E3 - Q&A: Sony CEO Jack Tretton on next-gen war.

Q: Before E3, there were all these rumors about the redesigned PSP [featuring a flash drive] so I have to admit I was a little let down when I heard it was only going to be thinner and lighter. When I got my hands on one, though, I was impressed...though it still seemed like an incremental improvement. Why not embed a flash drive?

Jack Tretton: I think we're talking about a short period of time here. Playstation Portable has only been out for a couple of years, and I think it will continue to evolve over time. We are absolutely thrilled with the PSP and we love it. We think it's state-of-the-art technology and we think these improvements take that technology and just give you an updated form factor. But clearly we haven't abandoned the 25 million consumers that are fans of it.

I think one of the risks you run into when you get into [embedding flash memory into a new PSP model] is, what happens to the people who already bought it? And are you going to get the development community to make UMD based games? We have to make sure that anything we do, as far as the evolution of hardware, doesn't leave consumers behind. You can talk about price all day long, but if you don't get the features you need for the long term it's a bait and switch. The good news is you get the price you want and the bad news is the technology has been abandoned. I don't think we ever want to do that to consumers.

Speaking from a personal perspective, I'm not a terrific fan of the Wii. I think it's great for the industry, but it doesn't speak to me as a gamer. The technology is pretty limited and I think that in 2-3 years that it could go into this casual Tamagotchi kinda thing. It seems like a different industry almost. Could you speak to that and how you see the Wii and DS fitting into your philosophy?

JT: I would tend to agree with everything that you said. Let's talk about portable gaming since we were just on PSP. My view of portable gaming used to be little kids on airplanes playing to keep them quiet with software that was not comparable to a console experience. I think with the PSP we've taken that console experience and put it into the hands of consumers like you and me. Now you have an entertainment experience that appeals to someone other than a little kid. We've gotten it out there to the tune of 25 million consumers, and with our software offerings and pricing, we're starting to reach down to a younger consumer. I think it's much easier to reach down than to reach up. I really think we'll have the same degree of success with that strategy on portable that we had on the console.

On that note, let's shift gears to the PS3. You were talking about appealing to both casual and hardcore gamers, a sort of do-it-all approach. The PSP is almost a digital Swiss Army Knife, for instance. The PS3 is bleeding edge technology, but my sense is that some people are a little confused about it; is it a Blu-ray player, is it a computer, is it a gaming system? Is Sony still focused on gamers and do you think that message might be getting lost?

JT: There are two pieces to that answer. We definitely have more of a challenge to educate consumers to everything the PlayStation 3 can do that hopefully justifies the price point and the investment for the consumers. I'll tell you my personal consumer experience. If you told me about something that was going to be the center of my living room I wouldn't even look at it. If you told me you've got the ultimate gaming system that would attract me.

I was personally very interested and couldn't wait to get a PS3 and take it home and hook it up to my TV and play the games. I did that and it took me about five minutes to start enjoying the games. But I found as a consumer, when I went and took pictures of my kids at the soccer games, I came home, and instead of putting the memory stick in my PC, I put it in my PS3 and had a slideshow up on my big-screen TV 15 minutes after I left my kids game. I couldn't do that on my PC. Then I popped a Blue-ray movie in there and I thought this is why I bought a HDTV. I'm paying $150 a month to Direct TV and I'm buying every goofy channel that I can get, and this is awesome that I'm going to be able to watch movies in HD. Then I bought a $1000 Sonas so could stream my music to my stereo system in my bedroom and down in my living room, and I thought wait a minute, all I need to do is rip my music to my PS3, it's already hooked up to my stereo. I don't need this stupid $1000 device I just bought. I started to back in to all these other uses. To me, for 600 bucks I'll do that all day long. I paid $1000 to get my digital music transferred from my PC to my stereo. I think that, as an average gamer, and I'm just one of them, how I would end up having the PS3 as the center of my living room.

Continued over page...

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