Sony Computer Entertainment Inc., the world’s largest producer of game consoles, has said that its leader Ken Kutaragi will retire in June and will be replaced by Kazuo Hirai. The announcement not only means that Sony admitted all the thorns it had to face with the PlayStation 3, but also may mark a milestone for the division’s strategy.

Ken Kutaragi, currently representative director, chairman and group chief executive for Sony Computer Entertainment will retire from his executive position at SCEI effective June 19, 2007, when SCEI’s annual shareholders’ meeting will take place. Mr. Kutaragi will serve SCEI as honorary chairman of the group and will also continue to support Howard Stringer, chairman and chief executive of, Sony Corp., as senior technology advisor.

Kazuo Hirai, currently president and group chief operating officer will be promoted to president and group chief executive.

Late last year Sony already promoted Mr. Hirai, who was the head of Sony Computer Entertainment America, quite tangibly to serve as president and chief operating officer. Ken Kutaragi is generally known as the father of the PlayStation and has engineering background. Meanwhile, Kaz Hirai, however, came to SCEA from Sony’s music entertainment division, has marketing background and is believed to have better working relationships with game developers that Mr. Kutaragi.

The retiring leader has faced a lot of criticism from observers for the PlayStation 3, the latest game console by Sony Group, as the machine is expensive to manufacture despite of the fact that initial batch of games are unlikely to become bestsellers. At the same time, technical advantages of the arch-rival – Microsoft Xbox 360 – and difficulty to develop games for the Cell processor used in the PlayStation 3 have resulted in losing exclusive titles with game developers.