Exec shakeup lays blueprint for Sony's future

CEO Howard Stringer aligns video game and consumer electronics businesses under Kaz Hirai, effectively picking him as successor. That secures Stringer's legacy while maintaining momentum of convergence of devices, entertainment.

Kaz Hirai, CEO of Sony Computer Entertainment, has been named as a possible successor to Chairman, President, and CEO Howard Stringer.
Kaz Hirai, CEO of Sony Computer Entertainment, has been named as a possible successor to CEO Howard Stringer. James Martin/CNET

Sony's CEO has named an heir apparent.

Howard Stringer, while making some organizational tweaks, today chose Kazuo, or Kaz, Hirai to possibly succeed him at the helm of the iconic consumer electronics company.

Hirai, 50, rose up through the ranks in the music and video game businesses and has been the president and CEO of Sony Computer Entertainment, which produces the successful PlayStation franchise as well as the video game business. Now, he's been tapped as the head of the entire consumer business, meaning not only video game consoles and titles, but TVs, Blu-ray players, notebooks, and more.

This is a pretty big deal. Hirai's heading the business will mean changes in some ways, but it will also establish some consistency for whenever Stringer does eventually decide to leave. Here are the most important things about today's announcement.

Stringer's "convergence" agenda should stay on track
Sony's chairman, president, and CEO first laid out his plan at the Consumer Electronics Show in 2009, stressing that the future of consumer electronics was the convergence of PCs, TVs and other gadgets, and entertainment. For most consumers we'd say, well, that's fairly obvious what with our smartphones and tablets being able to play our downloaded apps, videos, and music, and the emergence of lots of streaming entertainment content from the Web to our TVs through video game consoles, set-top boxes, and through the TV itself.

But that wasn't necessarily as obvious two years ago. And Sony has historically struggled with different business divisions working together across music, video, and software platforms. By putting everything--TVs, entertainment software, PlayStation, MP3 players, Vaio laptops--under one roof and a single executive, that actually encourages more cooperation across the company. It's a way of securing his legacy at the company.

The guy in charge of video games is now in charge of TVs
TVs and audio were the jewels in Sony's crown for decades. But today? Apple introduced the iPod a decade ago and basically dismantled Sony's Walkman business. The TV business has been outpaced by Samsung , and hasn't turned a profit in more than half a decade.

Hirai's appointment shows how important the PlayStation business is to the company's fortunes now. For many years, the consumer electronics divisions and video game divisions treated each other as almost separate companies. The PlayStation group is profitable and is responsible for Sony's PlayStation Network, where games and movies can be downloaded to the PS3. By combining responsibilities for Hirai, now the same person will be responsible for the PSN and the Qriocity platform, which has services like Music Unlimited that allow songs to be bought and streamed to the PlayStation 3, and Sony TVs, and Blu-ray Home Theater systems, as well as a range of Sony's portable devices.

He's not another Stringer
Compared to Stringer, 69, Hirai is about two decades younger. As Sony's iconic brand name ages, and as the cachet once associated with having a Sony stereo or TV has been replaced by the cachet of owning an Apple product, it's not a bad move for Sony to pick a leader whose experience aligns him better with its core demographic: young, male gamers.

While Hirai lives in the U.S. now, he was born and raised in Japan. Longtime observers of the company would say that's important for a Sony, whose founding and legacy is distinctly Japanese. As previously noted, Hirai grew up in the company and is recognized as being instrumental in the growth of its gaming business. Stringer was born in Wales and is a former journalist and media executive. He was brought into Sony to shake things up precisely because he was an outsider. It appears that experiment will soon be over.

This isn't set in stone
In an interview with The Wall Street Journal today, Stringer said that Hirai isn't his successor for sure, but is "the leading candidate." Just two years ago, Stringer had selected four executives that he dubbed the "four musketeers," relatively young English-speaking Japanese execs that would help his turnaround the company's fortunes. Hirai was one of them. Hiroshi Yoshioka was another, and he has now been charged with running a group parallel to the consumer business, the Professional and Device Solutions Group.

Stringer has been known to shake things up every few years. So if he does stay on until 2013, as some have speculated, it's not entirely outside the realm of possibility he'll change his mind yet again.

 

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