TOKYO -- Ken Kutaragi, who created Sony Corp.'s PlayStation videogame
business, resigned yesterday, giving up his leadership role at the
company at a time when his biggest technological gamble to date -- the
PlayStation 3 -- is lagging behind rivals.

The electronics company said Mr. Kutaragi, the 56-year-old chairman and
chief executive of the Sony Computer Entertainment unit, will leave his
post in June, though he will serve as honorary chairman and support
Chief Executive Howard Stringer as senior technology adviser. In a
statement, Sony said Mr. Kutaragi "decided to pursue his dreams beyond
PlayStation."

The outcome of Mr. Kutaragi's bet on PlayStation 3, the most
technologically advanced videogame system on the market, remains
unclear. The cutting-edge technology Mr. Kutaragi put into the console,
including a Blu-ray disc drive that plays high-definition movies and a
high-performance microprocessor, came at a steep cost, causing delays
in the release of the PlayStation 3 and increasing its retail price to
$499 and $599 for two versions of the console, more than rival
machines. PlayStation 3 made its debut in November, and Sony currently
only sells the more expensive model with a bigger hard drive in the
U.S. and Europe.

While many game executives say Mr. Kutaragi's ambitious vision with
PlayStation 3 still could pay off, the console is in an unexpectedly
weak position compared with less expensive systems from Microsoft Corp.
and Nintendo Co. In March, U.S. retailers sold 259,000 Nintendo Wii
consoles http://snipurl.com/Nintendo_Wii , 199,000 Microsoft Xbox 360s
http://snipurl.com/Xbox_360 and 130,000 PlayStation 3s
http://snipurl.com/Sony_PS3 , according to NPD Group Inc.

Instead of being the hoped-for cornerstone of a recovery for Sony,
videogame-related losses for Sony's year ended in March are expected to
amount to $2 billion, or double original forecasts. That is expected to
drag down the company's overall performance despite improvements in
other businesses, such as televisions. Sony will report full-year
earnings next month.

Sony's predicament in videogames is all the more surprising given the
company's decade-long supremacy in the business with the first two
models of the PlayStation, a success widely credited to Mr. Kutaragi, a
brash engineer who joined the company in 1975. The PlayStation came out
in December 1994 and vaulted past Nintendo's machine as the best-
selling game console.

"His contributions to the growth of our industry are unparalleled,"
said Larry Probst, chairman of Electronic Arts Inc.

Mr. Stringer, nearly two years into the top job at Sony, has been
striving to revamp the company by getting its fractious business
divisions to work together to create products that better integrate
software. In the fall, Mr. Stringer effectively moved Mr. Kutaragi from
his position running day-to-day operations of the videogame unit, as
Mr. Kutaragi's communications issues with other senior executives
became an increasing problem.

Those issues were on display in September, when 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 I were asked whether Sony's quality of manufacturing has
declined, I would have to say 'yes,'" Mr. Kutaragi said.

Richard Doherty, an analyst at the Envisioneering Group who knows Mr.
Kutaragi well, says his decision to step down could also reflect Mr.
Kutaragi's fatigue from years of internal battles. Mr. Doherty said he
detected a change in Mr. Kutaragi's mood last year when he met with him
at a conference. "I think his first seeds of getting tired of shouting
were showing to me," he said.

To succeed Mr. Kutaragi, Sony said Kazuo Hirai, the 46-year-old former
U.S. head who was named president in the fall, will be promoted to
chief executive of its games division.

Sony declined to make Mr. Kutaragi or Mr. Hirai available to comment.

Ultimately, the PS3 launched in a different market than the PS2 - so
the success would never have been the same.
However, Sony priced the system beyond the mass-market, and is
suffering as a consequence.

The net result is that developers are not targeting games for the
system, so even multi platform titles, with only a couple of
exceptions, are not being made for the system first. This results in
poor performing games, like Splinter Cell 4, or F.E.A.R..

Fangirls point to the PS2 and how games like God of War 2 look so
great, thus proving their theory about devlopers pushing the envelope
etc.

That's all well and good, but it not only took 7 years to achieve that
level of performance, but it took a 1st party development studio and a
massive budget to get that far. In the meantime, 99% of the games
released still look not a lot better than their 2001 equivalents.

If, by that same token, it takes 7 years and a massive budget for Sony
to find similar leaps in the Ps3, then you're in for a very long wait
Fangirls.

meanwhile, the 360 trashes the Ps3 in graphics NOW, and hasn't even
begun to be exploited:

To elaborate; The PS3 fangirls continually state:" The p0w3r of the
c3ll!! ZOMG!'.
It's true that developers need to exploit the CEll more to get beter
results. But as I pointed out before, most developers will be porting
to the PS3 from the PC or 360 due to budget and userbase. Therefore
the Cell will only be exploited by a handful of developers.
Furthermore, most of the really great looking games we've seen on the
360 use middleware like Unreal Engine or Renderware.

Both these solutions are multi-platform, and designed around a single
core standard last gen GPU on a PC.

They were adapted for the consoles, but not primarily written for
them.

Therefore, until games are written with the 360s GPU and 3core CPU
specifically, you cannot ully appreciate what it's capable of.
It's the same argument that PS3 fangirls use when arguing the PS3 will
show better results after programmers get to grips with their belove
CPU.

So while Gears of War looks great, it's only scratching the surface of
what the 360 can do. Wait a few years and games will hit the XENOS and
XENON combo like a pack of hungry wolves.

As for the 'value added' ness of the PS3, it's true that it costs less
than a 360 with wireless, and an HD-DVD drive - but HD-DVD is not a
necessity with the 360, and neither is wireless.

How would you feel if I automatically included a car with your holiday
package, even if you dont need it? You'd be much happier if it was an
option that you can add on for a reasonable cost later.

Besides, Blu-Ray may win the format war, granted, but at great cost to
the gaming side of Sony's business. Blu-Ray and HD-DVD have sold
barely 2 million units of software between them, many of which are the
same title duplicated. (Like The Departed, for example, or Superman
Returns). I would hazard a guess that in actual fact, half of those
titles are the same, and thus only about 1.5 million have sold since
launch.

The Ps3 may have artificially boosted interest in Blu-Ray to start
with, but these sales are so tiny that even the recent Borat DVD
eclipsed the entire sales for both formats, in just one week!

So despite 3 milion PS3 owners, Casino Royal only managed 59k copies.
A higher proportion of HD-DVD owners are buying software, considering
there are only around 150-200k players out there, they still managed
to sell close to 1 million titles in the same time frame that Blu-ray
sold 1.2 million.

So with 1/12th as many players, they sold 95% the same numbers int he
same time.

In other words, Blu-Ray and HD-DVD hardly matter to anyone now, and
wont for a very, very long time. By the time they do, there'll be
muylti-format players cheap and available. THe PS3 will then look even
more stupid a purchase.

Goodbye Sony, your days are numbered.

Lets face it, neither the XBOX nor the PS3 have set the world ablaze,
and the simple reason is that the market is just not ready for high-
def gaming on a mass scale yet.

The PS3 and 360 are fighting over a small niche of  high end hard core
gamers who view themselves to  superior to the rest of the market.

The Wii is taking over from the PS2 for the majority of gamers, as
they are finding that fun can be had, not by having high end gaming
rigs, but by a new and inovative method of controlling the games.

Sony, however, never intended the PS3 to be a 'high end only' system -
they hoped tht the transition would be the same as that for the PS2
from the PSone.

What they didn't count on is MS beating them to the market by a year,
and for Nintendo to make a product that peple want.

So all they have left now is to continue to develop the PS2 market, as
that's the only area they are acutally profiting in - otherwise their
losses would be catastrophic.

The net result now is that people see no need to upgrade, as:
A) They dont' have a high def telly.
B) They can't afford even the 360 core.
C) They don't want to play online
D) They dont play games enough to warrant the expense.
E) Current gen games on the PS2 represent fantastic value and are
continuing to impress.

Quite frankly, unless Sony can pull out all the stops, the PS3 will
end up being the gaming  equivalent of a high end sports car.

By the time it's a 'mass market' product (I.E. in about 4 years time)
Nintendo will be wheeling out the Wii 2 with full backwards
compatibility, high def video and all the trappings of what people
like Botty-Bandit think is a next-gen system. Sony will be doomed.