Sony boss Kutaragi blasts timid management for iPod dominance

By Steve Malone

Posted on 21 Jan 2005 at 11:59

The head of Sony's Computer Entertainment Division has hit out at the management of the company for becoming too timid to launch new products. Ken Kutaragi implied that the fear of piracy expressed by the Sony music and movie divisions held back the launch of Sony MP3 players which ended up handing the market to the likes of Apple.

It was only last September that Sony abandoned its policy of building music players which only used its proprietory Atrac format and instead offering MP3-compatible devices.

Kutaragi, seen by many as a future President of the company, said that many Sony employees had been frustrated by the company's refusal to launch MP3 devices. He now says that the company has admitted its mistakes and was 'growing up'.

Possible evidence of this is yesterday's announcement that Sony would be joining with other Consumer electronics vendor to back the establishment a cross-industry DRM standard which will allow copy protected music and video content on any vendors' portable device.

Kutaragi's comments are viewed as outspoken for a Japanese executive in a culture where employees are expected to toe the company line, it may be that his remarks have been sanctioned in order to reassure markets that Sony is getting back on track after the company issued a profits warning yesterday.

The company shook the markets when it emerged that its operating income forecast for the quarter would be 31 per cent down from its previous forecast to 110 billion Yen from 160 billion Yen. The company blames the profit warning on the precipitate fall in prices for some of its product lines including DVD recorders and video cameras. Significantly, it also includes in its statement 'income for portable audio products are also anticipated to fall short of Company estimates as a result of changes in the competitive environment'.

In other words, Apple is eating Sony's lunch.

Kutaragi said that Sony had to get back to the original spirit of the company. 'We have to concentrate on our original nature - challenging and creating,' he said. His own division based around the Playstation is set to have a big hit on its hands when the Playstation Portable (PSP) goes on sale in Europe and North America this spring.