Ken Kutaragi

President and CEO Sony Computer Entertainment

The father of the Playstation is training his baby for a fight on the Internet.

Ken Kutaragi, who runs Sonys games division, has nurtured his creation into a multibillion-dollar empire: Sony has sold an estimated 75 million PlayStation systems worldwide since 1994. Kutaragi, an engineer by training who conducted research and development in Sonys digital signal processing lab in the 80s, initiated development of the first PlayStation console. PlayStation accounts for about 40 percent of Sonys revenue and has a 47 percent market share.

This year, Kutaragi will engage the most serious threats yet to PlayStations dominance. Microsoft is bulldozing into the game console arena with Xbox, which will include Internet connectivity as a central feature. Meanwhile, traditional rival Nintendo is prepping a summer release of Gamecube, its own high-performance "immersive" three-dimensional system. Sega is fading from the scene, reportedly phasing out its Internet-enabled Dreamcast box.

To meet the competition, Sony is planning to add broadband Internet connectivity to the PlayStation2 sometime later this year, hoping to position it as the entertainment hub of the digital home. The PlayStation2 is already able to play DVD movies, and Kutaragi thinks that adding Internet connectivity will open up a new world of interactive entertainment.

Sony recently stumbled when it couldnt ship enough of the hotly anticipated PlayStation2 systems when it launched the product in the U.S. last fall because of a shortage of electronic components. The shortfall will hurt its earnings. The company says it has rectified its production snags, and says its on track to ship 10 million new units by the end of March.

No one outside of Sony Computer Entertainment knows exactly what Kutaragi is hatching for the PlayStation2s Internet launch. But whatever it is, it will need to be serious fun.