PS3 Development: Kutaragi's Big Secret

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Labeled a "stumbling block", and "renegade", Kutaragi went over-budget on the PS3 and never told the CEO.


According to a revealing new interview over at the Wall Street Journal, Ken Kutaragi was a "stumbling block" to Sony's CEO Howard Stringer. The article describes Kutaragi as a "renegade" who was "notorious within the company for his reluctance to communicate with his bosses or other units."

"In developing the PlayStation 3 console, the device's latest iteration, Mr. Kutaragi went over budget on development costs without informing Mr. Stringer, according to a person familiar with the situation. When Mr. Stringer urged Mr. Kutaragi to have dinner with the heads of the electronics division, he did so just once a year, this person said. A spokeswoman for Mr. Kutaragi declined to comment.

Mr. Stringer tried to win Mr. Kutaragi's cooperation with patience. "I've had dinner with [Mr. Kutaragi] more times than I've had dinner with my wife, and that's not really healthy," Mr. Stringer says.

In September, Mr. Kutaragi announced Sony was halving shipments of the new PlayStation to the U.S. and Japan and was pushing back its European launch. At a news conference, Mr. Kutaragi blamed Sony's electronics group for failing to produce enough of a critical component, exposing his tense relationship with the division.

"If we're asked whether Sony's quality of manufacturing has declined, I would have to say 'yes,'" Mr. Kutaragi told reporters.

At a board meeting a few weeks later, Mr. Kutaragi sprang another surprise on Mr. Stringer, suggesting he drop the price of the entry-level PlayStation 3 console by 20% to just under 50,000 yen (about $420) to make it more competitive.

"It wasn't financially one of my best moments," Mr. Stringer says. "The budget implications were self-evident. [But] I agreed because I wanted the launch to be successful."

The price cut will help double videogame-related losses for Sony's year ending March 31 to about $2 billion, erasing many of the efforts made by other units to boost profitability. "I think it's fair to say that any time you're aiming for the stars, you're running the risk of falling a bit short on your timetable," Mr. Stringer says."

Mar 5, 2007

News by Richard Manley.

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