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The Founder's Notes

Founder index · PlayStation · b. 1950

Ken Kutaragi

The lesson that travels

A new business inside an old company usually dies of internal opposition, not market failure. Survival depends less on being right than on securing exactly one protector senior enough to overrule everyone else.

Ken Kutaragi joined Sony in 1975 as an engineer in the digital research group and spent the following decade doing largely conventional work. What changed the trajectory was a personal observation with no corporate mandate behind it: watching his daughter play a Nintendo Famicom, he concluded that the machine's sound was primitive and that Sony's audio expertise could fix it.

He then did something that should have ended his career. He negotiated with Nintendo, essentially unilaterally, to design the SPC700 sound processor for the Super Famicom — work performed for a competitor in a consumer category Sony's board considered beneath the company. When the arrangement became known internally, senior executives wanted him dismissed. Norio Ohga, Sony's president, backed him instead. That single act of protection is why PlayStation exists.

The second hinge came in 1991. Sony and Nintendo had jointly developed a CD-ROM add-on; at the Consumer Electronics Show, Nintendo announced a partnership with Philips instead — publicly, with no warning to Sony. Ohga's response was to authorise Kutaragi to build a console outright. The PlayStation shipped in Japan in December 1994, aimed squarely at developers with cheap CD production against expensive cartridges, and at consumers at $299 against Sega's $399.

Kutaragi's later record is a genuine mixed verdict, and the case is better for saying so. The PS2 he shepherded became the best-selling home console ever made. The PS3 he championed — the exotic Cell processor, the $599 launch price, the conviction that developers would learn to love difficult hardware — cost Sony billions and a generational lead. He stepped back from the division in 2007. The same temperament produced both outcomes.

§01The hard calls

  1. 1988

    Design the SPC700 sound chip for Nintendo's Super Famicom without Sony's institutional approval, working for a competitor in a category Sony's leadership dismissed.

    Executives sought his dismissal. Norio Ohga protected him. The chip shipped in one of the best-selling consoles of its era and gave Sony its first real position in games.

  2. 1991

    After Nintendo publicly abandoned the joint CD-ROM project at CES, push Sony to build a complete console alone rather than exit the category.

    Approved by Ohga. Sony Computer Entertainment was established in 1993 and the PlayStation launched in December 1994.

  3. 1994

    Court third-party developers with cheap, fast CD-ROM production and accessible tools, rather than restricting the platform to protect first-party software.

    Developers defected from Sega and Nintendo in numbers. The two-sided network that still protects PlayStation was established in its first eighteen months.

  4. 2006

    Ship the PS3 with the Cell processor at $599, on the conviction that superior but difficult hardware would eventually be rewarded.

    Billions in losses and a generational lead surrendered to Xbox 360. Kutaragi stepped back from the division in 2007. Sony kept the razor-and-blades model and recovered with PS4.

One of these is set up as a tutorial — you make the call before you find out what Ken did.

Face the decision