Avoiding the Performance Trap

In 2007, after Nintendo suddenly and unexpectedly reestablished its leadership position in the home console market, Sony and Microsoft were left wondering what to do. Clayton Christensen, who became famous for his thesis on disruptive innovation in the hard drive sector, offered several possible responses.

1. Copy Nintendo by developing a motion controller.
2. Repurpose a legacy product to compete with the Wii.
3. Disrupt the disruptor

The Wii Remote, which cost less than $10 to make, was a game changer for Nintendo.

Although the article was directed at Sony, it could be applied equally well to Microsoft.

In making his first suggestion, Christensen appears to be unaware that Sony launched its PS3 system with a motion sensing controller – the Sixaxis. However, he rightly anticipated the challenges of a “me-too” approach.

While this would be the quickest path to market, it has some real risks. Nintendo’s system has been optimized around its controller. Simply sticking a motion-based controller onto an existing system could result in a highly disappointing product. The controller would remain an afterthought, as opposed to an integral part of the product.

In fact, that was how many gamers viewed Sixaxis – as an afterthought. What made matters worse was the lack of rumble, a deficit that was later remedied with the introduction of the Dual Shock 3.

Christensen recommends the third option as the preferred response to Nintendo.

Instead of following a me-too strategy, Sony could seek to truly develop a category-changing project. While this approach would take more time and require greater investment, it has the most long-term potential—if Sony can figure out a different measure of performance on which to compete in the video game market.

The question is how to identify category changing projects that offer different measures of performance. Christensen does not answer this question, nor does he explain why innovations introduced by Sony and Microsoft, such as Blu-ray and Xbox Live, do not qualify as category changing.

Sony saw its “different measure of performance” in the combination of the Cell processor and Blu-ray drive, two technologies that Sony believed set it apart from competitors. The problem was that few developers were able exploit the unique characteristics of the Cell and few customers cared about Blu-ray (at least initially). Still, any Sony executives who may have read Christensen’s advice must have been left wondering why he did not see the PS3’s unique features as category changing.

Microsoft’s own category changing features were centered around Xbox Live – by far the leading online gaming community in the world. Today, Xbox Live has become the de facto standard for online gaming and it is Microsoft, not Nintendo, that continues to lead the industry in this increasingly important niche. Meanwhile, Nintendo’s online service has become its Achilles heel, as it struggles to keep up with the competition.

Project Natal could be another category changing innovation when it is introduced later this year. Although Natal can be used as a motion sensing gaming interface like the Wii Remote, it offers much more in terms of artificial intelligence,  interface design, and potential non-gaming uses. For example, Natal-type technologies will one day provide hands-free control of products ranging from automobiles to security systems. In the long run, that will prove far more disruptive than the Wii Remote.

In the futuristic film Minority Report, Natal-type interfaces are used for everything from interactive billboards (above) to security systems.