| BUSINESSWEEK ONLINE : JUNE 14, 1999 ISSUE | ||||||||
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| INTERNATIONAL -- ASIAN COVER STORY
Ken Kutaragi: Is Sony's Future in His Hands? (int'l edition) Even by Sony Corp.'s liberal standards, Ken Kutaragi stands out as a brazen individual. The 48-year-old computer engineer openly complains that his company has lost its entrepreneurial spirit and suffers from the same ''big-company disease'' that afflicts much of Corporate Japan. He boasts that PlayStation, the hugely popular videogame console he created, is keeping Sony afloat. That's not farfetched: Sony Computer Entertainment, the game division Kutaragi heads, is the company's biggest cash cow--contributing 41% of Sony Corp.'s operating profits in the last fiscal year. ''We're reviving Sony,'' Kutaragi says, ''and showing it how to succeed in the Digital Age.'' Few at Sony can get away with such brash self-assurance. But then again, few are as indispensable as Kutaragi. His original PlayStation, launched in 1994, has sold 55 million units worldwide, not to mention 430 million copies of game software. The next 10 months will be crucial as Kutaragi oversees a $1 billion project to market PlayStation II, a 128-bit workstation-cum-game machine that has been under hush-hush development since 1996. With sales of the original machine waning, Sony is marshalling all its resources to develop what it hopes will be a killer product to wipe out the competition, namely Nintendo and Sega Entertainment. ELECTRIC GUITAR. In a recent sneak-preview, Sony offered a glimpse of what the next-generation machine is capable of: stunningly real 3-D graphics. ''The new PlayStation exceeds my dreams,'' gushes Kutaragi, a videogame, film, and music enthusiast who built his own home theater, complete with a 150-inch screen. The fun-loving Kutaragi has been creating toys since his childhood in Tokyo's old downtown district. He recalls that at age 10 or so, he built an electric-guitar amplifier for a classmate yearning to be a rock musician. In junior high, he took apart scooters to construct go-carts. While he excelled in all his studies, Kutaragi decided to focus on electronics so he could continue to tinker. At one point, when his father fell ill, he considered taking over the family business, a small printing operation. But his parents encouraged him to pursue his electronic dreams. Upon graduation from a prestigious technical university in 1975, he surprised his professors by joining Sony, which was then a fraction of the size it is today, ''because it was the best in terms of encouraging creativity and offering researchers freedom,'' he says. The budding engineer flourished in the Sony incubator. He left his mark on a number of projects, such as the first Mavica still camera, which used a floppy disk as a storage medium, and chips for the ill-fated Betamax video system. In the mid-1980s, when he was assigned to the company's audio lab in Atsugi, outside Tokyo, Kutaragi finally had the research freedom he had been yearning for. During this period, he figured game consoles could do with better audio capabilities. So he developed a sound processor, which Nintendo incorporated into its 16-bit game machine in 1987, before Sony jumped into video games. Before long, Kutaragi had persuaded Nintendo to jump on board another project. This time, the two companies would jointly develop a 32-bit console with improved graphics, based on Sony's CD-ROM drive. When Nintendo abruptly dropped out of the project midway, Norio Ohga, then Sony's President, was so furious he approved Kutaragi's plans to develop the console alone, despite Ohga's reservations about the game business. Fortunately for Sony, the PlayStation turned out to be the company's most successful product in years. More important, the PlayStation has provided Sony with a new business model. As margins decline on consumer-electronics gadgets, Sony has learned from its game operations that the real profits lie in software, whether it be games, music, or movies. As it moves to transform itself into an Internet-based company, Sony sees new profits coming from digital content being downloaded from its Web sites to home entertainment centers. That's why Kutaragi is already thinking about PlayStation III. His dream is to raise interactiveness to a new level, one that would allow users to create their own multi-faceted games. ''My unit was the first to create a business out of the combination of hardware and software,'' says Kutaragi, ''so we're showing Sony how it's done.'' No doubt others at Sony are watching closely. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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