America first and Japan coming later. Making the 360 a *little* bit easier to find last holiday season, and not negatively affecting the japanese market since their principal game (DOA4) was not even ready for launch there. Global launches are a messy thing and with all the next gen consoles being region free, a staggered launch doesn't hurt early adopters from importing their console of choice as soon as it drops in another region (case in point, DS Lite).
Todd @ Jun 22nd 2006 2:00PM
"you can't argue that cheaper systems sell better." I beg to differ Jeff. Are you telling me that more people bought a PS2 when it was 300 dollers versus when it was 200? I know you ment among different systems, but I submit a different way of thinking. Price has nothing to do with something becoming popular or most wanted, but has everything to do with sales.
Robotic House Plant @ Jun 22nd 2006 2:03PM
I don't understand how Sony could possibly win, when there's two competing formats to confuse consumers. Toshiba and Sony really should have concentrated on standardizing the format together. Had that happened, I think Sony would have been in a much better position.
That you have some movies in one format and some movies in another format, really sucks for the consumer.
VerdigriS @ Jun 22nd 2006 2:13PM
At #2...
I wouldn't mind playing the Dreamcast over the PS2 or the XBOX, as it was clearly a better system, for a cheaper price.
Online out of the box, web browser, interactive storage, plus that little game called Phantasy Star Online... oh the days of my youth wasted because of that game... :(
Kinda makes you wonder if the 32x, Sega CD, and Saturn had never bombed, would the Dreamcast have been a success? It was the first Sega console I purchased, so I guess I didn't have a bias... and I've got Nintendo running though my veins....
ck @ Jun 22nd 2006 2:14PM
The article itself is a contradiction, really. I mean if these people don't really matter, then why exactly are people writing about them in the first place?
Kutaragi and Ballmer still matter, because this next generation has still yet to pan out. And you can't say that even if Sony or MS "fails" this gen, that they don't matter. That will have a SERIOUS impact on the games industry. So for Business 2.0 to cry wolf at such an early stage like this is outrageous. Try waiting two more years before articles like that get published.
Jason W @ Jun 22nd 2006 2:22PM
Its an interesting take on the whole BluRay and HDDVD thing. After investing in a nice upconverter and surround system I must say now, I dont care for either new format. My tv is only a 42 inch but it sits almost 12 feet from my sofa. The picture difference is not even apparent at that distance.
Now Sony's gamble could make or break that company and I feel it is more important, to Sony, than the video game division of MS. I still think MS is going to win this round, but who am I to make a prediction so early.
Arex @ Jun 22nd 2006 2:46PM
While the higher than expected price for the PS3, and the delay of the Japanese launch certainly don't help Sony, to declare both the PS3 and Blu-Ray likely "non-starters" is more than a little bit premature. And the comparison between Betamax and Blu-Ray at this stage in the game is just silly.
Everyone knows the PS3 is going to sell out during the first couple of months of its release, despite its ridiculous price tag. And even though Sony will likely lose signficant market share vs. the PS2, it's still virtually guaranteed to sell at least a couple million units during the first year or two of its life. While that in and of itself is not going to determine the victor in the Blu-Ray vs. HD-DVD war, that number of Blu-Ray players out in the wild is nothing to sneeze at.
Azrael @ Jun 22nd 2006 3:00PM
oh god! please dont turn joystiq into another slashdot, Nintendo fan boyism has no place in gaming journalism ok?
Nintendo was not on either list, good or bad, he is no "likable kid who didnt got noticed" It simply was _ignored_ and therefore it shouldnt have been mentioned in this article at all period.
Business 2.0 list is dubious at best, Ballmer and Kutaragi in the bad "doesnt matter" list? last year maybe, this year with Vista and PS3 coming months away. I dont think so!
Zacky V @ Jun 22nd 2006 3:35PM
Ok I found it on youtube so I just had to post it on here
http://www.youtube.com/watch?v=KMU0tzLwhbE
RazorElite @ Jun 22nd 2006 3:44PM
The article does have a point. Sony is hoping to get Blu-ray players into as many households as possible but yet their primary method of doing that is still outrageously expensive for the average consumer. Early adopters usually have money, and many will probably just pick up a 'normal' HD-DVD or Blu-ray player at the higher price (well Blu-ray at the higher price) anyway because they will most likely be higher quality players than the PS3. Just like it was with DVD players and the PS2 back in the day. So how are you going to get the PS3 with Blu-ray into the average consumer's house when the average consumer won't pay that much for a game console anyway. So all they'd be doing is getting more early adopters. And early adopters don't determine the winner.
Scoob101 @ Jun 22nd 2006 3:50PM
Whilst the short term sales of either consoles isn`t going to define who wins the next round of the console war, I have to say that microsoft must be reasonably satisfied with their head start. If the rumours currently circulating about an xbox price cut coinciding with the PS3 launch come true, then Sony should be worried.
I seriously doubt that manufacturing costs have come down enough to warrant such a price drop on their own, but we all know microsoft can afford it regardless.
I forsee Xbox making siginificant gains over PS3 in US and Europe, with PS3 winning hands down in Japan and Asia.
Siraris @ Jun 22nd 2006 4:00PM
It's quite clear what is going on here, even though most people don't see it. Sony could have survived for another year on the PS2 alone, had the 360 not been released last fall. There are numerous games coming out for the PS2 that will sell over 1 million units. GoW 2, Okami, FF12, Sony isn't hurting for titles. Unfortunately, Microsoft jumped the gun and now people are left fragmented in the market. If we waited a year, I bet the PS3 could have been sold for the same price as the 360 is now. Blu-Ray would have ramped up production, Cell yields would be higher and being produced at 65nm, and everything would be dandy.
Sony cannot just let a year go by and let Microsoft (and Nintendo) have 1-2 years lead on them. They need to show their presence which is what they are doing this fall. They will release the console, and they will sell through their initial quantities. They will then re-evaluate the price next year, if it is really hurting them, and most likely they can lower it substantially.
Raikage @ Jun 22nd 2006 4:34PM
Well if Myiamoto dosen't matter then who in the industry does? The Regginatior, Hideo Kojima, Cliffy B, that other skinny guy who does shooters, Peter Molyneux, Will Wright...come on you can't say that these people don't matter...or even get noticed. Sure I don't like sony much but Kutaragi did make(more or less) the Playstation...that's got to count for something right?
P.S. Zachy V...that video scared me for life...man that guy is crazy...
The Raikage
Zacky V @ Jun 22nd 2006 4:58PM
Yeah when I first saw that I was like "Steve Ballmer is like the coolest old guy", could you imagine him on Mad Money with Jim Cramer lol
http://www.youtube.com/watch?v=-aqcTR-lRsE
C. Grant @ Jun 22nd 2006 5:15PM
Azrael: Yeah, don't think you have to worry about us being Nintendo fanboys. We're currently being yelled at by that very demographic a couple posts up.
Ummm, when their two major competitors get scolded by a major publication, that doesn't involve them at all? And I didn't mention that it was positive, I said they went "unnoticed." You're trying to twist around what I wrote to read "NINTENDO FTW" but it ain't working. Find how many Wii writeups I did at E3 and I think you'll reevaluate your statement.
And Vista/PS3 coming months away means they are exempt from criticism? Vista is *several* years late and is shipping with a greatly reduced feature set. PS3 might not be *late* in NA, but it's certainly late in Japan and, as other thoughtful comments have noted, the coupled manufacturing strains are going to make Xbox 360 shortages look like a surplus. Sony fanboys might not care, but Sony shareholders do.
Agree with Epobirs, that the final line calling PS3 and Blu-ray "nonstarters" is over the line. While we're harsh (though I don't think exceedingly) on Sony, underestimating them is a serious error. This is still their game to lose and, until they start losing it, it's premature to dismiss them outright.
Ianc02 @ Jun 22nd 2006 5:45PM
Was it not Krazy Ken that designed the Snes sound chip? To say he doesn't matter is ridiculous. Miyamoto gave birth to gaming in general(waits for flame), and Kutaragi has seen video games through their adolescence. What would have happened by 11/2007, we will see.
Brad Lee @ Jun 22nd 2006 6:31PM
I think most of you are missing the point. The point of the article is that Business 2.0 thinks that from an economical view as a whole, Ken Kutaragi and Steve Ballmer don't matter. I think all of you are looking at that statement through gamers' eyes only. And as gamers of course we think both of these people matter. But, gaming is still a rather small market, and doesn't matter as much from a worldwide economical viewpoint.
I think his critique of Sony is perfectly valid, even if it is exaggerated. I think Sony believes that PS3 will win them the format war, and I think that is just blind arrogance. A few million PS3s around the world by the end of the year is not going to win them the format war, especially when HDDVD players cost about the same as a PS3. And I doubt non gamers will even think about buying the PS3 as a standalone Bluray player. I could be mistaken, but I doubt it. The PS3 will only help Sony's format war in the long run, when they are up to 50mil+ units sold worldwide. But, even good PSP sales are not helping the PSP movie format. This just proves that people buy video game systems for the games, not the movies. Hence why I believe that even if PS3 sells like crazy, it won't necessarily help them in their format war.
As far as who wins the format war, well its anybody's guess, but I personally believe there will be an extremely slow adoption rate for both formats, because I doubt too many consumers will really see the benefits of upgrading from DVD to HDDVD or BluRay. Most consumers still don't have an HDTV, and even if they do, they could just buy a good DVD player with upscaling for good quality at half the price. Until the prices drop significantly for both players, I don't see either format doing very well.
Donald @ Jun 22nd 2006 7:48PM
Steve Ballmer had no comment except to say that he is going to "fucking kill" Business 2.0.
Source: Uncyclopedia
Arex @ Jun 22nd 2006 7:54PM
"A few million PS3s around the world by the end of the year is not going to win them the format war, especially when HDDVD players cost about the same as a PS3. And I doubt non gamers will even think about buying the PS3 as a standalone Bluray player. I could be mistaken, but I doubt it. The PS3 will only help Sony's format war in the long run, when they are up to 50mil+ units sold worldwide. But, even good PSP sales are not helping the PSP movie format. This just proves that people buy video game systems for the games, not the movies. Hence why I believe that even if PS3 sells like crazy, it won't necessarily help them in their format war."
But even a few million Blu-Ray capable PS3s in consumers' hands within the first year WILL help Sony get an early lead in the format war. As with any new format, there's the chicken and egg problem: people don't want to plunk down on a new format unless there's good support for the format, but studios don't want to publish extensively on the format unless there's a decently sized installed user base.
Sneaking Blu-Ray players into people's homes with the PS3 avoids that problem. Although people buy gaming systems for the games, first and foremost, the demographic that is going to spend $500-600 for a PS3 is probably the same demographic that will use the PS3's Blu-Ray capabilities and purchase Blu-Ray movies. Having a larger initial installed user base (even if it's only through PS3 sales) makes the format more desirable for publishers to release movies on. And more movies makes the format more desirable for consumers.
The PSP/UMD is a poor analogy because UMD is a closed format, playable only on the PSP, so there's zero potential for growth of the format beyond the number of PSPs sold.
bobeotm @ Jun 23rd 2006 1:07AM
I don't know why Journalists and Analysts bother making articles predicting the success or failure of a console before its releastes. All the end up doing is backpeddling in the even they are proven false. So why bother, if you aren't going to own up to having been wrong if that so happens?
Most predictions this early on are often wrong. Look at the Dreamcast, many predicted it to succeed before it was launched, it did well for a short period and then died a humiliating and slow death (only expedited by Sega throwing in the towel). Being so gung-ho about what you think will happen without product in hand is only setting onself up for an embarrasment.
And btw, I dont think Sony believing PS3 will win them the format war is blind arrogance. Look at it this way. The PS3 gaurantees millions of potential Blu-Ray buyers. HDDVD doesn't have a device that can gaurantee that in any respect not even the XBOX360 (since it is not included iternally or bundled). Also in concert with the PC side of things (Sony Viao's, Dells and, Apple computers) they have a fully fleshed out both sides of the equation, entertainment, and utility. HD-DVD has no shoe-in like the PS3 to help it, nor does it have as hefty the Electronics support (being supported by much smaller tech companies). Its difficult to say that calling PS3 a key to winning the format war arrogant, its pretty accurate whether we like it or not.
scoob101 @ Jun 23rd 2006 5:44AM
Historically, games consoles make poor video players.
The Xbox 360 (whilst being a great games console) is a terrible dvd player. I can see Sony`s offering being similarly poor in this regard. Consoles, being multi purpose in nature just don`t lend themselves well to this task compared to stand-alone players/recorders.
The vast majority of consumers, when they want a video player, go out and buy a standalone machine. I don`t see sony changing that with the PS3.
Brad Lee @ Jun 24th 2006 2:17AM
bobeotm "Its difficult to say that calling PS3 a key to winning the format war arrogant, its pretty accurate whether we like it or not."
Well obviously I beg to differ, and it has absolutely nothing to do with whether I like it or not. I really don't give a rat's ass which format wins in the end because I don't plan on purchasing either one of them anytime within the near future. I plan on waiting and watching MS and Sony butt heads until either format proves itself and is at an affordable price (to me, affordable would be under $200, and that is probably quite a ways off). Even then I may not switch to BR or HDDVD. Until I see an obvious benefit to either player, I'm sticking to DVD.
I think you are assuming way too much here. For starters, you're assuming PS3s will be plentiful this holiday season. I'm not so optomistic. X360s were in extremely short supply last year, and MS didn't have to worry about BluRay or Cell. Sony has two new technologies and has the challenge of trying to produce these two new technologies in mass quantities all over the world. So I expect a huge shortage of PS3s. I'd be surprised if Sony pulled off 1 mil units in each major territory (despite their optomistic 6 mil worldwide presumption), and that is not nearly enough to make a major difference in the format war. Not until a huge amount of PS3s are sold will it help Sony win the format war, and by then the format war may already be decided. You are also assuming that PS3 will be a good BluRay player, and judging how the PS2 was a crappy DVD player from the getgo (my friend's PS2, which he got a few months after launch, doesn't even play DVDs at all from certain companies), I think it's quite likely the PS3 will be similarly problematic, especially at launch. Also, you assume that all those that buy a PS3 will actually feel at all compelled to purchase BR movies. I don't know about you, but as a gamer I play video games probably ten times more than I watch movies. I'm not saying gamers don't watch movies, but you also have to understand that people may not even see that big of a change between BR and DVD, especially if they don't already own an HDTV. So, if a gamer with a PS3 wants a new movie that is coming out, will they buy it on BR or will they stick to DVD which will likely cost less? And finally, you also assume that there will be enough BR titles available to sway consumers. So far, the library is extremely limited, and PS3 owners won't likely buy BR movies at all unless there is a movie they actually WANT on BR.
I think the so-called importance of BluRay on PS3 is highly overrated, especially since it jacked the price $100-$200 more than the 360 (depending on how you look at it).
And one more thing. I understand the difference between UMD and BR. However, if UMD proves one thing, it is that people buy video games systems for exactly one thing, the video games. The movie playback is merely a secondary option that some people will use and some will not. And if only a small amount of PS3 owners even bother buying BR movies at all, the PS3's contribution to the format war will be minimal indeed.
Now, if PS3 actually launched in Spring, all this would be a bit of a different story, because they would have already developed a strong base and have even more units by the holiday. Also, BR would have beaten HDDVD to the punch, and would have been the only choice at the time for early adopters. However, it didn't, and with the negative reception of the current BluRay player, along with Sony delaying their own BluRay player must make one wonder about the reliability of the technology.