WYSO

Sony Ready To Move Past Hackers, Losses

Originally published on June 10, 2011 5:15 am

Long before the iPod, there was the Walkman. Then, the CD, the DVD and Blu-ray. Over the decades, Sony has contributed to or invented some of the most significant consumer products in the world.

Of course, the company is also in the entertainment business. Sony makes movies, the cameras to make movies, and the Blu-ray players and TVs people watch them on at home. It also make video games.

And this week at E3, a gaming expo in Los Angeles, Sony started the press conference where it was unveiling its biggest product announcement of the year — the PlayStation Vita — with an apology.

"I want to apologize both personally and on behalf of the company for any anxiety that we've caused you," said Jack Tretton, the CEO of Sony Computer Entertainment America. "I know that we took you away from what you enjoy most, connecting and gaming with friends all over the world and enjoying the many entertainment options on the PlayStation network."

He was referring to the recent attacks on the company's gaming network. The security breach compromised 77 million accounts and took the network down for weeks.

Though the company has been criticized for its response, gamers are undeterred.

Gamer Ricardo Hernandez, who was at E3 this week, agrees.

"When I hear the name Sony, I think anything that's brand Sony is good," he says. "It's quality."

Antonio Williams, another gamer at E3, concurs.

"They handled this very, very well," he says. "They let people know what was going on, how they're doing, what they're doing to recover from this. It's just amazing."

Sony says the numbers show most gamers agree: About 90 percent of those on the PlayStation Network before the hack have returned.

Staying Vigilant

Still, Kazuo Hirai, president and group CEO of Sony Computer Entertainment, says the company has learned the importance of vigilant security, especially for a company that wants to be in the center of the living room.

"I think it's really a wakeup call for corporations around the world, and organizations as well that deal in personal information, about the importance of being vigilant," he says.

Hirai's response is important not just because of his position at the top of the game division, but because Sony's CEO, Howard Stringer, has tapped him as a possible successor.

Jack Plunkett, an industry analyst and CEO of Plunkett Research, explains why Hirai is first in line to succeed Stringer.

"Kaz is in charge of two-thirds of the revenue units of the company, and the side of the company that Sony is really betting the future on," he says.

Hirai would have a big job ahead of him. Last month, Sony posted its worst annual loss since 1995. Part of the loss can be attributed to the hacker attacks and to the earthquake and tsunami. Still, it is the company's third consecutive yearly loss.

Plunkett says Sony needs to rediscover the magic.

"They need to get some of that excitement back into their televisions, their stereos, their basic entertainment devices where, frankly, they've been outmaneuvered by a lot of other companies," he says.

The Heart Of The Matter

One thing the company could do is return to its roots.

John Nathan wrote a book on the culture and history of the company called Sony: A Private Life. He explains what made the company successful in the first place.

"The salient fact is that everybody in Sony, which was really run as a kind of family business long after it entered the multi-billion-dollar gross mark, was a connection of interpersonal relationships in which everyone was, one way or another, connected to the founders," he says. "The engineers lived to see them smile."

Hirai says that Sony's founders, Akio Morita and Masaru Ibuka, do still have a legacy at the company.

"Both Mr. Ibuka and Morita's DNA is really in the heart of the company and is fundamentally a driver of a lot of the things we still do at Sony today," he says. "Mr. Morita had always talked about the combination of hardware and software, and obviously that's in the heart of everything we do today. But today it's not only hardware and content, its network and services."

And perhaps this is why Hirai is at the top of the list to be the company's next CEO.

Now if only he can keep his networks secure, perhaps he might have a new job.

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Sony has been a top scorer in the gaming world, so many eyes were on the corporation this week at E3. That's the Electronic Entertainment Expo in Los Angeles. Those are the three Es. The company's had a rough couple of years, recently suffering from the Japanese earthquake and tsunami, and then a major security breach.

But as NPR's Nina Gregory reports, the game's not over yet.

NINA GREGORY: From the Walkman to the CD, Sony has contributed to or invented some of the most significant consumer electronics in the world. The company also makes movies and the cameras that make movies, and how you watch them at home. They also make video games.

But all that glory feels like it's fading. Recently, Sony has had some bad luck - so bad, it had to open its E3 press conference with an apology.

Mr. JACK TRETTON (Sony): And I want to apologize both personally and on behalf of the company for any anxiety that we've caused you.

GREGORY: That's Jack Tretton. He heads Sony's U.S. Computer Entertainment division. He's talking about recent cyber-attacks on the company's PlayStation Network that compromised 77 million customer accounts and took the network down for weeks.

Though analysts have criticized Sony for taking too long to respond, gamers think Sony did a fine job.

Mr. RICARDO HERNANDEZ: When I hear the name Sony, I think, anything that's brand Sony is good. It's quality.

Mr. ANTHONY WILLIAMS: They handled this very, very well. They let people know what was going on, how they're doing, what they're doing to recover from this. And it's just amazing.

GREGORY: That was gamers Ricardo Hernandez and Antonio Williams at E3. Other gamers agree: 90 percent of those on the PlayStation Network before the hack are back online playing games.

The president of Sony Computer Entertainment is Kazuo Hirai, or Kaz, as he's known. He says the security breach was an alarming lesson.

Mr. KAZUO HIRAI (President, Sony Computer Entertainment): I think it's really a wake up call for corporations around the world that deal in personal information about the importance of being vigilant.

GREGORY: Hirai's response is being watched closely because Sony's CEO, Sir Howard Stringer, has tapped him as a possible successor. Jack Plunkett is an industry analyst.

Mr. JACK PLUNKETT (Analyst): Kaz is in charge of two-thirds of the revenue units of the company and the side of the company that Sony's really betting the future on.

GREGORY: And that's a bet Sony needs to win. Last month, the company posted its worst annual loss since 1995. That's partly due to the hacking, the earthquake and the tsunami. Again, Jack Plunkett.

Mr. PLUNKETT: They need to get some of that excitement back into their televisions, their stereos, their basic entertainment devices where, frankly, they've been outmaneuvered by a lot of other companies.

GREGORY: Another thing Sony could do is return to its roots. John Nathan wrote "Sony: A Private Life." He explains what made the company successful in the first place.

Mr. JOHN NATHAN (Author): The salient fact is that everybody in Sony - which was really run as a kind of family business long after it entered the multibillion-dollar gross mark - was a connection of interpersonal relationships in which everyone was directly, in one way or another, connected to the founders. The engineers lived to see them smile.

GREGORY: Those founders are Akio Morita and Masaru Ibuka. Their legacy still lives at Sony, says the next possible leader, Kaz Hirai.

Mr. HIRAI: Mr. Morita had always talked about a combination of hardware and software, and obviously that's in the heart of everything that we do today, but perhaps the only difference being that today, it's not only just hardware and content, it's also network and services.

GREGORY: And perhaps this understanding of hardware and software and the network is why Hirai is at the top of the list to be the company's next CEO. Now, if only he can keep those networks secure, perhaps he might have a new job.

Nina Gregory, NPR News. Transcript provided by NPR, Copyright NPR.