Here Comes Playstation 2

The quiet in Akihabara is deceptive. Tokyo's electronics quarter, famous for a cubist profusion of stores hawking every imaginable gadget with every imaginable gimmick, has no balloons, posters or fliers promoting what one industry analyst predicts will be "the most successful consumer product ever launched." The only signs of the impending arrival of the machine that may supercharge interactive entertainment, democratize e-commerce, explode the DVD market and make the Sony company a dominant force in the Internet age are ubiquitous hand-scrawled notices near checkout counters that read, when translated, not taking advanced orders.

On March 4, however, the PlayStation 2 will finally go on sale in Japan (Americans will have to wait until late summer), and Akihabara may not be so quiet. Note the fate of Sony's Web site when it began to accept predelivery purchases of the ominous black and blue, state-of-the-art graphics supercomputer. Within seconds, approximately 100,000 eager buyers converged on the site, plunging it into a dot-coma. On PS2 Day, some Akiha-bara emporiums will open early to accommodate the inevitable lines of rabid gizmo freaks. "Dozens of times a day, we get asked if one can buy PS2 here on March 4," complains a salesclerk at one gaming mecca. "My answer is always the same--we cannot guarantee you anything." But Sony is guaranteeing something: a million PS2s sold this weekend at 39,800 yen each ($370)--the first wave of what might be an installed base of 100 million, big enough to catapult a thriving game-console industry into another galaxy--where gaming meets e-commerce and everyone can hear you scream (in Dolbyized stereo).

Part of the PlayStation's mystique is that it's much more than a game machine. Out of the box, PS2 is geared to play movie DVDs--just as mainstream consumers are considering switching from clunky VCRs to the dramatically enhanced digital alternative. And, of course, the PlayStation 2 will also spin your audio CDs. But the most significant aspect of the PS2 might be its ability to hook into the Internet, making it a "Trojan horse" to bring online gaming, e-commerce, Web browsing, e-mail and downloading of music, software and video into the home. In 2001, Sony will sell a combination high-speed Internet connector and hard-disk drive that is geared solely for high-speed connections. Previous attempts to merge the Net with game consoles have flopped, but Sony thinks it can buck the trend. "You can communicate to a new cybercity," gushes Ken Kutaragi, the visionary behind the PlayStation. "This will be the ideal home server. Did you see the movie 'The Matrix'? Same interface. Same concept. Starting from next year, you can jack into 'The Matrix'!"

For now, though, the PS2 will be judged as a game machine. And don't dismiss that as kid stuff. Last year the industry in the United States alone raked in almost $7 billion, and analysts predict that in 2000 the revenue will surpass the ticket sales of movie houses. Something that raises the bar is big news indeed.

Does PS2 raise that bar? Just punch the power button on the unit, a sleek black and blue, 16-inch-tall mini-tower that could pass as Darth Vader's toaster. Insert a disc in the slide-out tray, and it's instantly clear that computer games are edging toward territory previously monopolized by movies. You see skies with multiple layers of moving clouds. Coats that behave like real cloth. Rustling grass. And here's not-so-good news: in this post-Columbine era, social critics now have to contend with muzzle flash from a pistol that illuminates the shooter's face, double-helix smoke trails from missiles and a gorgeously granulated blood splatter as you lop off the head of a bat-creature.

The secret is the Emotion Engine, a fast, high-powered chip set that is fine-tuned to generate polygons, the building blocks of 3-D graphics. While the original PlayStation could handle a mere 360,000 polygons per second, version 2 can spit out more than 20 million: it's a jump from "South Park" to "Toy Story." And when connected to a home-theater setup, Surround Sound will allow game designers to assault eardrums with style. One action-horror game, Onimusha, was scored by a 203-piece orchestra.

"It's historic, a mass-market appliance that fundamentally changes society in the way the printing press did," says Trip Hawkins, founder of Electronic Arts and CEO of 3DO. "This is a new canvas for humanity that takes us back to our nature."

Such hyberbole is music to the ears of Ken Kutaragi. These days, the 53-year-old former engineer wears a smile that would require a ton of polygons to reproduce. His odyssey began in the mid-1980s, when he first conceived of building "a new type of entertainment" based on high-end graphics. But to Sony's brain trust, the idea was "embarrassing... Sony was very much an audiovisual hardware company [that considered] game machines as toys," he says. Finally, Sony's CEO, then Norio Ohga, took a chance on the project, and Kutaragi created the first PlayStation, released in 1994.

Gamers loved it, snapping up more than 70 million units. In one of every four U.S. households, there's a parent begging a kid to drop the PS1 game controller and rejoin the family of man. While developers created hundreds of titles for his machine, Kutaragi set about building a successor that he hoped would redefine computing itself. "Every computer from the 1960s is a downsized mainframe," he says. "These PCs are very useful as a tool, but we want a fusion of computers and entertainment."

All this comes at a crucial time for Sony. With an unparalleled consumer technology and creative assets in film, television production and music, it would seemed poised to stand toe to toe with the major players in the Internet world. Surveys say that teens consider it the third coolest global brand (behind Nike and Tommy Hilfiger). And after an initially lame foray into the PC business, its stylish, multimedia VAIO laptop computers are big hits. Still, the company centers on atoms more than bits. How can you call yourself an Internet company when you've got a six-figure work force mostly focused on manufacturing or selling things that ship in boxes and work with motors and flywheels?

That's the challenge for Nobuyuki Idei, who unexpectedly ascended to Sony's presidency five years ago. His brash style represents a break from the firm autocracy that traditionally defined the firm (John Nathan, author of "Sony: The Private Life," called Idei "the Heretic"). To compete in the new digital economy, Idei now promotes Sony as "the first broadband entertainment company," a fuzzy mantra unveiled during his keynote speech at the Comdex computer show last fall. Idei appeared as a high-bandwidth Mr. Rogers, strolling around a living-room set while entertaining guests like guitarist Steve Vai, software guru Bill Joy and director George Lucas.

Can Sony leverage its assets to become an Internet giant? "Synergy was forced in the analog world, but in the digital world, people can't get out of the way of each other," says Howard Stringer, CEO of Sony Corp. of America. Sony wants a future where all its appliances are Web-connected, digital content is stored in gum-stick-size Memory Sticks and people suck up Sony content through Internet services. The company is realizing that online distribution is inevitable, and the day will come when you can one-click for a Walkman. "Our investors are starting to see Sony as an atom-plus-cyber company," says Idei, referring to its heady stock price. But when the AOL-Time Warner buyout was announced, Sony's top execs were caught with their knickers on, at the Sony Open golf tournament in Hawaii. After a few frantic days of debate, they decided a blockbuster merger could mean a loss of control. Instead, they hoped to reach online consumers through PCs, set-top boxes and... Ken Kutaragi's creation. "PlayStation," says Stringer, "is at the crossroads of that convergence."

But Kutaragi, who holds the post of CEO of Sony Computer Entertainment, is notorious for following his own vision. He can afford to, because PlayStation 1 provided a full 40 percent of Sony's profits in 1998. And he expects his new product to be even more valuable. "Sony is a very old company," he says. "The 50-year-old company will be taken over by their child." He makes a point of boasting that when establishing the PlayStation brand, "we dropped the Sony name." Furthermore, Kutaragi resists the corporate view of PlayStation 2's becoming the flagship of a "digital delivery system" for Sony software, tunes and services. "Synergy is 120 percent not my dream," he says. "Sony has Sony's agenda. But [I] want a very open platform, equal for every person."

CEO Idei appears unruffled when he hears of such heresy. "It's his company," he says with a shrug. "That is Mr. Kutaragi's business. He is a very outspoken person, I think." Idei explains that Sony is a federation of multiple companies, run by him from an "e-headquarters." (Kutaragi is part of a management committee, which in turn reports to Idei.) Still, some observers find the dynamic astonishing. "Idei is not someone to grant that autonomy to anyone," says author Nathan. "It shows how vulnerable he is feeling."

While that corporate drama plays out, other game-console companies have their own strategies for "next-gen" games similar to PlayStation. The first one to hit the stores was Sega's Dreamcast, which sold more than 4 million units last year, surprising those who thought that people would save their money for PS2. Sega president Shoichiro Irimajiri says that online gaming will keep Dreamcast thriving, and by the time Sony's broadband strategy gets underway, Dreamcast machines will have a critical mass of online customers using the built-in narrowband (56K) modems.

Other machines won't beat PlayStation to market. Nintendo's Dolphin will feature the creations of its superstar designers like Shigeru Miyamoto (blame him for Donkey Kong and Super Mario). That--and Pokemon--will probably keep Dolphin afloat. Then there's Microsoft. Did you really think that Bill Gates was going to sit still while Sony sneaked an Internet browser into 100 million living rooms? On March 10, Gates is slated to address a game developers' conference, presumably to announce Microsoft's X-box game console.

Though PS2 isn't a sure thing--the intro could be flubbed by an initial short supply or people could balk at the price--most handicappers figure it to win. (One immediate advantage: it plays almost all original PlayStation games.) But even if Kutaragi's ambitious sales goals are met, does that necessarily mean that Trip Hawkins's rhapsody about "a new canvas for humanity" should be taken seriously?

Certainly not, if one judges by the games available at the PlayStation 2 Festival that Sony sponsored outside Tokyo a couple of weeks ago. The 55,000 people who filed into the vast Makuhari Messe pavilion found only evolutionary improvements on the same racing games, sports contests, shoot-'em-ups and dungeon quests. Though the console's technical features were clearly dazzling, many observers agreed with Takashi Saito, a 16-year-old game junkie, who said with a sigh, "I didn't see one game today that makes me want to run out and buy PS2 the first day."

But that's common with new game systems, whose abilities sometimes take years to exploit. Dozens of companies are only beginning that process. It remains to be seen whether those tools eventually enable game designers to bust through the "toy" barrier and create the grown-up entertainment that Hawkins promises.

But who cares? We'll be too busy shooting intricately detailed monsters, running bootlegs with quarterbacks whose sweat pours down their foreheads and taking a break by flipping to the Net and ordering food--while downloading the latest MP3s. Meanwhile, Kutaragi-san is already thinking about PlayStation 3 (the final fantasy?), due around 2005. "Over 200 years ago, the founders of your continent cut out the roadways, new towns, new cities, new culture," he says. "This is the same." If Sony boss Mr. Idei wants to concentrate on bolstering the parent company's value by using PlayStation 2 to promote synergy, let him. Kutaragi dreams, but not in Sony.