The 49% Proposal
Ken Kutaragi let out a strange yelp in front of his computer. He had begun reading with bated breath, felt a flicker of hope midway through, and then recoiled in shock at the final section. The reply from ID Group was the cause.
The document was as stiff and formal as any official Japanese government paper. Kutaragi’s own proposal had been brimming with passion, yet ID Group’s response contained not a single trace of emotion. Alan had simply rendered Yoo Jae-won’s instructions into precise legal language, which explained the cold tone. The entire document was written in English.
Despite its formality, the message was clear: ID Group was willing to participate in the development of the game console. They were even prepared to provide not only the technology Kutaragi had requested, but considerably more. At that point, Kutaragi had clenched his fists in excitement.
Then he reached the final clause and nearly choked.
“Forty-nine percent?”
ID Group wanted 49% of the shares in Sony Computer Entertainment (SCE), the subsidiary Sony planned to establish to handle games and entertainment. Good heavens. Even assuming PlayStation would succeed, SCE was valued at a full 100 million yen. Forty-nine percent amounted to 49 million yen. At that price, it would be far cheaper to simply purchase licenses for the 3D acceleration chip and Glide X2 outright.
Fortunately, there was still more text to read. Kutaragi forced himself to continue.
“Hmm.”
It was fortunate he had persevered. The sentence demanding 49% was followed by a detailed explanation of why ID Group wanted that stake. Through it, Kutaragi realized several points he had overlooked and learned that ID Group was willing to supply far more than just the 3D chip and Glide X2 for the PlayStation project.
He read the reply twice more, then a third time, searching for anything he might have missed. Behind the stiff language, he began to sense Yoo Jae-won’s true intentions. There was genuine interest in PlayStation. The demand for 49% was not arbitrary.
“I suppose I’ll have to go to America,” he muttered. He needed to verify the promised technology in person and meet Chairman Yoo Jae-won to gauge his resolve. Yet he could not simply book a flight on a whim. As a key figure at Sony, he first had to report to his superiors. Only then would he receive travel authorization and accommodations.
Kutaragi reopened his word processor. It was Ichitaro, the Japanese-made program, not ID Word Processor. Sony had not yet fully internationalized, so employees still used domestic software for documents.
“Sigh. We really need to replace this outdated program.”
After using ID Office, switching back to Ichitaro felt like returning to an ancient DOS application. The interface was clumsy and performance was poor. It was no exaggeration. Microsoft had collapsed rapidly in the operating-system market, and Android, with its rich graphics, had become the standard. Japan, however, was still lagging behind. The Ichitaro he was running was little more than a port of the old PC-98 version to Android, resulting in an awkward interface and sluggish speed.
Company-wide adoption of ID Office would solve the problem, but the slow-moving executives showed no interest. They only read paper reports submitted by employees and had no idea how outdated Ichitaro truly was.
“When I become president, I’ll change everything,” Kutaragi vowed, ambition burning in his eyes. He also knew that the surest path to the top was to make the PlayStation project a success. Setting those thoughts aside, he focused on drafting the travel request.
“Hey, Rick! This proves it’s not just our product showing weird results, right?”
Rick Space nodded at his colleague’s question.
“Yeah. Data doesn’t lie.”
The two programmers had been given a special assignment by Intel CEO Andy Grove a few days earlier: investigate the performance drop under Android Enterprise. As a control group, they had benchmarked not only Intel CPUs but also those from competing manufacturers.
If the two men had not been computer enthusiasts, the task would have been unbearably tedious. They had tested nearly every Intel processor from the 286 to the Pentium, plus rival chips, across multiple versions of Android—Enterprise, Adware, and the paid ad-free edition—along with various patches. The work had been mind-numbingly repetitive, especially on the first and second days. Even now, with some experience, neither wanted to repeat the ordeal.
Fortunately, the results had come in smoothly, revealing a clear pattern.
“It looks like Enterprise added some extra functionality that the regular versions don’t have.”
The performance drop occurred exclusively under the Enterprise edition. The Adware version showed only a negligible decline, well within benchmark margins of error. The culprit was clearly the Enterprise build.
“Our new products seem to be hit especially hard, though.”
While the drop was most pronounced on the Pentium, it also appeared—though to a lesser degree—on AMD and Cyrix’s new 5x86 and 5k86 chips. Older 486 and below CPUs were unaffected. The penalty on competing new CPUs was smaller than on the Pentium: up to 8% on Pentium versus at most 4% on AMD or Cyrix parts. Even so, the performance gap between Intel and its rivals had narrowed, dealing a clear blow to Intel’s “expensive but undeniably superior” marketing message.
“We need to figure out why this is happening,” Rick said.
Two possibilities remained: either Android had been built incorrectly, or Intel CPUs simply did not play well with it. Either scenario would have massive repercussions, so solid evidence was essential.
“We have to try. We can’t take this report to Andy as it is.”
Rick casually used the CEO’s first name.
“Agreed. This is going straight to Andy’s desk. We can’t half-ass it.”
His colleague nodded.
“Shall we get started?”
Rick rubbed his tired eyes and sat down with renewed determination. The reckless attempt to reverse-engineer Android Enterprise had begun.
“They said it’s difficult right now and asked us to wait a little longer.”
“They really said that?”
“Yes. I’ve never seen this kind of response before. I confirmed it twice.”
Remington’s voice carried a hint of bewilderment. The conversation concerned Intel. Several days had passed since ID Group placed an order for ten thousand units, yet there had been no reply. Growing impatient, Remington had contacted Intel directly and received the vague response: “It’s difficult right now—please wait a little longer.”
What could possibly be difficult? Yoo Jae-won’s mind raced through various hypotheses. Had they discovered not only the FDIV bug but also the Meltdown vulnerability and were frantically patching it?
Recently released patches did include software mitigations for Meltdown. The Enterprise edition applied stricter protections, while the standard edition used milder settings, which explained the varying degrees of performance loss across versions. Yoo Jae-won had deliberately ensured the mitigation affected all pipeline-based CPUs evenly, so that the drop would not appear targeted solely at Intel. As a result, Pentium suffered the largest penalty, while AMD and Cyrix Pentium-compatible chips experienced milder losses. Intel would certainly have noticed something odd, yet because rival CPUs were also affected, they would not immediately conclude that Pentium alone carried a Meltdown bug.
The strange part was Intel’s reaction. If they had detected the performance drop, a straightforward inquiry would have sufficed. Why the mysterious delay?
“Could they be attempting to reverse-engineer the Enterprise edition?”
“Hmm. If they take too long, it’ll cause problems. Switch the order to AMD. Ah, and since AMD CPUs are a bit weaker than Intel’s, order an extra two thousand units.”
“That brings the total to twelve thousand.”
“Yes. Ask for their best 5k86 models. Also contact Taiwan and have them prepare motherboards with AMD-compatible sockets.”
While Intel held a performance edge, the difference was not insurmountable when viewed across an entire cluster. The strength of a cluster system lay in compensating for individual weaknesses with sheer volume. If AMD delivered roughly 20% less performance per core, they could simply add more nodes. Moreover, AMD chips were $400 cheaper, so even with the increased quantity the total cost remained lower. The only drawbacks were the need for additional system administrators and higher power consumption, both of which ID Group could easily absorb.
“Understood.”
Remington raised no objections. Thus, ID Group’s first cluster system would be built around AMD CPUs—an outcome Intel would later rank among its greatest regrets. By securing the first major cluster deployment, AMD also became the platform for which Android was first optimized, leading many enterprises adopting the Enterprise edition to prefer AMD processors. Yet this ripple effect was still minor compared with the larger aftershocks ID Group would soon unleash.
“Also, we’ve received a response from Sony’s Ken Kutaragi.”
“Oh? Already? What did he say?”
“He expressed gratitude for your proposal, but he still has questions about the equity stake. He would like to visit in person to receive an explanation and seek your advice. Shall we send him to Korea?”
Kutaragi’s reaction was exactly as Yoo Jae-won had anticipated—perhaps even milder. Most people would have exploded upon being asked for 49% outright.
“No. Let’s meet in America. I’ll be heading there soon anyway.”
“Ah, is that so? That’s good news. Though I feel a bit guilty as well.”
Remington’s guilt stemmed from the fact that his paternity leave was about to begin: one month fully paid, followed by two months at two-thirds salary—a total of one hundred days. Some executives had grumbled that the policy was overly generous, but Yoo Jae-won knew that more than half of American workers had no savings whatsoever. Without pay, they would be out on the street. With a new baby on the way, unpaid leave would be tantamount to forcing them to resign. Hence the two-thirds salary. In return, recipients were expected to show greater loyalty to the company.
“There’s nothing to feel guilty about. A stable family is the foundation of a strong enterprise. Take your time and enjoy it.”
Remington’s gratitude was boundless; the paternity policy had earned his absolute loyalty. While not every employee would match that level of devotion, it was enough that they refrained from leaking secrets or pursuing outside interests.
“We’ll host him at the San Francisco mansion. Arrange airport pickup as well.”
“That’s VIP treatment.”
“Yes. Quite a few people still underestimate us as a new company—especially Japanese firms.”
“Understood. Vice President Greenhill mentioned the same issue.”
Vincent Greenhill’s M&A team had yet to bring back good news from Japan. ID Group’s brand recognition there remained low, overshadowed by its reputation for stripping Japanese wealth. Sanyo had expressed willingness to sell, but was demanding a premium for its supposedly unrivaled battery technology. Other promising small firms, often family-run for generations, flatly refused to hand their businesses to foreign buyers. Meanwhile, Japan’s domestic market remained frozen, with no sign of recovery. Export-oriented conglomerates were slowly reviving thanks to favorable exchange rates, but domestic companies faced a double blow: skyrocketing raw-material costs and shrinking sales. Even with no other buyers on the horizon, they remained defiant. The Comcast acquisition, by contrast, appeared likely to close sooner. Alan’s review had found the federal government’s blocking provisions to be legally ambiguous, leaving room for challenge. The government’s intervention had also sent Comcast’s stock price plummeting, angering shareholders. In the United States—ID Group’s home turf—Yoo Jae-won and the ID logo enjoyed an excellent reputation for both showmanship and philanthropy. Market analysts believed that folding Comcast into ID Group would dramatically increase its value. The stock collapse had left many investors trapped, and they were now vocally criticizing the administration while supporting Yoo Jae-won. This had emboldened him further. If legal disputes arose, the simplest solution was to eliminate their root cause by enacting legislation that explicitly permitted cable networks to offer telecommunications services—an achievable goal under the coming Clinton administration, whose signature policy was the Information Superhighway.
Still, while ID Group wielded considerable influence in America, its image in Japan remained purely negative. The M&A team was therefore preparing a new strategy, and Yoo Jae-won decided to extend especially warm hospitality to Kutaragi upon his arrival in the United States.
One week later, Ken Kutaragi arrived in San Francisco accompanied by a single subordinate. It was his first long-haul flight, and although his body was tired, excitement kept fatigue at bay. Upon clearing immigration and stepping into the arrivals hall, he was greeted by an astonishing sight.
“Whoa! A Rolls-Royce!”
“Kensuke, try not to make it so obvious.”
“But it’s a Rolls-Royce, not even a Mercedes!”
A Rolls-Royce bearing a small ID Group flag on its grille waited for them, complete with a uniformed chauffeur. Once inside, the car whisked them away to ID Group’s San Francisco mansion. As Yoo Jae-won had predicted, the two men’s jaws dropped at the sight of the magnificent estate perched on the hill. Renovated at great expense as a wedding gift for Remington, the mansion’s elegance and sophistication far exceeded contemporary standards.
There they met Yoo Jae-won, the head of ID Group and a proven genius. Though the occasion was nerve-wracking, Yoo Jae-won quickly put both visitors at ease. Unlike the impatient Kutaragi, however, Yoo Jae-won remained perfectly relaxed. As a result, they enjoyed a lavish meal and afternoon tea without a single word of business being discussed.
“Do you like Doom?”
When Yoo Jae-won finally asked the question, Kutaragi felt a brief flash of irritation. Within Sony, he was the person most knowledgeable and enthusiastic about games. He prided himself on being second to none in both software and hardware, which was precisely why the company had placed him in charge of the PlayStation project. As for Doom—there was nothing to say!
“There’s a sequel. Would you like to play it together?”
Doom 2! ID Software had been working on it, but no concrete information had leaked yet. It was the hottest unreleased title around.
“Yes! It would be an honor!”
The offer was impossible to refuse. Business temporarily forgotten, Kutaragi and his subordinate followed Yoo Jae-won to a small theater-like room. Although only four chairs were present, the screen mounted on the wall measured over 120 inches. Both men marveled once again at the world of the wealthy.
The system powered on, revealing a familiar desktop: taskbar, Start button, and large icons—the Android operating system. Kutaragi’s eyes immediately locked onto the Doom 2 icon. Yoo Jae-won moved the mouse and launched the game, then returned to his seat and handed something to Kutaragi.
“A prototype joypad developed by our research lab.”
Yoo Jae-won spoke casually, yet the controller carried special weight for Kutaragi, who was building a game console. It was slightly larger than a standard pad, with a satisfying heft. In addition to the directional pad, it featured two analog sticks for thumb control and four face buttons. Two additional triggers sat on the front, shaped like gun triggers and operated by the index fingers.
Doom 2 booted, its magnificent and imposing title screen filling the massive display. The sound was spectacular; the deep, rumbling bass made Kutaragi’s chest vibrate. He would have liked to listen longer, but Yoo Jae-won was in charge. The chairman kindly displayed a help screen explaining each button’s function.
“I’m ready.”
With his sharp eye, Kutaragi memorized the controls instantly. Many of them matched the pad he was designing for PlayStation, making the task even easier.
The title screen returned. New Game was selected. A faint sheen of sweat appeared on Kutaragi’s palms; anticipation for the visuals was overwhelming.
Thud!
The moment the explosive bass from the subwoofer hit and the intro sequence began—
“Hah!”
Kutaragi, already tense, let out a scream and dropped the controller he had been holding. The visuals were stunning, the high-fidelity audio overwhelming, but what truly caught him off guard was an entirely unexpected new sensation that struck him while he was completely defenseless.