SHAKE-UP AT SONY : Idei Man : Schulhof Ouster May Signal Tighter Control by New Sony Chief

When Nobuyuki Idei took over in April as president of Sony, there were sighs of relief in Sony’s American subsidiaries. Here was an outspoken, cosmopolitan, English-speaking idea man in the tradition of Sony founder Akio Morita.

The characterization of Idei may have been accurate but the relief may have been misguided. With the resignation Tuesday of Michael P. Schulhof, Sony’s point man in America for two decades, and earlier demotions of other American Sony executives, analysts say Idei appears intent on reining in the firm’s overseas operations.

“Sony is in the process of trying to bring the [U.S.] operation under tighter control,” said Joseph Osha, analyst at Merrill Lynch Japan. “They realize they have to get in and get their hands dirty, they have to understand the business.”

The departure of Schulhof, whose membership on Sony’s board has long been touted as evidence of Sony’s global-mindedness, may also be a sign that Japanese companies will take a tougher stance in holding their international executives accountable for their financial performance.

“Before it was a club, and because the market was growing rapidly it was easy to do business,” said Akio Mikuni, head of a Tokyo credit-rating agency. “Now the companies are trying to restructure management. That means they have to be tougher and meaner.”

Since the surprising appointment of Idei as Sony president in April, observers have been watching closely to see how Idei would extricate the company from its financial problems.

Sony has invested an estimated $8 billion in its movie businesses and recently took a $3.2-billion write-off against losses at Sony Pictures and elsewhere. Sony’s consumer products business is also in the doldrums as a recession in Japan has hit sales of VCRs, compact disc players and other key products.

Schulhof’s resignation could be a sign that Idei is willing to break with the past shaped by Morita.

“Japanese chief executives typically wait six months before they do anything,” Mikuni said. “This could be his first move.”

There is little to indicate where Idei will go from here and whether he will choose to sell Sony Pictures Entertainment, which includes Columbia and TriStar Pictures.

Idei has been a frequent visitor to the studios and knows a number of its entertainment executives. And while expressing faith that Morita knew what he was doing when he bought Columbia pictures, Idei said in an interview three years ago that Sony could only have so much patience with its movie business’ poor performance.

But Idei is intent on plunging ahead with its original intention of melding software (movies and other content) with its traditional hardware business.

Idei’s new slogan for Sony: “The Digital Dream Kids.” The term refers to Sony’s effort to target such fast-growing businesses as the Internet and home computers.

Idei’s challenge is in finding a way to make the transition from an expert designer of consumer products to a company that can develop systems that work well with diverse software and can be tied together through computer networks.

Sony’s first effort in the systems area, its portable digital assistant that runs software developed by General Magic, a U.S. company, has been largely a failure.

But Idei also backed the company’s successful entry into the game business with its PlayStation, which took advantage of the design prowess of American chip and software companies. And Idei is credited with the decision to work with Intel on a new low-priced personal computer for the home.

Idei has long been identified as one of Sony’s more internationally minded leaders. He helped the company establish its European presence by opening Sony France in the late 1960s. But he was trained as an economist, not an engineer, and his record in backing new trends has always been mixed.

It was Idei who helped market the compact disc as a replacement for records in the early 1980s. But he was also in charge of the failed effort to develop a game machine using a Microsoft-designed standard called MSX.

Sony has often turned to Idei to bring the company back from the brink. It was Idei who was put in charge of backing off from the beta standard for VCRs that Sony had long championed but which lost out to the VHS standard backed by rival Matsushita.

Idei is also given credit for the reconciliation between Sony and Toshiba, which were pursuing conflicting standards for a new kind of video disc player for storing movies.

But for all his skills, Idei will ultimately be judged by what he does to improve Sony’s bottom line.

Times researcher Chiaki Kitada in Tokyo contributed to this report.

More Sony Coverage:

* Schulhof resigns; move seen as admission of bad management. A1

* What might happen to Jeff Sagansky, now No. 2 at Sony America? D11