Joystiq

You showed Home interfacing through a cell phone. How expandable do you see Home becoming in the future?

Phil: There are a lot of very cool technologies that are going to be enabled for PlayStation 3. The demo with the Sony Ericsson phone and Phil in live-time updating his Home space with the web interface he used -- I think that's just a sneak peak of new ways that we can enhance the PlayStation world. And Home is the glue. It's the sticky part that will continue to evolve over time to make the whole PlayStation lifestyle statement.

It's safe to assume that Home will continue to evolve through its life cycle?

Phil: I think all of our products have continued to evolve. That's the wonderful thing about PSP today. Through our firmware updates, we've been able to turn on new features that people didn't even imagine. You probably weren't disappointed. You probably liked your PSP from day one ... but there's so many more things that we're doing to evolve the product. Same thing with PlayStation 3. There's so much horsepower in PlayStation 3, right? There's so many cool processing opportunities and the speed and the power and the storage and the internet connectivity and the Blu-ray player ... and there's so much more we can do because we have this hardware platform that can be expanded.

Why wasn't any PSP interactivity shown for Home?

Phil: Isn't it roadmapped?

John: Oh, it's absolutely roadmapped. It's certainly on the agenda. I think the point of the cell phone was just to show you can bring other products into play. But the PSP is certainly roadmapped at this point. Like Phil was saying, it's all about bringing together the PlayStation portfolio of products together and using them the right way with Home.


No hints you can offer about what could happen between PSP and Home?

John: Nope, nothing quite yet. I think they're still working through with the ramifications of using PSP and certain parts of the environment are. The point of what Phil [Harrison] was showing was to show that other products could be used within Home.

Phil: But being able to access leaderboards, or community, or find out which of your friends are in Home, or in-game via hotspot, I think is realistic. As far as timing? I think that there's more to come.

Why announce a PSP redesign now?

Phil: Well, it's an evolution of PSP. Our conversation with our customer from the very first day is that we're going to continue to evolve our products. I think that the evolution of the redesign really reinforces that. Adding more RAM to make game loading faster, adding video out, really opens up the whole proposition of UMD video content on PSP other than gameplay completely. Slimmer and lighter is cooler. Introducing new colors -- it's something our customers have been really excited about.

Yeah, I remember telling you that people have been wanting new colors for a really long time.

Phil: Sure, and other than just a skin. We think that this continues to evolve the value proposition. So, PSP for you is probably is a lot different than PSP for me. And I know my experience is a lot different than Mariam's (Analyst Relations Manager for Sony PR). But, this is just another way to continue the evolution.

John: And the message is that we're listening to the customer constantly. When you and I talked back in March, we were thinking colors: how can we put this together? We saw silver being the top-rated color in several different studies that we did. White really popping as well. We saw that the opportunity to go more portable really fits the trend of where other portables are going: becoming slimmer, sleeker and lighter. Being able to add video out -- video out has always been one of the top enhancements asked for.

Phil: And without giving up a millimeter of the screen.

John: Yeah, our screen size is the same. So, our competitive edge stays the same, and we add strength.


What kind of marketing needs to be done to educate the consumer about the new PSP?

Phil: More than half of our day is spent talking about how do we take the mystery out of the technology. There's some basic communication pieces we're going to put together to help the consumer understanding how PSP is evolving. One of the things I'm excited about is UMD movies and TV shows. They're given a new life with the new video-out feature. It's easy and convenient. I still like watching a movie on the PSP. I think it's better than watching on a video iPod.

One of my favorite things to do on PSP is to watch things from Memory Stick. Are there any plans to ever increase support for video codecs? Or, will we always need to use MPEG-4?

John: We would never say always. Our updates keep on evolving. We listen to what our customers are asking for and then we look at, from a product planning perspective in Japan, whether or not it's possible. I don't think we'd ever close the door on it. We're not saying anything today about changing that around, but we're always looking for opportunities to expand the way people use it. About 6 months ago, we added full-resolution video, and we've been pushing for that just because consumers have been pushing for that. So, the brakes were taken off in Japan.

Phil: So the story with the PSP. It's an evolved product, and there's cool bundle propositions. We're introducing new colors this year. We're working very closely with studios and television providers for new content at the right price point on UMD. I think that was a big miss. The studios managed the UMD by themselves and really didn't understand our space, so we have an initiative this year where we [the PlayStation team] are going to sell very targeted video content at under-$15 price points. You're going to be surprised on some of our announcements involving UMD. We're enabling more and more entertainment value and taking away some of the cost barriers to participate for the consumer and we're enhancing the product. It's a great year for PSP. PSP is a real important component of our business. It's built on the same platform and thought process of 10-year life cycles, and built-to-last and okay-to-evolve. It's a huge piece of our proposition, and it's going to be very exciting. PSP fans are going to be excited to see how the ecosystem of PSP and PS3 changes and evolves. And this isn't long-term in-the-future stuff. This is new things that continue to evolve around PSP and PlayStation.

The PlayStation 2 is still an important part of the PlayStation family that has the most potential to go against Wii's current mainstream popularity.

Phil: The PS2 is an amazing platform. The value proposition of the PS2 does align with the casual, younger, pick-up-and-play demographic of Wii. The PS3 -- it's like comparing a BMW 750i to a Toyota Corolla. You sell a lot of Corollas, but there's a whole different value. The PS2 has thousands of games, tons of cool peripherals. Wait until you see the new SingStar and Buzz product coming out. And also some of the key IP. It's amazing. [PS2] is a fun, easy platform that's still a DVD player. The value proposition around there ... it's still very relevant.


Speaking of SingStar, I was hoping the PS3 version would be like Folding@home, where it would be an application you can install on the hard drive.

Phil: At the press conference, we showed a sneak peak of that really cool interface using the SingStore. And there's more coming. You might not be too far off.

Doesn't offering a 80GB PS3 at $599 negate the mentality that the PS3 is cheaper? In effect, it doesn't appear that you've created a price drop at all. [Note: This interview was conducted before Sony confirmed that the 60GB model was no longer in production.]

Phil: Yeah, one of our competitors said the same thing in the press today. The story for us is the 80GB PlayStation 3 with more hard drive space, really focusing on how the PS3 interacts with the Network. People like the extra headroom, and as we start introducing downloadable services, whether its games, or HD content, having the larger hard drive adds a lot of value. Including Motorstorm, which is a million unit seller around the world -- there's a lot of value adding that game there. Now, the 60GB at $499. You might not think $100 makes that much of a difference, and already we've seen tremendous volume. We've always wanted a two SKU strategy in the marketplace. When we introduced the 20GB, but without the memory slots, and without the wi-fi, the value proposition simply wasn't there. And frankly, because demand was so exceeding supply back in Christmas (we didn't catch up until February), people were really just settling for the 20GB version because they couldn't get the 60GB. Having a 60GB system with all the features at $499 with all the features and benefits of PS3, is a terrific value. We don't want to discount what $100 means to the average consumer. It's a lot. What we're concentrating on is that an investment here -- we won't walk away from the platform, we never have, in three years. Other companies in this space have. This really is a roadmap strategy for us that allows us to have different value propositions for different consumers.

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Thanks to Phil and John for the interview! We had a great time at Sony's E3 booth. Also, don't forget to check out interview with Kaz Hirai and Jack Tretton for more.