Ken Kutaragi

 Ken Kutaragi

Ken Kutaragi is the former Chairman and chief executive officer of Sony Computer Entertainment (SCEI), the video game division of Sony Corporation. He is known as “The Father of the PlayStation”, and its successors and spinoffs, including the PlayStation 2, PlayStation Portable, and the PlayStation 3.

Kutaragi was closely watched by financial analysts who trace profiles of the losses and profits of the Sony Corporation. This has been attributed to the PlayStation franchise’s high profit returns for Sony; it has been the key source of profit for the aforementioned parent corporation.

Ken Kutaragi was born in Tokyo, Japan. His parents, although not wealthy by Japan standards, still managed to own their own business – they ran a small printing plant in the city. As Kutaragi grew into childhood, they actively encouraged the young boy to explore his mechanical abilities in the plant, and he worked after school there. Aside from his duties in his parents’ factory, Kutaragi was a studious, high-level student; he was often described as a “straight A++”.

Kutaragi always had the desire to “tinker”, often taking apart toys as a child to see how they worked. This curiosity carried from childhood, leading him as a teenager to learn the intricacies of electronics. Eventually, in fact, his love of electronics led to him enrolling in Denki Tsushin University, where he acquired an Electronics degree.

Immediately after graduation, Kutaragi began working for Sony in their digital research labs. Although at the time it was considered a radical decision, Kutaragi felt that Sony was on the “fast track”. He quickly gained a reputation as an excellent problem solver and a forward thinking engineer, earning that reputation by working on many successful projects – including early liquid crystal displays (LCDs) and digital cameras.

, he was watching his daughter with a Famicom and realized the potential that existed within video games. At that particular time, Sony’s executives had very little interest in video games. Thus, when Nintendo expressed the need for a wavetable sound chip for its upcoming new 16-bit system, Kutaragi immediately accepted. Working in secret, he designed and built the chip, the SPC700. When they found out, Sony’s executives were furious. Only with Sony CEO Norio Ohga’s help was Kutaragi able to push the project to completion and keep his job.

Even while working with Nintendo, within Sony gaming was still regarded as a fad and something looked down upon. Despite this hostile atmosphere to video games, Kutaragi managed to persuade Sony to fund his research into the Super NES CD (the device that would eventually become the PlayStation). Despite being considered a risky gamble by other Sony executives, Kutaragi once again had the support of Sony CEO Norio Ohga. The success of the Playstation led to him heading up the development of more consoles like the PlayStation 2, the most successful games console in history and the latest console in the series, the PlayStation 3.

The commercial success of the PlayStation franchise makes Sony Computer Entertainment the most profitable business division of Sony. Despite being an upstart in the console market against veterans Nintendo and Sega, the first PlayStation displaced them both to become the most popular console of that era. The PlayStation 2 extended Sony’s lead in the following generation, at one point holding a 65% market share with 100 million units shipped. Ken was recognized by many financial and technological publications for this success, most notably when he was named one of the 100 most influential people of 2004 in TIME magazine[3] and the Gutenberg of Video Games”.

Since 1997, Kutaragi had been favored to become the next Sony president. He enjoyed a close relationship with Sony CEO Norio Ohga, who had backed Kutaragi on the Sound Chip and PlayStation projects. Ohga’s successor Nobuyuki Idei promoted Kutaragi to Deputy Executive President, Sony-Global Chief operating officer, and Vice-Chairman in 2003. During a controversial management shakeup in 2005, Kutaragi was demoted from the Board of Directors and replaced as head of consumer electronics.However, Kutaragi will remain as the head of the Sony Computer Entertainment gaming division and will also be given a new title: Group Executive Officer.

Analysts believe that Kutaragi’s demotion was surprising and indeed harsh. Many attributed the demotion to his speech at the Foreign Correspondents’ Club in Tokyo wherein he criticised Sony’s policy of using proprietary technologies and implicitly criticised the company’s use of DRM technologies in reference to Sony’s failure to offer a compelling strategy to answer the rise of Apple Computer‘s iPod. This was seen as a break within Japanese corporate culture since employees rarely criticized their companies.

Although Kutaragi’s leadership of consumer electronics was not successful, analysts also suspect that outgoing Sony CEO Nobuyuki Idei had set up Kutaragi to fail, given that both men had a cool working relationship. Idei assigned Kutaragi the tedious task of turning around the consumer division which had already been falling behind competitors such as Samsung in the LCD market. Kutaragi’s rival for the top position, Howard Stringer, was given the less difficult assignment of the content business and his success at Sony BMG resulted in his promotion.

Sony Computer Entertainment, which Kutaragi has been heading since its inception, had a weaker year in 2004 after several years of solid growth.[6] During that same year, Sony’s game sales fell to $7.5 billion from $8.2 billion, and its operating income slid to $650 million from $1 billion, losing $25 million in Q4 of 2004. This can be attributed partially to the oversaturation of the video game market and price wars which caused the PS2 to lose the top sales position for a time.

Kutaragi has labeled the Xbox 360 as “just an Xbox 1.5” and stated that it was “only going after PlayStation 2“. Kutaragi also touted a number of hardware features to show the PS3’s superiority over the Xbox 360 which never actually made it into the final hardware. However, SCE Executive Tetsuhiko Yasuda does not consider Microsoft to be a competitor, and has said that they might consider working on games together.

On September 8th 2006 Kutaragi admitted that the shortage of Playstation 3 consoles to North America and Japan as well as the postponing of the consoles debut in Europe put Sony’s strength in hardware in decline

On November 30, 2006, Kutaragi was replaced as President of Sony Computer Entertainment by Kaz Hirai, the President of SCE America. In addition to other management changes, Kutaragi was promoted to chairman of SCEI, and retained his position as chief executive officer of the group.

On April 26, 2007 It was announced that Kutaragi would retire and instead take up the role of Honorary Chairman. Taking over his position will be current SCEI president and CEO Kaz Hirai, who will be promoted to president and CEO.


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