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April 26, 2007 5:59 pm

Sony PlayStation creator retires

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Ken Kutaragi, the maverick engineer behind all three generations of Sony PlayStation consoles, announced his retirement on Thursday in a move likely to be seen as a reaction to the lacklustre sales of the PS3.

Mr Kutaragi, who will leave his post in June, was sidelined from the day-to-day management of Sony Computer Entertainment in December when he was appointed chairman and chief executive.

At that time, Kazuo Hirai was named global president and chief operating officer. On Thursday he was promoted to group chief executive of SCEI.

Sony’s PlayStation 3 has struggled to gain a foothold in global markets despite a record launch in Europe last month, while Nintendo’s Wii games console continues to go from strength to strength.

On Thursday, Nintendo said brisk sales of Wii consoles helped more than double the group’s operating profit to a record Y226bn ($1.91bn) in the year ended March.

The Japanese games maker forecast a record operating profit of Y270bn in the current year and aims to double global sales of the Wii to14m units this year.

Meanwhile, analysts expect Sony’s games division to report an operating loss of Y70bn in the current fiscal year ending March 2008.

Due to the high costs of producing the PS3, Sony is still incurring a loss on every console sold and Goldman Sachs estimates it will not make money on the console until next year, at the earliest.

Mr Hirai, who worked for years in the US with SCEI, is understood to have stronger working relationships with US, European and Japanese games makers and is seen as better-suited to repair strained relations with games companies, which were adversely affected by repeated delays of the PS3 launch.

He is also understood to have a better working relationship with Sir Howard Stringer, Sony’s chief executive.

Mr Kutaragi will remain “honorary chairman” of SCEI. “I am happy to graduate from SCEI after introducing four platforms to the PlayStation family,” said Mr Kutaragi on Thursday.

Sony said that Mr Kutaragi “has decided to pursue his dreams beyond PlayStation and accelerate his network vision”.

Mr Kutaragi’s retirement could be the sign of a critical shift in management thinking, with Sony changing its emphasis so that the current generation of games console will be its last as a hardware manufacturer.

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