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Lonely at the Top

Fri 26 Nov 2010 8:00am GMT / 3:00am EST / 12:00am PST
Business

Howard Stringer is said to be seeking a new President for Sony. Has Kaz Hirai's moment come?

Sony Computer Entertainment

Sony Computer Entertainment is a Japanese videogame company specialising in a variety of areas in the...

playstation.com

One good question deserves another, so it's fitting that in a week when Sony managed to tackle a long-standing question mark over the firm's videogame division by finally launching Gran Turismo 5, an even bigger question popped its head above the parapet. As reported by Bloomberg and picked up by specialist press the world over, the question is simple - who's next in line to run the whole company?

The tenure of the firm's present boss, the British-born former TV executive Sir Howard Stringer, is not exactly drawing to a close - but the end is in sight, with Stringer himself hinting at retirement in 2013 after the completion of his restructuring plans. It makes sense, in light of this, to name a new president now, essentially allowing a smooth succession by handing down the mantle of Chairman and CEO to an already established leader.

Two names have already emerged as front-runners, at least according to analysts in Tokyo - one of which will be very familiar to games industry types, with Sony Computer Entertainment boss Kazuo Hirai tipped as one of the likely successors. He'll be competing, the rumour-mongers claim, with Hiroshi Yoshioka, presently boss of the consumer products division - which encompasses televisions, cameras and other such devices.

There's a sense of deja vu about the entire affair, from a games perspective. It doesn't seem so long ago that Ken Kutaragi, enjoying the mantle of Sony's golden boy after a decade in which the PlayStation could seemingly do no wrong, was strongly tipped to run the entire company. Few at that time would have predicted a non-Japanese businessman from a media background taking over the engineer-dominated company, let alone the possibility of Kutaragi's departure from Sony Computer Entertainment - and replacement with an executive whose background is in marketing, not designing computer chips.

This time around, those factors are reversed. Hirai is the businessman who's credited, at least within Sony itself (although also increasingly by a wider section of the games business) with turning the company's attitudes around, dragging an engineering-led and notoriously developer-unfriendly division into the 21st century and teaching it to be agile, intelligent and competitive. Whether he's actually succeeded, of course, is a question which it'll take several years to answer, but there's no question but that he's very different from Ken Kutaragi.

Yoshioka, the other front-runner for the job, is a rather different character. Somewhat older than Hirai, he's arguably more representative of the company's old guard. A glance at the men's backgrounds prior to joining Sony demonstrates the difference - both are Sony lifers, but where Hirai graduated with a BA from Tokyo's extremely internationally focused International Christian University, Yoshioka trained as an engineer at Kyoto University. He's been working at an executive level within Sony for many years, but his roots, like that of the company itself, remain in engineering.

The question is, in whose favour does that work? On the one hand, Hirai is the more obvious "continuity" candidate, whose background in media, marketing and working abroad make him a natural choice to follow on from Stringer. However, the choice is not likely to be Stringer's alone - and Sony insiders acknowledge that the the ageing engineers who once dominated the firm entirely remain a powerful force who could push for a candidate more in line with their world-view.

They may be aided in that attempt by the fact that while Stringer is generally seen as having pulled Sony back from the brink, his tenure has only stalled the decline, with any form of strong growth remaining elusive. His supporters would point out, not unfairly, that he's been deeply unlucky in important respects, with the global financial crisis striking just as his reforms within Sony started to bear fruit, and the past year in particular being blighted by the unprecedented strength of the Japanese Yen, which has been extremely damaging to most export-led Japanese firms. Regardless, he's always likely to be seen as the man who managed to hold Sony back from the edge, rather than the man who turned the company around.

That could mean that opinion in Sony's higher echelons swings behind Yoshioka, the old guard engineer - but in spite of that possibility, and allowing for the impenetrable machinations of internal politics at a corporation of this size, most smart bets will probably be on Hirai. In part, he's a safe pair of hands to continue Stringer's work - but more than that, he's also intimately familiar with the PlayStation business, a sector upon which Sony is now more than ever pinning its future hopes.

The torrid launch of the PS3 and the disappointing performance of the PSPgo may be fresh in the minds of many in the games business, but that's only one way of looking at Sony's performance of late. From the perspective of the other parts of the business, the PS3 may be suffering at Nintendo's hands (and Microsoft's, to a lesser extent), but it's a solid example of a business being turned around under new management, and moreover, it's a fascinating platform for media distribution, while PSPgo is an unsuccessful commercial launch but potentially a solid basis for a mobile strategy to eventually challenge Apple.

Talk to Sony's most senior people about PlayStation, and their eyes shine with the future potential - not so much of the hardware itself, but of the PlayStation Network, of the mesh of software and services which have emerged from Sony Computer Entertainment and now stand ready to be integrated into consumer devices, into mobile phones, and into the business models of the company's giant media divisions. It's not that Sony hasn't talked about all of this before, of course - but with Hirai as president, it may finally have someone in charge who can bring the disparate divisions together and start walking the walk.

What, you might reasonably ask, will this mean for Sony's position in videogames, and for the wider industry? If Hirai were to be placed in line to run the company, it would certainly be a vote of confidence in the future role of PlayStation at the heart of Sony's business. It would point to a future where PlayStation would be the hub of the corporation, with complementary businesses such as televisions, Blu-ray players, computers, phones and, of course, music and movies all benefiting from the platform SCE has created.

In turn, that would strengthen SCE's position in the market, and potentially open it up to a much wider audience. If Sony seems outmanoeuvred in the games business this generation by Nintendo, then that's all the more reasons to play a few more cards from its deck. PlayStation Network titles on mobile phones? On network-enabled television sets? On VAIO computers? The possibility is there, and the software libraries - PSone, PS2, PSP, PS Network and even the burgeoning PSP Minis - have the potential to be impressive from day one, something the company's rivals can hardly match.

None of this, of course, is guaranteed - but if Hirai has demonstrated anything in the time he's been at the helm of SCE, it's an ability to use the tools at his disposal effectively and creatively. With the vote of confidence for PlayStation which would be implicit in his appointment as president, he could craft a strategy that would be as much a shot in the arm for the games division as for the rest of the company.

The direction Sony jumps in this decision will be widely seen as a strong indication of the future strategy of the entire corporation. The stock market, of course, will be watching - but none will be watching quite as keenly as Sony's key rivals at firms like Apple, Nintendo, Microsoft and Samsung. The Japanese giant is no longer in peril, but the next man to take the helm will determine whether it can stay truly relevant in the battle for global market share over the coming decade.

2 Comments

Joseph Marlow Blogger http://gamesburp.com

22 0 0.0
Very interesting, thank you.

Posted:4 years ago

#1
From the two candidates, Hirai seems to be the man

Posted:4 years ago

#2

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