Playing His Way to the Next Level

By Jim Frederick

In video games, success is always fleeting. Master one level, and you get a new, more difficult round. The real-life world of Sony computer-entertainment president Ken Kutaragi--the mastermind behind PlayStation--is a lot like this. He created one of the most successful computer products in history (98 million units sold and counting)--and followed it up with the even more dominant PlayStation 2. But Kutaragi, 53, faces his biggest challenge yet: returning ailing Sony not just to its former glory but beyond. "My role," he says, "is to help lead the company into the future."

Educated as an electrical engineer, Kutaragi joined Sony in 1975 and helped develop several cutting-edge products: a liquid-crystal-display projector, a sophisticated sound-processing chip, an early digital camera. And when a joint venture with Nintendo to build a home-video-game console broke down in 1990, Kutaragi demonstrated vision and management expertise. Rather than concede the business to Nintendo, he formed a team within Sony to build a better system, pressing ahead against internal opposition. PlayStation, released in late 1994, vaulted over Nintendo's Super NES to become the world's top home-gaming platform. A few years later, Kutaragi took a bigger gamble on PlayStation 2, sinking $2.5 billion into the start-up; it has captured about 75% of the home-video-game-console market. Kutaragi's division racked up nearly $10 billion in annual sales and contributed 58% of Sony's operating profit in its most recent fiscal year.

But the rest of Sony has flagged, particularly the consumer-electronics division. Kutaragi's promotion to executive deputy president last March restoked rumors that he's next in line to succeed chairman and CEO Nobuyuki Idei, 66. Kutaragi won't comment on that, but he does acknowledge that his mandate at the company has expanded. Sony needs to return to its roots as an innovator of leading-edge technologies, he says, and rely less on sexy design and savvy marketing. It won't be easy, but Sony's video-game warrior is ready to do battle. --By Jim Frederick. With reporting by Toko Sekiguchi/Tokyo

With reporting by Toko Sekiguchi/Tokyo