Sony shuffles gaming unit, sidelines PS3 mastermind

Ken Kutaragi, President and Chief operating officer of Sony Computer Entertainment Inc. (SCEI), will no longer be active with his current role and will become chairman and Group CEO, effective December 1, 2006, Sony’s video game unit SCEI said yesterday in a press release.

Kutaragi, the mastermind behind the creation of Sony’s PlayStation game console, would be replaced by Kazuo Hirai, President and CEO of Sony Computer Entertainment America (SCEA). Hirai will be appointed as President and Group COO of SCEI, also effective today.

Although, Kutaragi will give up control of daily operations, still he will continue to supervise the entire SCE Group, a wholly-owned unit of Sony Corp., as chief executive officer. He is still authorized to reinforce and further accelerate the development of the PlayStation segment.

After facing much criticism for the handling of the PlayStation 3 launch, Sony decided to shuffle the corporate level. Being at the root of the next-generation PlayStation 3 machine’s production and delay problems that forced the company to slash shipment targets Kutaragi also faced criticism.

After much delay, Sony has launched PlayStation 3 gaming console on Nov. 16 in North America. But Sony had to struggle hard to maintain its lead in the game console market as Microsoft’s Xbox 360 and Nintendo’s Wii are already doing well in the roughly $30 billion global game market.

However, it is too early to say whether Sony, Microsoft or Nintendo will succeed to drag in maxim gaming lovers, but speculation are high among analysts that Sony’s shake up in the corporate level, soon after the release of its PS3, signifies that Sony is not satisfied with the opening sale of gaming consoles.

Sony has dealt a series of problems throughout the year. It faced glitches in its lithium ion batteries and in production segment due to component shortage that raised questions about the quality of its consumer products. Moreover, it dealt with a malfunction in its flagship PlayStation 3 gaming console that delayed the shipments of his high-profit PlayStation home video game system.

The company also witnessed decreasing profits and a failure to win back the portable music market from Apple’s iPod. Recently, the Japanese multinational corporation found a production glitch in its Cyber-shot digital camera models.

Sony hopes that the management shuffle would make supervision of its video game operations strong. Kutaragi will be responsible for strategic thinking at the game unit, while Mr. Hirai will handle shorter-term issues, Sony said.

Jack Tretton, will continue the job of Hirai as president and chief executive officer of SCEA.

Sony has also appointed Akira Sato, member of the board of directors, as Vice Chairman.

David Reeves, President and CEO and Co-COO of Sony Computer Entertainment Europe (SCEE), will now serve as Deputy President of SCEI besides his current responsibility at SCEE. Masaru Kato will continue with his current position as Deputy President and Group CFO.

Sony shares were down 21 cents, or 0.5%, to $39.30 in yesterday trading.