Tokyo - Sony Computer Entertainment said that the "Father of the PlayStation," Ken Kutaragi, is stepping down as chief executive of the video game giant as it battles fierce competition from its rivals.
Kutaragi, 56, will become honorary chairman of the company, which has dominated the home video-game market since the 1994 launch of the original PlayStation console, the company said in a statement late Thursday.
Kutaragi is the architect of the original PlayStation and the PlayStation 2 in 2000, which both became key sources of revenue for the Japanese icon.
But his most recent brainchild, the PlayStation 3, faced a string of setbacks and is up against intense competition from Nintendo's Wii and Microsoft's Xbox 360.
Kutaragi gave up the day-to-day running of the games unit last year as it slid deeper into the red due to the huge investments in the PS3.
He will continue to support Howard Stringer, Sony chairman and chief executive, as senior technology advisor, the company said.
Kazuo Hirai, currently president and group chief operating officer of Sony Computer Entertainment, will replace him.
"I am happy to graduate from Sony Computer Entertainment Inc. after introducing four platforms to the PlayStation family," Kutaragi said in the statement, referring to the PlayStation family and the handheld PSP console.
"It has been an exciting experience to change the world of computer entertainment by marrying cutting edge technologies with creative minds from all over the world," he said.
Sony has poured hundreds of millions of dollars into PlayStation 3 and its success is considered vital to the company's future following a series of setbacks, including recalls of millions of faulty computer batteries.
The original version and PlayStation 2 have sold more than 100 million each.
Kutaragi is the whiz behind the PS3 and was once touted as a possible future Sony president but he was demoted from the group's board of directors in a 2005 management reshuffle and also replaced as head of consumer electronics.
Sony was forced to delay the global launch of the PS3 by about six months due to problems with the high-definition DVD player and pushed back the rollout again until March 2007 in Europe and some other markets.
Stringer hailed Kutaragi as "a powerful visionary and entrepreneur in one figure.
"Not only has he created a multi-billion dollar business for the Sony Group, he has brought the industry into a new dimension. Sony has benefited tremendously from his vision, his creative genius and from the very strong team he assembled and nurtured," Stringer said.
Sony refuses to say exactly how much it has spent on the PS3 but admits that it will initially lose money on each console after spending hundreds of millions of dollars on new technologies such as the "Cell" microprocessor.
Kutaragi began working on the PS3 after the launch of the PlayStation 2 in 2000, putting the focus on chip power in contrast to rival Nintendo whose new Wii console puts the emphasis on affordable fun for the whole family.
Sony shares fell 60 yen to 6,400 in morning trade.
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