PlayStation Chief Hirai Tipped As Next Head of Sony

The Sony executive credited with turning the PlayStation into a money-maker, Kazuo Hirai, is in the lead to take over from Howard Stringer after he retires, the Sony chairman said Thursday. But Stringer noted that the race is not over yet.

“The PlayStation group has gone from being a money loser three or four years ago to being a profit center,” Stringer said during a small group interview at Sony’s headquarters in Tokyo.

Hirai’s success with the PlayStation has been noticed by the company’s board of directors and made him a very obvious leadership candidate at Sony, Stringer added.

On Thursday Sony announced Hirai’s promotion to the head of a new consumer products and services group that will include all of Sony’s consumer electronics, personal computer and gaming operations. He currently runs Sony’s Networked Products and Services Group (NPSG), which included the PlayStation business. The promotion will take effect April 1.

Stringer offered several reasons for Hirai’s leap into pole position. Aside from his PlayStation success, Stringer noted Hirai’s teamwork with engineers, expertise in convergence products, loyalty and “charming personality.”

There are also strategic reasons.

As head of NPSG, Hirai oversaw the creation of a digital platform that delivers content to Sony devices. The PlayStation Network feeds games, music and video to PlayStation 3 consoles while a companion network, called Qriocity, serves audio and video to Sony consumer electronics products.

The PlayStation Network has more than 74 million registered accounts worldwide and the newer Qriocity service was launched recently in several European countries and the U.S.

With the platform “up and running quite well,” Sony is poised to integrate products and services to work better together, Stringer said.

The digital platform proved that Sony can do well in software and, with it in place, “now all we have is upside,” Stringer said.

Despite the strong endorsement, Stringer said other executives could still be awarded the top job at Sony.

Hirai will continue be judged on “performance, performance, performance,” Stringer said. His new job will also put him in more frequent, direct contact with Sony’s board of directors, giving them a chance to see more of him, the executive added.

Nipping at Hirai’s heels is Hiroshi Yoshioka, who was named Thursday to run a new division that includes the remainder of Sony’s electronics operations, consisting largely of semiconductors, batteries, image sensors and products for the broadcasting industry. Yoshioka currently runs Sony’s consumer electronics, professional solutions and devices business.

“Mr. Yoshioka has a lot of opportunity to make a lot of money in his group, so the race is not over,” said Stringer. “There are no guarantees about who gets promoted next,” he added.

Stringer declined to give a timetable on deciding a successor. He also said his three positions of chairman, CEO and president could be split up and not all go to the same person.

External candidates were considered but Sony is no longer looking at outsiders.

“I think it would be destructive to bring in an outside player,” Stringer said, explaining how hard it would be for an outsider to grasp the complexity of the company. “I think it would be destructive to morale, it would be destructive to performance,” he said.

A decision could be years away. Stringer has extended his commitment to remain at Sony, though he did not offer a specific time frame.

“The board asked me to stay on and I’m happy to do so because there is unfinished business,” said Stringer.

Stringer became chairman and CEO of Sony in 2005, a time when its core electronics business was struggling. He has said in the past he would leave the company when its turnaround was complete. With that in mind, any clues as to the identity of his successor have been keenly watched.

Sony will reorganize its core electronics operations into two main divisions from April 1, with Hirai and Yoshioka leading the units. The move positions the two executives to potentially succeed Stringer one day as chairman of the electronics giant. Originally, there were four men in the running for Stringer’s job, all Japanese.