Known as the “Father of the PlayStation,” Ken Kutaragi seemed to many a logical choice to take Sony Corp.’s helm as it struggles to turn around its stumbling electronics business and regain its past glory symbolized by the Walkman.
But in a dramatic management reshuffle on March 7, Kutaragi was removed from Sony’s board, though he still runs the company’s game business. Howard Stringer, a Welshman who had overseen Sony’s successful music and movie businesses, was named the new chairman and chief executive — the first foreigner to lead the Japanese company.
Kutaragi’s demotion wasn’t for lack of accomplishments. His latest creation, the new portable version of the PlayStation, the PSP, is a hot item. Sony was on pace to sell as many as 3 million PlayStation Portables by the end of March.
Instead, it appears that Kutaragi’s outspoken nature may be to blame.
Kutaragi, 54, has earned a reputation over the years as a geek, even a genius — independent and shockingly frank by Japanese standards. He hasn’t held back from criticizing company decisions, acknowledging earlier this year that Sony made the mistake of being overly proprietary about its content. In a culture that values harmony, he isn’t exactly viewed as a team player.
His blunt manner may have been seen as problematic at a time when the sprawling company, whose core electronics business has suffered amid its expansion into entertainment, desperately needed cohesion and revitalization. Sony’s stock has fallen about 70 percent over the last five years.
Ryoji Chubachi, a production and electronics expert who became president in the same reshuffle — making him No. 2 behind Stringer — praised Kutaragi as a talented engineer, but hinted that he wasn’t suitable for managerial leadership.
“I respect him as an engineer,” Chubachi, 57, told journalists at a recent gathering at the company’s Tokyo headquarters. “In the area of semiconductors, I consider him my teacher.”
Kutaragi, chief of subsidiary Sony Computer Entertainment Inc., declined requests to be interviewed for this story. But earlier this year, he was asked by The Associated Press about what he would do if he were to run Sony.
He said the company needed to revive its original innovative spirit, when it boasted engineering finesse with the transistor radio, Walkman and Trinitron TV.
Sony also has been hurt by its insistence on making its content proprietary, Kutaragi said. Some employees, he said, have been frustrated for years with management’s reluctance to introduce products similar to Apple Computer Inc.’s iPod portable music player, mainly because Sony’s music and movie units were worried about content rights. The iPod plays MP3 digital files, which are an open standard and widely used.
“We are growing up,” he told reporters then. “We have to concentrate on our original nature — challenging and creating.”
It’s unclear whether Kutaragi was punished for speaking out. But it is clear that consensus-builders — such as people like Stringer, who doesn’t speak Japanese, are reputed to be — were chosen over potentially divisive critics.
Outgoing Sony chief executive Nobuyuki Idei didn’t say why Kutaragi was passed up, but defended the selection of Chubachi as president, subject to shareholder approval.
“Mr. Chubachi is a good listener,” Idei said at a recent press conference.
Stringer said he still views Kutaragi as a key person at Sony and instrumental in developing the next-generation video-game console dubbed PlayStation 3, or PS3.
“Obviously PS3 is a vital device for the company going forward. So I am under no illusions about the value and importance of Kutaragi-san,” Stringer said, attaching the Japanese honorific “san.”
Another widely held opinion is that Kutaragi, who as a top manager along with Idei, had to take some of the responsibility for Sony’s failures.
“The old management had to be ousted, and so this was the only way Mr. Kutaragi could have ended up,” said Tetsuya Furumoto, an analyst at Shinko Securities.
Battered by competition from cheaper rivals, exemplified by the dramatic rise of South Korea’s Samsung Electronics Co. Ltd., Sony has been in deep trouble in recent years. It fell behind in flat-panel TV sets and got pounded by the iPod.
The PSX, which combined the PlayStation 2 with a DVD recorder and player, has bombed since going on sale less than two years ago. It was never sold outside Japan and Sony won’t disclose PSX sales figures.
Kutaragi drew criticism from even devoted Japanese game players over reported glitches in the PSP after its initial release in Japan.
Some PSP machines in the initial shipment had a button that tended to get stuck, according to Sony.
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