Alternate title: How Nintendo created its biggest rival.
Even before the Super Famicom was on store shelves, Nintendo had plans to expand the technology behind their console by utilizing the expansion port on the bottom. With the growing popularity of CD-ROM technology, Nintendo foresaw CD-based technology as being an integral part to future of the video games industry. Throughout the lengthy development process, the add-on CD drive for the Super Famicom saw many different models as well as versions from two different two different companies entirely. Regardless, Nintendo intended to somehow make use of the included expansion port.
The development of the Super Nintendo CD add-on was long and complicated. In the late 1980s, Sony researcher Ken Kutaragi designed a sound chip for the in-development successor to the Famicom. After coming to an agreement with Nintendo about using the sound chip in the Super Famicom, Kutaragi and Sony were also tasked with developing a CD-ROM based technology that would be utilized in home entertainment. Not only did the deal include that the upcoming SNES would be fully compatible with Sony's new CD based console, but unbeknownst to Nintendo, Sony would be the sole worldwide licenser, giving them the publishing profits from the SNES and SNES CD titles. Sony officially announced their console, the Play Station, in 1991. The device was able to play both Super Famicom cartridges as well as other interactive software via CD-ROMs, such as movies, music, educational software, and of course, games. The development cycle saw many variations of the hardware, including both a unit that attached to the Super Famicom via the expansion slot as well as a version that was a stand alone unit.

When the contract was created between Sony and Nintendo, Nintendo somehow didn't realize that the deal they made with Sony would not allow them to have complete control over licensing and manufacturing. Nintendo originally intended that the CDs would have a custom plastic caddy that fit over the disc in which they would include a lock-out chip to ensure that they had complete control over licensing. Sony, on the other hand, wanted to place the lock-out chip inside of the CD-ROM device itself and did not want to have the custom caddy as part of the software. Having the chip inside of the device would give Sony complete control over what kind of software would be produced for the add-on. After recognizing this, Nintendo knew that they needed a way to gain some leverage on Sony.
Shortly after Sony's announcement of the Play Station, Nintendo revealed that they were working together with Phillips, one of Sony's largest competitors, on a CD-ROM drive for the Super Famicom. Nintendo cited that the technology behind the Phillips endeavor was technologically better than what Sony was working on at the time. Nintendo gained the leverage they needed by signing this new deal with Phillips. The titles developed for the CD add-on would also be compatible with the new Phillips CD-i. An extension of the agreement also gave Phillips the rights to use select Nintendo characters in some of their CD-i games (which would become the Zelda CD-i games and Hotel Mario). Although this was a breach of the original agreement that Sony and Nintendo had agreed upon, it was in the best interest of both companies to maintain a friendly relationship, especially considering that Sony was still supplying the sound chip for the Super Famicom.
Development from both Sony and Phillips spanned a number of years throughout the Super Famicom's life cycle. While Phillips worked pretty closely with Nintendo throughout all stages of development, Sony's experience was a bit of a different story. In mid 1992, Nintendo officially and briefly ended their partnership with Sony for the CD add-on. In a retaliation of sorts, Sony pledged support to develop titles for Sega's new Sega CD. Despite this, later on in the year, many publishers were seeking to produce an industry standard for CD formats. After many licensees put pressure on Nintendo, they once again teamed up with Sony in an attempt to create this standard. Not only that, but this joint venture would have Nintendo, Sony and Phillips working together on a Super Famicom CD-ROM drive. In the deal, Nintendo had the rights to control all game licenses for the Super Famicom, and Play Station game software, while Sony would have control over non-game software. The system would also be compatible with the Phillips CD-i.
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The Phillips/Sony/Nintendo iteration of the CD add-on was technically impressive at the time. Unlike previous iterations of the hardware and of the competition (Sega CD, PC Engine CD/TurboGrafx CD) which were 16 bit, the new add-on was going to be an impressive 32 bit. The storage medium was a CD/cartridge hybrid that would be able to hold up to 540 MB of data. Game saves would be saved to an onboard 56 Kbit RAM memory chip. Through the CD add-on attached to the bottom of the Super Famicom via the expansion port, a separate system cartridge inserted into the cartridge slot was developed so the console could communicate with the CD device's RAM. The system was called H.A.N.D.S. (Hyper Advanced Nintendo Data transfer System) and it enabled a 32 bit coprocessor to assist the Super Famicom, which brought the CPU speed from 3.58 Mhz to 21.44 Mhz.
Delays plagued the CD add-on. Even during the early stages, the device was always talked about and given a tentative release date which would seem to never come and the release of the Super FX chip only seemed to exacerbate the situation. Development on the CD add-on would have to be revised to, at the very least, be parallel with what the Super FX chip was offering. By late 1993, Nintendo announced that all development on the Super Famicom add-on was officially canceled. Developments in chip-based cartridge technology, such as the Super FX chip rendered the need for a CD add-on mostly obsolete. Not only that, but Nintendo was also in the early stages of developing a successor to the Super Famicom, one that would be 64 bit and would focus on 3D technology. Even though all of the original ideas were completely scrapped, this did not stop Sony from creating and releasing their disc based 32 bit console, the PlayStation, in late 1994 in Japan (1995 elsewhere). While plans to utilize the expansion port on the bottom of the system would be explored via other avenues, the original purpose was all but abandoned.
Photos courtesy of n-sider.com.