As a follow up to the previous report regarding the planned sale of Sony’s chipmaking unit – the Japanese the company said Tuesday that it is still looking at ways to improve its chip operations and has reached no decision on whether to sell it; essentially denying Japanese media reports that it has struck a deal with Toshiba.

Toshiba Corp. spokesman Keisuke Omori also said no deal has been decided.

Japan’s top business daily, The Nikkei, reported Saturday that Sony has decided to sell its advanced computer chip production operations to Toshiba, which partnered with Sony and IBM Corp. in developing the “Cell” microprocessor. Cell powers Sony’s PlayStation 3 video game console, some IBM servers and specialized, graphics-intensive hardware, but it has yet to emerge as a mainstream processor.

The speculation about the future of Sony’s chip operations comes amid a restructuring at Sony and intensifying competition among the world’s computer chip makers. In general, prices have been dropping not only on lower-end chips but all gadgets, making it harder for manufacturers to maintain profits.

“There’s probably two or three things going on in concert,” said Charles King, an analyst with Pund-IT Research. “It’s very expensive not just to produce or develop but also to maintain a hardware platform. It’s not something that ends when the finished chip comes out.”

Sony shares fell 2.2 percent amid market expectations that the company will have to shoulder losses in selling its chip-making facilities to Toshiba. Toshiba shares dipped 0.6 percent.

Sony has been saying for months it’s exploring ways to streamline its chip business as it focuses on home entertainment devices. “But nothing concrete has been decided,” Sony spokesman Tomio Takizawa said.

In the weekend report, The Nikkei said Sony will sell its chip operations to Toshiba and then form a joint venture with Toshiba to use its products. IBM, which also produces Cell chips in East Fishkill, N.Y. — at a facility that got a $325 million investment from Sony in 2004 — declined to comment.

News source: Associated Press

Financial Times reported yesterday that Sony is in talks to sell its advanced semiconductor facilities to Toshiba in a move that would represent an effective retreat from high-end semiconductor fabrication. This strategy is in line with Sir Howard Stringer’s desire to slim down the industry giant and if the deal with Toshiba goes well, Sony may stop making advanced chips and instead focus on audiovisual equipment come 2008.

People familiar with the matter said on Sunday the two companies were discussing the sale of Sony chip fabrication facilities, including production lines for the “Cell” microprocessor used in Sony’s PlayStation 3 video games consoles. The cost to Toshiba of acquiring the facilities is expected to be about Y100bn ($866m).

The discussions highlight growing pressure on Japanese semiconductor manufacturers to address their lack of global competitiveness, particularly in the system LSI market, including microprocessors.

“We are considering many options for strengthening our systems LSI operations,” Toshiba said. Both Sony and Toshiba declined to comment on the talks.

The move would be in line with Sony’s strategy of slimming down its non-core assets. Sir Howard Stringer, Sony chief executive, indicated this year that Sony, which has invested more than Y200bn in developing the “Cell” chip, would cut back on chip spending.

Sony, which is in the final year of a three-year turnround plan, is moving to a “fab-lite” model and outsourcing non-core components, in line with the trend in the semiconductor industry. Japanese semiconductor makers have struggled to compete profitably in the system LSI market, which is dominated by companies such as Intel and IBM, due to a lack of champion products.

System LSI chips entail huge investment costs but, since the chips are customised for applications, unless they can be sold in large quantities, it is difficult for the manufacturer to recoup costs. The “Cell” chip, which is as powerful as eight Intel microprocessors put together and is known as a “supercomputer on a chip”, is the PS3’s most expensive component.

Slower-than-expected PS3 sales and the lack of other large-scale commercial applications for the “Cell,” which was developed jointly by Sony, IBM and Toshiba, have kept the chip’s costs high.

Toshiba is Japan’s largest semiconductor maker with Y1,300bn in semiconductor revenues, of which system LSIs provide about 40 per cent. However, the system LSI business is not as profitable for Toshiba as the memory chip business and the company faces a need to improve profitability.

Japanese semiconductor makers have fallen behind larger competitors, such as Intel and IBM, in the system LSI market due to a lack of champion products.

The growing gap between winners and losers in the semiconductor industry has spurred calls for NEC Electronics, Toshiba and Fujitsu to pull together their system LSI operations, said one Ministry of Trade, Economy and Industry official.

The Ministry of Trade, Economy and Industry is also calling for semiconductor makers to set up a joint fab in order to improve Japan’s global competitiveness, he said.

(News Source: Financial Times)

Sony’s Walkman devices will always come with optional accessories and the new NW-S71xF/NW-S61xF series is no different. The new Network Walkman series will debut with new accessories as shown above; and it can also utilize existing Walkman accessories such as the AC-NWUM50, BCR-NWU3, WMC-NWR1, CPF-NW001, SRS-NWZ10, STP-NWN3/W, STP-NWN3/T, STP-NWN2/S, STP-NWN2/B and other miscellaneous Bluetooth accessories.

Product info and pictures after the jump …

Clear Case | CKH-NWS710
Weight: approx. 18g
Material: Polycarbonate
MSRP: 2780 yen (approx. USD24)

Clear Case | CKH-NWS610
Weight: approx. 18g
Material: Polycarbonate
MSRP: 2780 yen (approx. USD24)

Silicon Case | CKM-NWS610
*compatible with the NW-S71xF series
Colors: White and Black
Weight: approx. 7g
Material: Silicon rubber
MSRP: 2480 yen (approx. USD21.50)

Soft Carrying Case | CKS-NWS610
Colors: Black, White and Pink
Material: Polyurethane with silver carabiner ring
Weight: approx. 7g
MSRP: 2480 yen (approx. USD21.50)

Clip | CLP-NWS610
Weight: approx. 14g
MSRP: 1980 yen (approx. USD17)

Armband Case | CKA-NWS610
Mass: approx. 17g
Material: Polyurethane
Adjustable armband: approx. 21-40cm
MSRP: 2480 yen (approx. USD21.50)

Portable USB WM-PORT | WMC-NWP10
*enable quick connection between PC’s USB port with the Walkman.
Length: approx. 11cm
Weight: approx. 35g
MSRP: 1980 (approx. USD17)

USB-WM-PORT Cable | WMC-NWP10
*enable charging and data transfer between PC’s USB port with the Walkman.
Length: approx. 1.0m
Weight: approx. 27g
MSRP: 1980 (approx. USD17)

Privacy Filter | PRF-NWP180
MSRP: 1380 yen (approx. USD12)

Screen Protection Film | PRF-NWS610
MSRP: 980 yen (approx. USD8.50)

AC Adaptor & Recording Cable | ACK-NWH30

*provide direct encoding and include recording cable of approx. 60cm; weight of cable: approx. 10g
Specifications
Input voltage: 100-240V, 50/60 Hz
Rated output voltage: DC 5.0 V
Rated output current: 800mA
Dimensions: 63 (depth) × 33 (height) × 63mm (width) (not including projecting parts)
Weight: approx. 100g
MSRP: 3780 yen (approx. USD33)

AV Watch has released a pictorial review of the newly announced MDR-EX700SL canal-type earphones. For those interested, please visit AV Watch for the review piece.

More pictures after the jump …

World’s largest canal-type earphones; 16mm drivers

Magnesium chassis; weight: approx. 7g

Bundled accessories

MDR-EX90SL vs MDR-EX700SL

(Pictures courtesy of AV Watch)

It has come to our attention that Sony will be putting forth a new line of NetMD micro system on November 21, 2007. The new micro system, known as the CMT-M35WM will be available in three colors: Black, White and Silver; and has an expected MRSP of approximately 37,800 yen (or approx. USD328).

The micro system’s suffix – WM underscore its capability to facilitate direct recording to certain Walkman models* via its USB port. (as shown in the picture below) It is also interesting to note that basic operations of a Walkman while connected (via USB) to the micro system can be accessed using the CMT-M35WM’s remote control.

* NW-E305/E307, NW-E002/E003/E005, NW-A605/A607/A608, NW-S603/S605/S703F/S705F/S706F, NW-S203F/S205F, NW-E013/E015/E016, NW-A805/A806/A808, and NW-S615F/S616F/S715F/S716F/S718F.

The CMT-35WM has a CD, MD and Cassette Tape module and its amplifier has a maximum output of 20W×2ch; Dimensions: approx. 450mm (w) × 282mm (d) × 232mm (h); Weight: Main unit, approx. 3.1kg; Speakers, approx. 2.2kg for one.

More pictures after the jump …

Sony Japan announced yesterday that three new NETJUKE system – NAS-M95HD, NAS-M75HD, NAS-D55HD along with an optional NAS-C5 wireless digital audio streamer will be added to its current fleet of NETJUKE system (click here for previous version). The new NETJUKE system – NAS-M95HD, NAS-M75HD, NAS-D55HD and NAS-C5 wireless digital audio streamer will be available for sale (in Japan only) on November 10, October 20 and November 21, 2007 respectively.

NAS-M95HD: 120GB HDD/MD/CD/S-Master 26W×2ch
★ approx. ¥120,000 (USD$1,053)
NAS-M75HD: 80GB HDD/MD/CD/S-Master 20W×2ch
★ approx. ¥80,000 (USD$702)
NAS-D55HD: 80GB HDD/CD/Digital amplifier 20W×2ch
★ approx. ¥60,000 (USD$527); available in Pink, White and Black
NAS-C5: wireless digital audio streamer
★ approx. ¥30,000 (USD$263)

Like its predecessor, the new NAS-M95HD and NAS-M75HD will feature Sony’s S Master Digital Amplifier*. However, the NAS-D55HD will only employ a standard digital amplifier. The new NETJUKE system will also have an Ethernet port (which is DLNA compliant) so that your Mp3 and ATRAC tunes residing within your PC can be transferred onto the NetJuke’s HDD via Wireless LAN. These new NETJUKEs are also equipped with Sony proprietary “WM-PORT”; so direct music transfer without the PC is possible for selected Walkman (*currently, NW-A800/S710F/S700F/S610F/S600 series).

The “S-Master” digital amplifier, used in the BRAVIA X series and a range of other Sony products, is designed to transform electricity into sound efficiently. This fully digital amplifier minimizes power consumption by converting more than 85% of electricity into audio signals*4. Moreover, the “S-Master” suffers almost no sound deterioration due to heat, because it generates only one-tenth the heat of analog amplifiers. This improvement ensures high-quality sound. In addition, Sony contributed to the conservation of resources by significantly reducing the size of the heat sink – a part that stabilizes the generation of heat.

More pictures and details after the jump …

NAS-C5

As for the NAS-C5, it is essentially a wireless speaker with the ability to stream digital music files (MP3, ATRAC, WMA, and the linear PCM) from the NETJUKE system wirelessly (yes, the NAS-C5 is DLNA compliant; 2.4Ghz IEEE 802.11 b/g). When connected to the Internet wirelessly, the NAS-C5 can also stream the Japanese internet radio station: J-WAVE Brandnew-J. The NAS-C5’s amplifier has a maximum output of 10W×2ch; Dimensions: approx. 340mm (w) × 212.5mm (d) × 123mm (h); Weight: approx. 3.1kg.

NAS-M95HD

NAS-M75HD

NAS-M55HD

Hi-Speed USB (connection with supported Walkman device, PSP, Sony Ericsson Cellular)/USB bus power charge

WM-PORT

Mp3 and ATRAC tunes residing within your PC can be transferred onto the NetJuke’s HDD via USB and Wireless LAN

MD Module (NAS-M95HD,NAS-M75HD)

Real-time Recording | MD to HDD

SPECIFICATIONS | NAS-M95HD/NAS-M75HD/ NAS-D55HD
★ 4.3 color liquid crystal display
★ records: MP3(96/128/160/192/256kbps), ATRAC(48/64/66/105/132/256kbps) and Linear PCM
★ playback: MP3(32～320kbps,CBR/VBR), ATRAC(32kbps～352kbps) and Linear PCM
★ Mp3 and ATRAC tunes residing within your PC can be transferred onto the NetJuke’s HDD via USB and Wireless LAN
★ a world’s first improved smart, sound analysis technology for radio recording; this new feature essentially will divide the music and “talking” part of recorded radio segments into separate folders
★ support album cover art
★ CDDB/Music ID
CD Module
★ CD–>HDD recording at 16X or less
★ Format: CD-DA, MP3(CD-R/RW)
★ Frequency Response: 20Hz～20kHz
MD Module
★ MD–>HDD recording at 20X or less. *only for NAS-M95HD/NAS-M75HD
★ Audio Compression: SP, LP2, LP4
★ Frequency Response: 20Hz～20kHz
FM/AM Tuner Module
★Frequency range: FM:76.0～90.0MHz /AM:531～1602kHz
Amplifier Module
★ Maximum Output: 20W+20W(8Ω) for NAS-M75HD/ NAS-D55HD; 26W+26W(6Ω) for NAS-M95HD
★ Digital Amplifier (NAS-D55HD); Full, Digital Amplifier S-Master (NAS-M95HD/NAS-M75HD)
Speakers
★ tweeters: 20mm balance dome-shaped tweeter (NAS-D55HD), 25mm soft dome-shaped tweeter (NAS-M75HD), 25mm carbon graphite composite dome-shaped tweeter (NAS-M95HD)
★ cone type subwoofer: 120mm (NAS-D55HD), Aluminum 120mm (NAS-M75HD) and Aramid Fibre 120mm (NAS-M95HD)
Terminals
★ 1X 100BASE-TX/10BASE-T
★ 2X USB 2.0
★ WM-PORT
★ 3X Audio Inputs
★ 1X Audio Output (NAS-M95HD/NAS-M75HD)
★ 1X Headphone
★ 1X Composite Output
Power Consumption
★NAS-D55HD: 50W (Standby Power: 0.5W or less)
★NAS-M95HD/NAS-M75HD: 48W (Standby Power: 0.5W or less)
Dimensions
★NAS-M95HD/NAS-M75HD/ NAS-D55HD: 285mm (w) × 143mm (d) × 285mm (h) (*main component without speakers)
★Speakers: 140mm (w) × 250mm (d) × 215mm (h) (NAS-M75HD/ NAS-D55HD); 149mm (w) × 290mm (d) × 253mm (h) (NAS-M95HD)
Weight
★NAS-D55HD: approx. 5.0kg; NAS-D55HD Speaker: approx. 2.2kg (1)
★NAS-M75HD: approx. 5.6kg; NAS-D75HD Speaker: approx. 2.2kg (1)
★NAS-M95HD: approx. 6.0kg; NAS-D95HD Speaker: approx. 4.0kg (1)

Sony Japan announced today that the following new Walkman: NW-S71xF and NW-S61xF series will debut on October 20, 2007 (only for the Japanese domestic market). The newly announced NW-S71xF series will be available in capacity of 8GB/4GB/2GB (White, Pink, Red, Blue and Black) whereas the NW-S61xF series will be available in both 4GB and 2GB capacity (Silver, Blue and Pink). MSRP for the new Walkman S series are as follows:

★ NW-S718F [8GB] – 26,800 (approx. USD236)
★ NW-S716F [4GB] – 20,801 (approx. USD183)
★ NW-S715F [2GB] – 16,800 (approx. USD148)
★ NW-S616F [4GB] – 17,800 (approx. USD157)
★ NW-S615F [2GB] – 13,800 (approx. USD121)

The NW-S71xF series differs from the NW-S61xF by having the Noise Cancelling feature, higher capacity and different color variation. Otherwise, both these new Walkman series are identical in terms of basic functions and features. Like its predecessor, the NW-S700F/S600, the new Network Walkman also features a proprietary WM-PORT – which enables direct recording from CD/MD –> Network Walkman using an optional WMC-NWR1 cable, which is equipped with a recording level switch. The cable is about 60cm in length.

However, unlike both the new NWZ-A81x and NWZ-A61x series, the NW-S71xF series along with its non-Noise Cancelling variant, the NW-S61xF series will still support the ATRAC format and obviously, SonicStage. It is important to note that the Japanese NW-S71xF and NW-S61xF series is not part of Sony’s Open Digital Music Environment using Windows Media Player 11. So, for the time being ATRAC will still continue its existence in the land of the rising sun. In sum, the new Walkman series supports:
Audio Format: MP3 (32-320kbps), WMA (32-192kbps), ATRAC (48-352kbps), ATRAC Advanced Lossless (64-352kbps), linear PCM, AAC (16-320kbps) and HE-AAC (32-128kbps).
Video Format: MPEG-4 AVC/H.264

More pictures and details after the jump …

NW-S71xF

NW-S71xF | Noise Cancelling ON/OFF Button

NW-S61xF

NW-S71xF/S61xF | 1.8” TFT LCD color screen display

NW-S71xF/NW-S61xF | Basic Specifications
Display: 1.8” TFT LCD color screen display
Connection: Hi-Speed USB / WM-PORT (multi-connection terminal)
Supported format:
Audio
MP3 (32-320kbps), WMA (32-192kbps), ATRAC (48-352kbps), ATRAC Advanced Lossless (64-352kbps), linear PCM, AAC (16-320kbps) and HE-AAC (32-128kbps).
* does not support WMA/AAC files with DRM
Video
MPEG-4 and AVC(H.264/AVC); AAC-LC
Noise Cancellation: built-in feature *only for NW-S71xF
Direct Encoding: linear PCM/ATRAC3plus 64/128/256kbps with WMC-NWR1
Sound Quality: Noise Cancelling function, Clear Bass, Clear Stereo, 5 Band Equalizer, VPT Acoustic Engine and Dynamic Normalizer
FM tuner: Reception frequency is FM:76.0～90.0MHz; TV:1～3ch Power source: built-in lithium ion chargeable battery and USB power
Charge method: USB bus power charge
Charging time (USB charge): approx. 3 hours
Battery life: approx. 33 hrs (Mp3 128kbps), 30 (ATRAC 132kbps) measured with built-in chargeable battery use, power saving mode super-time, Clear Stereo, VPT, Noise Cancelling, DSEE, Dynamic Normalizer
I/O interface: headphone/Hi-Speed USB /WM-PORT (multi-connection terminal: 22 pins)
Dimensions:
NW-S71xF: 42.0mm (d) × 79.5mm (h) × 13.0mm (w)
NW-S61xF: 42.0mm (d) × 79.5mm (h) × 11.5mm (w)
Mass:
NW-S71xF: approx. 52g (inclusive of built-in lithium ion chargeable battery)
NW-S61xF: approx. 50g (inclusive of built-in lithium ion chargeable battery)

AtracLife forum member, aznbro85 reviews the new NWZ-A818. This exclusive review is definitely a must-read! Check out the many other topics in the Product Reviews/Pictorials section that were not mentioned here, and you can add to the growing list – Register for free to participate in the #1 discussion board for ATRAC based device.

Come September 20, 2007, the newly “redesigned” PSP (PSP-2000) with a reduced size and weight by 33% and 19% respectively will be available for your gaming pleasure. While we countdown to its debut day, Famitsu has released a comparative pictorial between the smaller PSP-2000 and the current PSP-1000. Enjoy the pictures exclusively from Famitsu!

PSP-2000 (top) vs. PSP-1000 (bottom)

more pictures after the jump…

UMD Slot

Memory Stick Duo Slot

Speaker

Video Out

Battery Compartment

Weight Comparison

Package Comparison

The console war continues…. as writers of Forbes notes: “you’ve been hit with a disruptive attack. A competitor you dismissed has successfully changed the game in your industry. Analysts and investors are clamoring for your response…or your head. What should you do? “

Executives at Sony (nyse: SNE – news – people ) are trying to answer this question today as the video game leader struggles to figure out how to respond to recent disruptive moves by rival Nintendo (other-otc: NTDOY – news – people ). Early signs suggest that Sony is choosing the path of least resistance–and least potential.

Competition in the video game console industry has been fairly straightforward over the past two decades. Companies succeeded by providing better quality graphics, more sophisticated game play, and a wider array of games. Over the past few years, historical industry leader Nintendo had drifted down to third in the industry league table as Sony and Microsoft (nasdaq: MSFT – news – people )’s raw power and wide range of titles outpaced Nintendo’s continually clever game play.

All of that changed last Christmas. While Sony’s PlayStation 3 and Microsoft’s Xbox 360 continued their steady march up market, Nintendo innovated in a different direction. It focused its effort on making game play significantly simpler and more intuitive. A chip made by Massachusetts-based Analog Devices (nyse: ADI – news – people ) called a “three-axis accelerometer” embedded in the controller for Nintendo’s Wii system measures movement in three directions. The controller allows consumers to use natural motions to have characters swing a tennis racket, toss a bowling ball, cast a fishing pole, and so on.

Nintendo’s strategy was a conscious attempt to reach the “non-gamer,” the person who found existing video game systems too complicated and time consuming. The system is so easy to use that even video game novices can enjoy game play within minutes. By all accounts, Nintendo’s effort has been a massive success. Nintendo can’t make its $250 Wii fast enough to meet demand. Nintendo’s stock is up close to 50% this year, and its market capitalization has surged past Sony’s market capitalization. Part of the reason? Sony’s video game unit recently reported losses of close to $2 billion.

Sony needs to catch up quickly, too: in the month of June, the Wii outsold the Playstation 3 in Japan by a six to one margin. Nintendo’s simple DS handheld system has similarly outpaced Sony’s more sophisticated PlayStation Portable.

Microsoft is facing its own struggles, as well. It recently announced that it would take a $1 billion charge to correct flaws with its Xbox 360, and analysts are beginning to suggest that Microsoft should spin off its money-losing video game decision.

Recently, Sony took action intended to remedy is sales slump. The Wall Street Journal reported that the company slashed the price of its PlayStation 3 console by $100 (to $499) to boost sales. While sales might increase, this alone will not solve Sony’s problems. Unlike the Wii, which is a profit-maker for Nintendo, even at the older, higher price Sony took a loss on the PlayStation 3 console in the hopes of making fat profits on sales of new games.

There are at least some public signs that Sony still doesn’t understand exactly what is going on. The president of Sony Computer Entertainment America, while acknowledging that Nintendo deserves credit for the Wii, told Fortune, “If you look at the industry, any industry, it doesn’t typically go backwards technologically. The controller is innovative, but the Wii is basically a repurposed GameCube. If you’ve built your console on an innovative controller, you have to ask yourself, Is that long term?”

But Nintendo hasn’t truly gone backwards technologically. It has simply innovated in a different way. It understood that the barrier to new consumers using video game systems was the complexity of game play, not the quality of existing graphics. By removing that barrier, it has been able to compete against nonconsumption and create a significant growth business. It is a classic disruptive strategy.

Others in the industry are well aware that Nintendo has hit on an important, innovative new-growth area. John Riccitiello, CEO of Electronic Arts (nasdaq: ERTS – news – people ), the world’s largest publisher of video games, recently told The New York Times that one of the main reasons his company’s growth has stalled at about $3 billion in annual revenues is the difficulty of actually playing the company’s video games.

“We’ve become a niche,” Riccitiello told the Times. “Eighty, 90 percent of the resources that are put into play by us and most of our competition are in building sequels of games that super-serve teenage boys with fast thumbs.” Riccitiello believes the greatest source for growth will be outside these core gamers—just the type of folks Nintendo is targeting.

So, assuming Sony is able to fully internalize the importance of Nintendo’s disruption, what should the company do now? One option would be to not respond at all. One pundit noted that any response by Sony would only validate Nintendo’s approach, which could end up helping Nintendo. While the risk of validation is real, our belief is that ignoring Nintendo’s approach would be a mistake. Assuming Sony chooses to respond, it has three options. The seemingly simplest option is to just come up with a copy-cat version of Nintendo’s controller that works with one of Sony’s existing consoles.

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.

The second option is to repurpose Sony’s “legacy” product (PlayStation 2) into a me-too version of the Wii. To do this, Sony would develop a new controller, lower the price of the PlayStation 2, and try to get game developers to create motion-based games for the platform.

Done properly, this approach would have some strategic merit and it could take some wind out of Nintendo’s disruptive sails. However, Sony would likely face fierce internal and external resistance if it followed this path. Analysts would wonder why Sony was intentionally cannibalizing its higher-end, higher-margin product. Engineers might wonder why they are “wasting time” on a low-tech product.

Also, this approach is unlikely to create a blockbuster growth business. Sony would in essence be following a sustaining strategy against Nintendo. While it might carve out a reasonable market position, it is unlikely that this move would redefine the category the way Nintendo has.

The final option is for Sony to try to “disrupt the disruptor.” 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. For example, perhaps the company could take another run at the handheld market, where there still seems to be substantial room for growth.

So what will Sony do? Rumors indicate that it is planning on following the first approach, sticking a new, motion-sensitive controller onto an existing console. Our perspective is that this is the worst of the three options. Instead, we’d recommend that Sony follow the second option to buy time while simultaneously undertaking efforts to develop an entirely new way to play in the video-game market. The key to success is realizing that the market is still replete with nonconsumption. Nintendo has shown one way to appeal to the non-gamers, but Sony could find others.

It isn’t easy for a company that has been thumped by a disruptor to respond. Trying to force-fit the disruptor’s new approach onto an existing business runs the risk of creating a disappointing product that further illustrates the novelty of the disruptor’s solution. Companies in the middle of a disruptive wave need to think about how they can disrupt the disruptor and find a new way to redefine the space. While this approach seems to carry the most risk, if done correctly, it actually has the greatest chance of real success.

*Excerpted from a recent issue of Strategy & Innovation. For more analysis from Clayton Christensen, Click Here. Clayton M. Christensen is a professor at Harvard Business School and the co-founder of Innosight LLC, a Watertown, Mass., innovation consulting company.

(via Forbes) (picture courtesy of HCW.com)