Expensive "Living Room Overlord"

Far away in Tokyo, Nakayama Takuya looked at the North America first-day sales report displayed on the fax machine and casually picked up his coffee and took a sip.

"US dollar 699—" He looked at the number and couldn't help but shake his head. "Panasonic appliance guys at Panasonic probably think gamers' money grows on trees."

He threw the briefing into the shredder, and with the rustling sound of the paper being swallowed up, he delivered his final verdict on that arrogant "32-bit era."

"Ignore them. This machine won't last more than two years."

Smoke filled the conference room at Nintendo Headquarters in Kyoto.

Yamauchi Hiroshi sat at the end of the long table, holding a faxed 3D0 configuration list in his hand, his face revealing neither joy nor anger.

Sitting next to him were Shigeru Miyamoto, Yokoi Gunpei, and Masayuki Uemura, a core member of the Development Department.

"Take a look, everyone." Yamauchi Hiroshi pushed the paper to the center of the table. "This is the commotion Panasonic caused."

Yokoi Gunpei picked up the list, glanced at it, and his brows furrowed deeply.

"A 32-bit RISC chip, a double-speed CD drive, and it also needs to play VCDs and play music—" he muttered, his fingers gesturing unconsciously on the table as if he were doing mental calculations. "This isn't a game console; it's like stuffing half the counter of an electronics store into this black box."

"Panasonic is making a huge fuss, and Tripp Hawkins is certainly good at talking big." Shigeru Miyamoto adjusted his glasses, his tone somewhat serious. "I saw their demo, and it's definitely much better than the Super Famicom. That kind of polygon processing capability is something current 16-bit machines simply can't do."

A moment of silence fell over the conference room.

No one in the room dared to take the term "next generation" lightly. Technological advancements are like the sword of Damocles hanging over their heads; once it falls, the old hegemons could be instantly decapitated.

"Uemura," Yamauchi Hiroshi suddenly called out, "Have you calculated the cost of this thing?"

Masayuki Uemura immediately sat up straight and pulled out a densely filled spreadsheet. "President, I already had the purchasing department inquire about component prices. That double-speed CD drive module alone isn't cheap these days, not to mention the RISC chip and all those miscellaneous video decoding circuits—"

He paused, then held up a few fingers. "If you don't count mold amortization and R&D costs, the hardware material cost (BOM) alone will definitely be no less than five hundred US dollar."

"Five hundred US dollar?" Shigeru Miyamoto was taken aback. "How much are they planning to sell it for?"

"According to industry practice in the home appliance sector, after adding channel fees and retailer profits, a significant markup is necessary to make a profit," Yokoi Gunpei continued. "But this is a game console. Unlike us, where we can collect royalties to subsidize the meager profits from the hardware, Hawkins only charges a three- US dollar royalty, so Panasonic has to rely on selling the consoles to make money."

"Therefore," a glint of shrewdness flashed in Yamauchi Hiroshi's always narrowed eyes, "They have no choice but to set a high price."

"But President, this setup is really scary." Masayuki Uemura was still somewhat worried. "What if—"

"There's no 'what if'," Yamauchi Hiroshi interrupted him, his tone firm. "Game consoles are toys for kids, not decorations for middle-class living rooms. Five hundred US dollar? What ordinary family would spend that much money on a game console for their child?"

Just then, the secretary pushed open the door and came in, holding a copy of the latest intelligence report.

"President, the final selling price from the United States has been released."

All eyes immediately turned to that direction.

"How many?"

US dollar 699.

"Pfft--" Yokoi Gunpei, who was drinking tea, almost spat out his water.

He didn't even bother wiping his mouth, staring at his secretary with an incredulous look. "How much? Say it again?"

"US dollar 699, Panasonic's official price."

There was a three-second silence in the conference room, followed by a strange atmosphere. The tense, almost precarious feeling vanished instantly, replaced by a mocking, almost scornful look.

Yamauchi Hiroshi didn't smile, but the wrinkles on his face seemed to have smoothed out considerably. He picked up a cigar, slowly lit it, and took a deep drag.

"US dollar 699—" He shook his head through the smoke, "Panasonic is still the same Panasonic selling home appliances; they have no idea what games are."

"They thought they could win just by piling on the specs," Shigeru Miyamoto laughed. "Sega may sometimes be extravagant and like to come up with fancy peripherals, but at least they wouldn't dare sell their consoles at such exorbitant prices. And Sega doesn't skimp on game content at all. Nintendo's success isn't based on the strongest performance, but on the most fun games and the most reasonable prices."

"President, then we—"

"Ignore them." Yamauchi Hiroshi waved his hand, sentencing the machine, which was less than a month old, to death. "This thing is just a dead man in golden armor; it won't last more than a few steps before it collapses on its own."

Although he spoke lightly, Yamauchi Hiroshi was not entirely at ease.

3D0 is doomed, but the concept of "32-bit" has already been hyped up.

Players' appetites have been whetted; after seeing 3D graphics, going back to 2D pixelated visuals will inevitably lead to disappointment.

"However," the old man's tone shifted, his gaze sharpening, "Although Panasonic was a fool, they at least proved one thing—the door to the next generation has been broken open."

He looked at Masayuki Uemura had been in charge of hardware development.

"Uemura, how many more years can the Super Famicom last?"

Masayuki Uemura pondered for a moment, "Although sales are currently decent, we're locked in a very tight battle with Sega for market share. If we're really going to fully enter the 3D era, the SFC's capabilities are definitely insufficient."

"Let's begin then. Let's start by discussing the technical specifications of the next-generation console." Yamauchi Hiroshi tapped his pipe in the ashtray, the crisp sound like a starting pistol. "Don't let Sega, and even more so, don't let that yet-to-be-revealed Sony get there first."

"Understood." Masayuki Uemura and Yokoi Gunpei exchanged a glance, both seeing the fire in each other's eyes.

"So what's the development codename?" Shigeru Miyamoto asked.

Yamauchi Hiroshi paused for a moment, then looked out the window at the ancient streets of Kyoto.

"Project Reality."

The old man slowly uttered the name, his voice not loud, but carrying an undeniable ambition.

Sony Headquarters in Tokyo.

The blinds in the conference room were drawn tightly shut.

The static on the TV screen was still crackling, and the 3D demo videotape that had just finished playing was ejected.

Ken Kutaragi tossed the remote control onto the mahogany conference table with a sharp "thud," breaking the silence in the room.

"Panasonic rice cooker makers at Panasonic, that's all they're good for."

He pointed disdainfully at the black screen, his tone full of the arrogance and sarcasm typical of a technologist, "Anyone can build hardware. They put together a double-speed CD drive, stuff in a RISC chip, and think they're the future? That controller can even plug in headphones; they've practically etched the words 'I'm a home appliance' onto their foreheads."