Sign in with
Sign up | Sign in

Sony's New CEO Sees a Tough Road Ahead

By - Source: The Wall Street Journal | B 20 comments

Kazuo Hirai, who takes over as President and CEO of Sony Corp. in April, believes the company needs to set aside previous tradition and focus on the new "user experience" in order to succeed.

As reported earlier this week, Sony's current Executive Deputy President and Chairman of its Computer Entertainment (SCE) arm, 51-year-old Kazuo Hirai, will serve as President and CEO of Sony Corporation starting April 1. He now admits that taking the reigns of Sony is a much tougher, bigger challenge than when he took the reigns of SCE back in 2006.

"I thought turning around the PlayStation business was going to be the toughest challenge of my career, but I guess not," he told the Wall Street Journal in an interview. "It's one issue after another. I feel like 'Holy s—, now what?'"

He said the company will be in serious trouble if it doesn't make adjustments, if it doesn't set aside past successes in manufacturing and focus on the user experience itself. That means shaking up the corporate structure which he blames as the reason behind the lack of product innovation and for keeping with prior tradition. That also means cutting costs like he did with the PlayStation business four years after Sony reported a horrid multi-billion loss.

"Sony cannot continue walking on the same path,” Hirai said on Thursday. "Sony needs to find new business areas, such as medical. We also need to select and narrow our business portfolio." He added that the key questions for hardware in production at Sony should be "What can you do with the product? What are your services? What kind of content do you have?"

"It’s not just about the hardware product, it’s about the user experience," he said.

Hirai joined the company back in 1984 by signing on with Sony Music. In 1995, he was assigned to run SCE America (or SCEA) where he played a vital role in the original PlayStation console's success. Then in 2006 he replaced Ken Kutaragi as SCE President with orders to restore profits after Kutaragi revealed that the PlayStation 3 would lose more than $2 billion in its first year.

One of the changes Hirai plans to make will be the way Sony itself develops products. Previously different business groups mapped out products independently -- a method Hirai said lead to a bloated and disjointed portfolio. "We're going to tell you what you are going to make—not the other way around," Hirai said. "This is a complete sea change."

On Thursday Sony said it expects to make a loss of $2.9 billion in the year ending March 31. That's more than double its previous estimate. Yet Sony shares rose as much as 8.9-percent in Tokyo trading, the biggest daily gain since 2009.

To read the full interview, head here.

Discuss
Display all 20 comments.
This thread is closed for comments
Top Comments
  • 10 Hide
    pedro_mann , February 4, 2012 10:23 PM
    "It's one issue after another. I feel like 'Holy s—, now what?'"

    I have a little bit more respect for the new CEO after reading this quote. Makes me feel like he is more of a real person than a stuffy big wig corporate type. We'll see. As for Sony, they have a very good brand image, so that will help with their situation, if execution can be streamlined. Unfortunately, this looks like layoffs in order to reduce redundancy, etc.
  • 10 Hide
    choujij , February 5, 2012 12:01 AM
    I guess spending tens of thousands of dollars in lawyer fees trying to sue the pants off of a couple of teenagers, wasn't the best way for the company to earn profit after all.
Other Comments
  • 0 Hide
    alidan , February 4, 2012 7:55 PM
    damn... i can see why there wont be a ps4 if that rumor was even true to begin with... they if they put something out, it would need to make profit, and that kind of a console wouldn't much more powerful than the ps3...

    i can now see them seriously sticking to a 10 year plan now.
  • 4 Hide
    alidan , February 4, 2012 8:01 PM
    o and how about this for a focus...

    pc monitors and small tvs, all made in oled

    the monitors would be 1920x1200 and 2560x1600 they would be 24in and 30in respectively. and sell them at break even prices, as in they cover operation costs, and all that crap, but dont add to the profit.

    make them high quality, and become known for having the (pronounced theeeee) monitor to have... you than take the success from those, and introduce a new model, better picture and such, but marked up a bit for profit, and more the same manufacturing process over to the 40in+ line of tv.

    gain a reputation for immaculate hardware now, because most people who got a big tv when they got cheap (50in for less than 1500$) are now looking into getting a new one, and you will have a built in user base ready to buy.

    hard to say where you go from there though.
  • 8 Hide
    TheFoxyBox , February 4, 2012 8:09 PM
    alidandamn... i can see why there wont be a ps4 if that rumor was even true to begin with... they if they put something out, it would need to make profit, and that kind of a console wouldn't much more powerful than the ps3...i can now see them seriously sticking to a 10 year plan now.


    Of course there will be a PS4 and what's all this shenanigans about it only being profitable with limited hardware? If I'm not mistaken putting Blu-Ray in the PS3 is what made Sony lose a money since it was fairly new and expensive. Now look you can getting a GPU that's way better than one when the PS3 was released for the same cost. So of course the PS4 will be a lot more powerful than PS3 and still make Sony money.

    Now I really like that Sony is making this move and I'm interested to see what comes from them in the future.
  • 2 Hide
    applegetsmelaid , February 4, 2012 9:12 PM
    Sir Howard Stringer has some big shoes to fill.... Kaz just doesn't seem to have that CEO persona.
  • 10 Hide
    pedro_mann , February 4, 2012 10:23 PM
    "It's one issue after another. I feel like 'Holy s—, now what?'"

    I have a little bit more respect for the new CEO after reading this quote. Makes me feel like he is more of a real person than a stuffy big wig corporate type. We'll see. As for Sony, they have a very good brand image, so that will help with their situation, if execution can be streamlined. Unfortunately, this looks like layoffs in order to reduce redundancy, etc.
  • 4 Hide
    shloader , February 4, 2012 11:56 PM
    It wasn't just the Blu-Ray drive but the Cell processor that went with it along with the RamBus licensed tech. It all combined to make the unit too damn expensive. Certainly not knocking Blu-Ray as it seems necessary with some games now (like any title that's cross-platform but multi-disc on 360) but looking back they could have pushed a design out two years earlier with more conventional hardware... possibly. The Wii has proven you don't need the ultimate in latest tech, but staying power comes from avoiding being a gimmick.
  • 10 Hide
    choujij , February 5, 2012 12:01 AM
    I guess spending tens of thousands of dollars in lawyer fees trying to sue the pants off of a couple of teenagers, wasn't the best way for the company to earn profit after all.
  • -7 Hide
    robochump , February 5, 2012 12:18 AM
    How times change. No wonder Apple decided not to buy Sony. PS3 was a disaster which is very sad since it is one of the only innovative products to come out of Sony for some time.
  • 0 Hide
    SmileyTPB1 , February 5, 2012 12:27 AM


    It's been pretty obvious for years that Sony has lost sight of what the consumer wants. I wonder why it wasn't obvious to Sony.

    The PS3 blunders alone were very obvious. They were that last one out by a year, they most expensive console on the market and the hardware cost so much they were still loosing their ass on every unit.

    At least he doesn't blame piracy for Sony's problems.
  • 1 Hide
    p05esto , February 5, 2012 3:18 AM
    Sony made a dire mistake of going after the hacker community. They didn't realize how closely aligned the "hackers" are with gamers and tech users in general. Most knowledgable computer users and hard core gamers also consider themselves hackers to some extent. Hacking isn't illegal, it isn't a bad thing most of the time, hacking is tinkering, changing, exploring and creatively making things better. Sony shot itself in the foot by going after the hackers, shooting one of them was like shooting their entire audience. Idiots.
  • -5 Hide
    kashifme21 , February 5, 2012 4:25 AM
    Heres hoping Sony leave the Shitsole gaming business. The only thing the 3 of them do is hold the industry back. Would be awesome to see all of them die out, sigh one can only hope lol.
  • 5 Hide
    tomfreak , February 5, 2012 5:46 AM
    If PS4 is a device that is a
    1. A game console
    2. an internet PC + compatitible with any usb keyboard + mouse + HDD + able to run any linux software without limitation.
    3. a word processing PC, I can type with my keyboard and print with any printer.
    4. a media player the support most random format.
    5. Able to surf internet + playing Games using split screen or dual/triple Display( games on 1 screen, Internet, movie TV on another screen). It is cool to my me in the internet, my kids on the game, my mom on TV on a single device)
    6. VOIP, I can video conference with it!

    PS4 is actually a computer, stop limiting its functionality! Now u got a killer console there that replace everything in 1 device for $300-400. People will buy it.

    It will sell people will want it.
  • -1 Hide
    zolton33 , February 5, 2012 10:55 AM
    I knew sony was in trouble with the release of the ps3. Do not get me wrong i like sony products but the ps3 did not fully take the gamer in mind. They pushed the blue ray disc with the ps3 it wasn't really needed at the time.Unlike the ps2 where it was cheap and cost effective to add it into the ps2 when they added it. Adding blue ray inflated the ps3 price tag and gave way to more business to nintendo.

    Don't get me wrong i like nintendo as well. They have a tried and true way of selling their products. Of course they cater to kids more but alot of those who buy consoles are for their kids. So it makes sense. Add to the fact they also keep strong franchises going by being new and inovated with them and its easy to see why they succeed. They try to keep fans as well as new players both in mind.

    With the ps4 they have got to try to keep costs to make and sell it down.Give the players what they come to expect and nothing less. If you can add some goodies and new things without taking away from what the players already have and expect you will succeed. Keep in mind that alot of your customers are kids and adults and everything in between. Kids want to play these games. Parents want to make their kids happy. But if it costs to much not many will be able to afford it and as such you will not move it as easily.

    You need to start making your profits more from the games and less on the console. A majority of nintendos games come from nintendo. They know they have a fan base for certain franchises and they cater to them with new console. Nintendo has never released a system without carrying them with them and vise versa (although they did leave metroid behind on the 64). Sony you have a great product, now just do some decent marketing. But thats my 2 cents.
  • -2 Hide
    alyoshka , February 5, 2012 11:41 AM
    And?????????????
  • 1 Hide
    monsta , February 5, 2012 10:42 PM
    I like his attitude about we are gonna tell you what to make and about user experience , Sony used to be a cool brand, these days they are boring and hardly innovative. It's time Sony got its cool back and started making products that stand out that would make people want to love the brand like they used to.
  • 0 Hide
    spectrewind , February 6, 2012 2:00 AM
    "He said the company will be in serious trouble if it doesn't make adjustments"

    .... cough ... "will be" ??
  • 0 Hide
    wiyosaya , February 6, 2012 1:26 PM
    Yeah, tough to get Sony out of the mire that Stringer put them in, and tougher still because Stringer is still Chairman of the Board.

    Stringer should retire, IMHO, and let Sony get back to its base of developing quality products.
  • 1 Hide
    wiyosaya , February 6, 2012 1:29 PM
    SmileyTPB1It's been pretty obvious for years that Sony has lost sight of what the consumer wants. I wonder why it wasn't obvious to Sony.

    Stringer and the "western," i.e., profit before quality, tack he brought to Sony.
  • 0 Hide
    badaxe2 , February 6, 2012 9:04 PM
    wiyosayaStringer and the "western," i.e., profit before quality, tack he brought to Sony.


    Sounds like the Ballmer/Xbox mantra too.

    After selling value-added hardware at a loss for years, all the while offering free online gameplay, then to get hit by an earthquake/tsunami, it has to be an incredibly frustrating time for Sony execs. Not to mention the hackings, provoked or not, all the while their profit margins are completely dwarfed by Microsoft's. How can anyone think Sony is greedy at a time like this.
  • 0 Hide
    wiyosaya , February 7, 2012 12:29 AM
    Quote:
    Sounds like the Ballmer/Xbox mantra too.

    After selling value-added hardware at a loss for years, all the while offering free online gameplay, then to get hit by an earthquake/tsunami, it has to be an incredibly frustrating time for Sony execs. Not to mention the hackings, provoked or not, all the while their profit margins are completely dwarfed by Microsoft's. How can anyone think Sony is greedy at a time like this.


    Looking at Sony's Audio / Video past, both the Sony ES audio / HT receiver line and the XBR* TV lines were marginalized by someone in my opinion, and I think that that someone is Stringer. The XBR TV line is relatively meaningless at this time; Sony has become much more of a follower in this area and, IMHO, has definitely lost its lead. They both used to be lines where Sony made quality and innovative products, and had a loyal following. When flat tube TVs appeared around 2000/2001, Sony had a corner on the market as many manufacturers were using Sony manufactured picture tubes to make their own products.

    I can only think that marginalizing those lines dropped Sony out of their leadership role for TVs, and any leadership role they had with audio / receiver products. In my opinion, had those lines not been marginalized, Sony may have weathered recent difficulties in a much better fashion. My bet is that what happened to those areas is that they were cut because R&D in those areas is expensive - perhaps too much so for a "western" leader like Stringer. This happened well before the current economic climate / tsunami / earthquake induced woes.