Few people are more identified with an iconic product than Ken Kutaragi with Sony's PlayStation. So the announcement that Kutaragi, CEO of Sony Computer Entertainment Inc., would "retire" in June at age 56 was shocking on many levels. There's what it says about the PlayStation 3, whose repeated delays, high cost, and tepid sales seem to spell the end of Sony's dominance in the console market. There's what it implies about Sony itself, a troubled company whose future is uncomfortably tied to the PS3 and to two technologies embedded in it, the Cell microprocessor and the Blu-ray disc drive. And then there's what it means for Japan, a country whose dominance of the videogame market has been eroding for some time.
Kutaragi was always pegged as a renegade at Sony, and he fit the billing in the sense that he so flamboyantly defied the niceties of Japanese consensus management. Nonetheless, he embodied several of Sony's most characteristic and troubling aspects—its focus on hardware at the expense of software; its failure to comprehend the power of networking; its continued celebration of the lone-wolf engineer, at a time when going solo has become decidedly anachronistic. He also displayed a certain flair for megalomania. This is not necessarily a bad thing: Early on, it emboldened Kutaragi to take on Nintendo and Sega at a time when they ruled the game business, and to see that Microsoft would become the ultimate competitor in the battle for the electronic home. But with PS3, his ambition went rococo. By insisting that his new toy be not just a game device but a veritable supercomputer capable of delivering the entire panoply of hi-def digital home entertainment, he turned it into an all-or-nothing proposition.
For Sony, the results to date have been disturbingly closer to nothing. With the Cell, developed in partnership with IBM and Toshiba, Kutaragi created a chip far ahead of its time—meaning its potential won't be realized for years. And by tethering the PS3 to Blu-ray—the latest in a long series of Sony's quixotic attempts to realize its dream of defining a data format—he rendered it both difficult to manufacture and expensive for consumers. In the US, the PS3 is still outsold by the seven-year-old PS2—not to mention Nintendo's Wii and Microsoft's Xbox 360. In Europe, it didn't go on sale at all until last month. For a company already reeling from a flaming battery crisis and a malware DRM crisis, this is not so good.
For Japan, there's something kind of inevitable about all this. In Tokyo last summer, as the PS3 was in a state of suspended delivery, it was easy to think the planet revolved around PlayStation. Xbox was relegated to a tiny subsection in the blaring, multi-level electronics stores of Akihabara; Xbox gamers, likewise. But in the rest of the world, Halo just kept getting bigger and bigger. Even Tetsuya Mizuguchi, whose Lumines music-puzzle game was a huge hit for the PlayStation Portable, was developing a title exclusively for Xbox 360. Games were outgrowing Japan.
Sony, of course, outgrew Japan decades ago, yet it remained a thoroughly Japanese company, dominated by a proud yet money-losing electronics division that had clearly lost its way. Nobuyuki Idei, who resigned as CEO two years ago in favor of the British-American entertainment executive Howard Stringer, was a man who saw what needed to be done but was unable to do it. Stringer's record to date in reining in his Japanese engineers has been mixed, to say the least. But by replacing Kutaragi with Kaz Hirai, the longtime head of SCE America, he has now put the PlayStation franchise in the hands of a thoroughly Americanized Japanese. Hirai has already pulled off the not-so-easy feat of serving simultaneously as Kutaragi's chief deputy and Stringer's man at SCE. Now we'll see if he can pull off the far more difficult feat of salvaging the PlayStation 3—and with it, Sony itself.
