The next chief executive of Sony Corp. promises to forge a new path for a company that once dominated the business of filling free time with the creation of wildly popular consumer products, from Trinitron TVs to Walkman music players and PlayStation game consoles.
The selection of 51-year-old Kazuo Hirai by Sony's board Wednesday ends the reign of Howard Stringer, the boisterous and charismatic Brit who in 2005 became the company's first non-Japanese chief executive and over seven years as boss couldn't turn around Sony's electronics business.
The leadership change comes at a critical juncture, with Sony's market share squeezed by the manufacturing prowess of Samsung Electronics Co. and the innovations of Apple Inc. The steep ascent of the yen, which rose 30% against the dollar during Mr. Stringer's tenure, has also hobbled profit goals.
Mr. Hirai, who takes over in April, says he wants to cut costs and shake up the corporate structure that he blames for blocking product innovations and keeping Sony mired in the past. He rose on the corporate ladder with a record of hard-nosed cuts, most notably squeezing profits out of the company's PlayStation game division four years after it reported a $2 billion loss.
"I thought turning around the PlayStation business was going to be the toughest challenge of my career, but I guess not," he said in an exclusive interview with The Wall Street Journal in January, talking about difficulties in fixing the electronics business. "It's one issue after another. I feel like 'Holy s—, now what?'"
Born from the ashes of World War II, Sony products embodied technological cool in the decades that followed and established Japan as the center of must-have consumer electronics.
Today, Sony's stock teeters near two-decade lows. Its credit rating was downgraded last month. And reported losses are expected when Sony releases results Thursday for the third quarter of the fiscal year ending in March.
Mr. Hirai described his strategic goal as teaching the company's 168,000 employees that past successes in manufacturing must be replaced by selling the harder-to-quantify "user experience." The world has moved on, he said, "We can't just continue to be a great purveyor of hardware products, even though some people expect us to do that."
His predecessor, the eloquent 69-year-old Mr. Stringer, offered a sweeping vision of harmony between content and the electronics to create experiences available only on Sony products. Mr. Hirai, a videogame veteran, who got his start translating for the Beastie Boys, is considered a pragmatist, a leader who can ask the right questions and make tough decisions.
"We really need to buckle down and be realistic," said Mr. Hirai, who plans a news conference Thursday. "I don't think everybody is on board, but I think people are coming around to the idea that if we don't turn this around, we could be sitting in some serious trouble."
Even at a company known for its unconventional choices of leaders, Mr. Hirai's background is unorthodox. He said he joined the company after graduating from college in 1984 because he believed the company offered a "rock 'n' roll" lifestyle that, for example, allowed wearing jeans at work. At ease in both English and Japanese, Mr. Hirai peppers his conversations with equal doses of "dude" and corporate jargon: It is "important to right-size the business."
As the son of a Japanese banker, Mr. Hirai spent his childhood in the U.S., Canada and Japan. He attended the American School in Japan—a private school largely attended by the children of expatriates—because he worried about fitting in at a traditional Japanese high school. He founded the school's audiovisual club and his hobbies include building model trains and cars—his geek credentials.
In his first job at CBS/Sony Inc., a now defunct music joint venture between the U.S. network and Sony, he served as a translator for such bands as the Beastie Boys and Journey during their visits to Japan.
In the mid-1990s, Sony's music and electronics arms huddled to create a rival videogame business to Nintendo Co. and Mr. Hirai was assigned to run the U.S. division after several more experienced executives declined.
Legions of fans turned PlayStation into a popular and profitable gaming platform when videogame entertainment emerged to rival movies and music. Mr. Hirai took a high profile during Sony's annual appearances at the videogame industry's E3 trade show in Los Angeles, which drew game fans from around the world.
His prominence also made him a target of rival Microsoft Corp. during an E3 skit in 2004. In a spoof of then-popular reality TV show "The Apprentice," an actor played a frightened Mr. Hirai who sold out his fictional colleagues before Donald Trump fired the Sony team.
Mr. Hirai got his chance to run the operation in 2006. Ken Kutaragi, the executive credited with starting the PlayStation business, surprised Mr. Stringer in front of the board of directors by revealing the new PlayStation 3 would lose more than $2 billion in its first year. Mr. Kutaragi soon left the company and Mr. Hirai took over with orders to restore profits.
Mr. Hirai prodded Sony's semiconductor manufacturing partners to slash costs. In one small but symbolic move, he urged designers to swap out the plastic lettering of the PlayStation 3 logo with silk-screened paint, saving money.
Mr. Hirai also corralled PlayStation employees, who had long reveled in their independence from the main office. He transferred the videogame group from its plush offices in Tokyo's ritzy Aoyama neighborhood to Sony's less glamorous corporate headquarters.
"He did it in such a way that tempers didn't fray and anxieties didn't multiply. He is someone who can bring people together for common purpose, which is easier when you speak the common language," said Mr. Stringer, who doesn't speak Japanese.
Based on Mr. Hirai's success with PlayStation, Mr. Stringer promoted him in April 2011 to oversee the consumer-electronics division—still the spiritual soul of Sony. By November, he tackled the difficult TV business.
Televisions were once the cornerstone of a thriving electronics unit but Sony was late to embrace liquid crystal display models. The decision triggered seven straight years of losses for its TV business. With the company's history so rooted in television sets, executives had been unwilling to take a step backward. But Mr. Hirai declared three months ago that Sony would no longer pursue a long-term goal of selling 40 million television sets a year and told the television group he was cutting their sales goals in half.
Mr. Hirai said Sony would "build only what he could sell" and televisions would lose ¥175 billion, about $2.3 billion, in the fiscal year ending in March. The losses would cut by half in the following fiscal year before returning to profits in the year ending March 2014, he said.
The move upset Sony's global sales teams, because they worried it would anger retailers and hurt the company's ability to sell other electronics. Company managers saw the scaled-down goals could require job cuts.
To cut costs, Messrs. Stringer and Hirai abandoned an LCD panel-making joint venture with rival Samsung in December. The alliance was formed when panels were hard to procure. But a new glut meant Sony was paying more to buy screens from its own venture than on the open market.
In another significant shift, Mr. Hirai assumed more control of product planning from Sony's powerful business units. In August, he created a new centralized unit called the Integrated UX, or user experience, and gave it authority over product planning managers for digital cameras, TVs, PlayStation machines, audiovisual products and Vaio computers.
In the past, the different business groups would map out products independently. As a result, he said, Sony's product portfolio became bloated and disjointed. "We're going to tell you what you are going to make—not the other way around," Mr. Hirai said. "This is a complete sea change."
Kunimasa Suzuki, who is Mr. Hirai's deputy in overseeing the videogame and consumer-electronics divisions, said before the UX group was formed, they discovered that four different product category groups were working on separate projects for a tablet computer to challenge the iPad.
The UX group took control of the tablet and assembled a team of engineers. They emphasized such consumer features as the ability to play PlayStation games and browse Web pages faster.
Sony debuted the Tablet S in late 2011 to solid reviews. But the device has yet to reach significant sales.
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