SCE shakes up top-level management

[dobwal]

There are actually 2 questions in your post

(A) Whether organizational changes will improve things ?
It's difficult but clearly something needs to be done differently. I don't know whether Kaz can do it, but we can all watch.

(B) Why are people getting promoted ?

* To allow them better access/control to resources in various parts of the organization.

* To cover for gaps as exec shuffles around. An external hire will take time and very often it's even more messy (because they will need time to assimilate corporate culture and processes).

For all we know, they may be interviewing more candidates to fill in new roles

Makes sense. But one has to wonder whether or not Sony is doing this for appearances sake. Firing or resignations at this point would be admitting failure. Thus, could have a negative effect on the sales of the PS3. Plus, promotions would allow for the right people to get into to the right position without the negative connatation of firings, resignations or demotions.

 

[-tkf-]

If the PS3 ends up losing major marketshare due to low volume and highprice then whoever championed Bluray as a standard on the PS3 should be in line for promotion for CEO and deputy president of janitoral services.

And if Blu-Ray is a succes, both as a Video format and a Console format? Ruler of the world ?

 

[RobertR1]

This a promotion in title but really he's being stripped of his powers. I wouldn't be too shocked if his desicions can be overturned by a board vote or if Kaz retains full operational control of the gaming division and his word overrides Ken's.

The PS3 launch has certainly been less than stellar. The PSP is getting creamed by the DS Lite. The only solution to the diode problem is to keep opening up more production facilities and deal with the yield issues. There is no miracle breakthrough around the corner. Blu Ray has not established itself as a DVD replacement. If you believe the recent article, Sony lost GTA and Assassin's Creed exclusives (perhaps others) to due Ken.

We can speculate the future all day but the recent past hasn't been too great for Sony and a change was needed. However Ken is too much of a "PR figure" to simply remove or demote. Either one would send a ton of negative ripples and uncertainty throughout. Thus the slick way of handling the situation is to actually promote him to a hands off role with a bigger title but no operation control.

 

[Shifty Geezer]

The PSP is getting creamed by the DS Lite.

That statement is only true if PSP sales are suffering because of DS's successes. The fact DS is selling well doesn't mean PSP is selling badly (just been talking about this on another thread). If DS didn't exist, would all those people be buying the pricier and very different PSP? Chances are, no. And if PSP isn't losing sales to DS, it's not getting creamed by DS. It's operating in a different market. By comparison, If Mr. Men books outsell Harry Potter 2.5x to one, that doesn't mean Rowling is getting creamed by Hargreaves. They're selling to 2 different markets, and if Mr. Men didn't exist, Rowling wouldn't be selling any more books.

Now PSP probably isn't doing as well in it's sales as it should be, being a somewhat neglected platform, and i dare say someone should have been making more of an effort with it. I don't think the DS has had much of an impact though. It's not as though the moment DS Lite appeared, PSP sales dropped considerable. I think they've remained very consistent. Sony should have released all the upgrades, the motion detector, the GPS, and added decent software, games, download services, GPS maps on demand etc., to add value to the platform. This is actually what's let Sony down. Their PS devices have loads of potential and promises behind them, but the execution is lacking, including silly mistakes and oversights that have a dramatic impact on the experience. A few changes here and their in the software and services side would make the products really shine, and I hope for Sony's sake this shakeup does just that.

 

[Laa-Yosh]

One of their clear examples its the ps3, even though Blu-ray could be considered a propietary format

You're joking, right? Bluray is meant to provide a steady stream of licence fee revenues for Sony, replacing their CD patents...

 

[Farid]

http://www.ft.com/cms/s/f6728ed8-8095-11db-9096-0000779e2340.html

Ken Kutaragi, the maverick Sony engineer behind all three generations of PlayStation games consoles, will on Friday become chairman of Sony Computer Entertainment in a management reshuffle that could foreshadow the company’s exit from video games hardware.

...

Analysts said that Mr Hirai’s promotion to a global role at SCE could mark a critical shift in management thinking, with Sony changing its emphasis so that the current generation of games console will be its last as a hardware manufacturer.

“The appointment of Hirai could be the start of a shift from hardware to software,†said Yuta Sakurai, an analyst at Nomura. “I cannot now imagine a PlayStation4.â€

Mr Sakurai said that Mr Hirai’s new global portfolio puts a predominantly software-focused manager in charge of the company, adding that SCE’s future would be shaped by Mr Hirai’s relationship with Phil Harrison, the president of SCE’s worldwide studios.

Analysts argue that while Mr Kutaragi, a brilliant engineer, was the right man to run SCE as a hardware powerhouse, Sony may now see better opportunities as a pure maker of games.

Have fun discussing this, folks!

Try to keep it clean, though.

 

[scooby_dooby]

That would truly suck, I don't want to see a virtual MS monopoly.

 

[wco81]

Here's another take from the WSJ, which seems to quote the same Nomura analyst. But it said nothing about Sony getting out of gaming HW:

Sony officials say that the management change was decided internally within the unit. But the promotion of Mr. Hirai could place an executive sympathetic to Mr. Stringer's views high up in the game division, analysts say. Mr. Hirai, who was at the videogame unit's U.S. operations for 10 years, has worked with Mr. Stringer on joint marketing efforts in the U.S. Mr. Hirai is credited with the successful marketing efforts that helped turn the PlayStation into a powerful brand that dominated home gaming for much of a decade. He is also knowledgeable about software through his experience working with U.S. game publishers.

Analysts also say that Mr. Hirai's expertise in running the U.S. game business will be a valuable resource for Sony, which is facing particularly tough competition in its overseas markets. In the U.S. and Europe, Microsoft's Xbox 360 has momentum as it was released a year ahead of Sony's PS3, which was launched earlier this month. The company is also being squeezed by Nintendo's Wii game console, which has been winning accolades for its innovation.

Mr. Kutaragi has helped turn the PlayStation into one of Sony's most successful examples of hardware and software coming together. But Mr. Hirai could provide a balance to Mr. Kutaragi, an engineer, as the unit is increasingly called upon to collaborate on software with other divisions, analysts say.

"In contrast to Kutaragi, who is an engineer, Hirai is closer to software," says Yuta Sakurai, an analyst at Nomura Securities in Tokyo. "Now that the PlayStation 3 is out, however bumpy it was, it could be a message that they're focusing on software next."

After the success of the original PlayStation machine in 1994, Mr. Kutaragi, known as a talented engineer with a feisty temper, quickly moved through Sony's ranks. In 2003, he was charged with drafting a new strategy for all of the company's electronics businesses and was widely considered as a potential candidate for the top job.

But Mr. Kutaragi's fiery personality sometimes got in the way of efforts to work with his colleagues. By 2005, he was relieved of all responsibilities other than the videogame business.

 

[patsu]

Yes, Sony needs to change. The question is what kind ? I doubt Sony is concerned with promotion/demotion at this stage. They got a train going, they have to find the best way to steer and fuel it.

Based on this shuffling, we can guess that...

Its larger strategy seems intact (BTW, expecting Blu-ray to dethrone DVD in 1 year is unrealistic; but losing marketshare and exclusives are causes of concern). It's the execution that will change.

As a CEO, Kutaragi has the strategic decision and execution power. As Chairman, he can also control the flow of SCE board meetings. This means that he is still "the man" but his focus is not fire-fighting or short term needs anymore.

Kaz took the President/COO role, which means that he executes under the directions from Ken. If he's more familiar with software than Kutaragi, then he can execute better in this area. This is actually the best part of the news.

The major regions are represented by Kutaragi (Japan), Kaz (US) and David Reeves (Europe)

The rest are supporting function (CFO) and their bosses.

Looks normal to me. But other than better clarity and focus for the folks involved, there is really not much to it. What I would expect from this board structure is better communications and execution on a worldwide level (More attuned to user needs globally)

As for Sony exiting hardware console business, it is very unlikely and em... very speculative. It just means that software is now a strategic part of the formula... now that the hardware is casted in stone.

 

[dobwal]

http://www.ft.com/cms/s/f6728ed8-8095-11db-9096-0000779e2340.html


Have fun discussing this, folks!

Try to keep it clean, though.

That analyst has more imagination than any poster I've ever met.

First time, I've seen someone take an Nintendo demise conspiracy theory and apply it Sony.

How about Harai promotion is the results of Kutaragi's lack of execution in regards to gaining AC and GTA4 as console exclusives. It can be assumed that Harai was hired to give more emphasis to software over hardware, but is not an indicator that Sony's going all software.

 

[patsu]

It can be assumed that Harai was hired to give more emphasis to software over hardware, but is not an indicator that Sony's going all software.

In a nutshell, yes (assuming Hiraz is indeed a software guy). The other major benefit of this reorg is the communication platform between all 3 regions in the boardroom. This second point cannot be underestimated.

EDIT:
Actually... my personal assessment is: The big/key PS3 difference will be delivered by none of the above. I'll bet on Phil, the undistracted and quiet SCEWW guy. If he does this voluntarily and SCEWW delivers the bomb, he's (and SCEE's) smarter than I thought

EDIT 2:
Ok what wco81 highlighted, Sony officials say that the management change was decided internally within the unit., is significant too. Congrats and welcome to Phase 2.

 

[Supernatural]

Kutaragi's idea to use the PS3 as a troian horse for Blu-Ray was his doom.

 

[Shifty Geezer]

http://www.ft.com/cms/s/f6728ed8-8095-11db-9096-0000779e2340.html
Have fun discussing this, folks!

Hahahahahahahaha. Thanks for that. I needed a laugh. Sony have ridden the two most successful consoles ever for a decade, and now before their next console is even both-feet-out-the-door, they're supposed to be planning to hang up their hats?

Sony going into software?!

I don't know what a person's background has to do necessarily with their future jobs either. CEO's (like politicians changing Cabinet position) often go from corporation to corporation regardless of their past company. Stringer's a journalist historically. Does that mean his appointment as CEO of Sony show Sony want to get out of hardware and into newspapers? Kaz Hirai started as marketting in Sony's music division...

Crazy talk.

 

[Magnum PI]

last gen it was nintendo who was supposed to stop hardware..
now, very early in PS3 lifecycle, there are already ppl to claim there won't be a PS4.

this is not serious.

 

[Carl B]

Well, Yuta Sakurai loves to wonder, I guess that much is proven...

But seriously the idea that Sony would pack up their bags and run out of the hardware game three weeks into their latest launch is simply absurd. Let's at least wait a year there Yuta before waxing poetic. What do these people put on their resumes to get hired?

 

[London Geezer]

I think it's quite ok to say that the probability of Sony exiting the hardware market is as high as MS exiting the software market. Really... it's what they do and have done all their life...

 

[Titanio]

Some further comment from Sony..

Sony President, Ryoji Chubachi:

'The management team will be strengthened by the addition of Kazuo Hirai and another executive to form a four-man team,' Chubachi was quoted by the business daily as saying.

'The PS3 is Sony's biggest challenge, but SCE has the possibility of reaping 1 trln yen in revenue down the road,' he added.

Chubachi said that because the game business has experienced major changes and intensified competition, the workload of each manager has increased.

Following the management reshuffle, Chubachi said Kutaragi is likely to shift focus to the development of new technologies.

http://www.forbes.com/business/feeds/afx/2006/11/30/afx3218298.html

Sony spokesperson:

"Kutaragi will oversee the entire group operation as the group CEO but he's handing over the day-to-day operation to Hirai and David Reeves," said Sony Computer Entertainment spokeswoman Nanako Kato.

"This appointment is to reinforce the management team and at the same time to train the next generation of management team.

"Eventually Hirai will be trained to take the role of Kutaragi. But it's still too early for that and Kutaragi will remain as the group CEO," she said.

http://www.smh.com.au/news/Technolo...-Sony-game-unit/2006/12/01/1164777734926.html

 

[one]

Here's another take from the WSJ, which seems to quote the same Nomura analyst. But it said nothing about Sony getting out of gaming HW:

That article seems plausible. Now Hirai takes day-to-day game console business for the PS3. So what will Kutaragi do? You know it already, the PS3 supercomputing cluster known as the PS4

 

[wco81]

Wait, Kaz is still working out of the US or going back to Japan headquarters?

But yeah, it seems Sony is recognizing the importance of the foreign subsidiaries more.

 

[RobertR1]

I find this article even more interesting that got lost after this news:

http://www.gamespot.com/news/6162509.html?tag=latestnews;title;2

"The software available for any console is crucial to its success. According to a report on the Bloomberg news service, developers may be thinking carefully about making games for the PlayStation 3 because of the number of sales required to put the projects in the black. Namco Bandai Holdings Inc. president Takeo Takasu has said in an interview that PS3 games must be a mass-market success. Games for the next-generation console cost an average of $8.6 million to create, according to Takasu, and need to sell 500,000 units before the developer can turn a profit."