Sony's Playing to Win

This time, though, you're going up against a competitor who's much better financed than the ones you went up against in the first two rounds, at least in terms of who came out first.

Right. There's no question they have a higher pain tolerance. I think most companies, if they'd lost the billions that Microsoft has lost on the Xbox, would question whether or not they belong in the business. Obviously, they have a different standard of success.

But doesn't that affect your strategy? Not only do they have a lead, but they've also got a ton of cash to throw at this.

I don't think we ever got into this business with any expectation other than winning and winning early on. We've always done that. If we had suffered the struggles that Microsoft had, I'd question whether we'd be serious about the business today. Fortunately for us, we've never been in that position. And I guess until we get in that position, it's difficult to determine how we would react.

It's widely expected that Sony will be losing money on PlayStation 3 at launch. Do you have any estimate of what your losses will be or when you might turn a profit in the games division after it's launched?

No, I think it's always been the razor and razorblades business, but I think the key to success for us is to be successful in all worldwide markets. We've done that consistently on all our platforms.

When we got into the business back in 1995, what we're doing today in 2006 is very consistent with that vision. And it was always knowing that you had to invest in technology, that you had to give great value to consumers, and that you had to provide great software content.

If you could do that and provide an environment that was profitable for retailers, profitable for the developers and palatable to the consumers, then you would be very profitable long-term.

Arguably what determines which box wins is which one has the best games.

No question.

Last time around, your company had several exclusives on the Grand Theft Auto franchise, which many folks feel was the killer app for the PS2. You're not going to have that advantage this time around. How much does that hurt you?

There's no question that having the Grand Theft Auto franchise helped us a lot and helped us sell some units, but I don't think the battle would be any different with or without Grand Theft Auto.

If you look at our first-party library and the franchises that we've brought to market over the course of PlayStation 2, we have a very formidable first-party library of exclusive software that will help define us.