• Financial Times, Friday, December 1, 2006 10:45 AM

Less than two weeks after Sony's official PlayStation 3 launch, the electronics giant has sidelined Ken Kutaragi, the chief engineer behind all three generations of PlayStation games consoles, as Sony Computer Entertainment's president and COO. The surprise move is technically a promotion, as Kutaragi becomes chairman and CEO.

The move underscores Sony's difficulties in the video-game market. The undisputed leader of video games over the last 10 years, Sony is now betting the house on its PS3, after a terrible year for its other businesses. However, each new console cycle is like a clean slate, giving Sony's competitors another opportunity to take control of the video-game market.

The PS3's launch has been marred by the expensive cost and slow rate at which the company is able to manufacture each system. It also costs nearly $600, by far the most expensive console in video-game history.

It's a critical moment for Sony, which is why Kutaragi's move is somewhat vexing. Kazuo Hirai will replace Kutaragi as global president and COO; he is understood to be a more software-focused manager than Kutaragi, who is an engineer, which some feel means there will be no PS4.

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