Sony Fuses Latest
Technology: With Its Gadget King Pedigree
TOKYO -- After years of lost focus, Sony Corp. is pinning its future on its past as an inventor of cool personal gadgets.
For decades, Sony was a consumer-electronics pioneer, creating some of the world's most popular products, from the Trinitron television to the Walkman. But then, in the 1990s, Sony faltered, caught off guard by the rise of the Internet and new competitors. Distracted, Sony regularly reshuffled divisions, changed management and shifted gears on new products. Meanwhile, its electronics unit -- responsible for 70% of total sales -- fell behind in core areas such as mobile phones and Internet music players.
Now, in a return to the basics, Sony is once again pumping out flashy devices, ranging from tiny digital music players and a flat-panel television controlled by cellphone, to a flat, wireless device for surfing the Web called the Sony Airboard and humanoid robots that can walk, talk, sing and dance.
There's a major difference, though, between the new gadgets and the hit products in Sony's past. The old products were, for the most part, stand-alone boxes. The new gadgets are interconnecting, designed to share music, video and other data, either over a wireless home network or through memory chips that slot into the products -- a kind of electronic Lego system for grown-ups. The idea of a network of personal devices -- referred to as the "ubiquitous value network" inside Sony -- is the company's latest vision for marrying its electronics business with its music and movie businesses -- an integration Sony executives have touted for years but have yet to realize fully.
Leading the push is Kunitake Ando, president of Sony, who hopes consumers will see Sony products as part of a family of entertainment equipment. For example, consumers may soon be able to download a music video onto a stationary "home server," and then watch it on a television or ship it wirelessly to a portable video player, music player, game player or PC. "We have a strong vision of how to turn this into a reality," says Mr. Ando. "We are starting to make it happen from now."
Of course, it will probably be years before anyone knows whether the vision will kickstart Sony's slowed growth. In the digital age, even the most innovative gadget is quickly commoditized as rivals attack with similar products. A case in point is Sony's popular Vaio PC. Shipments of the brand are increasing, but prices keep falling, weighing on Sony's overall earnings. For the fiscal year ending March 31, 2003, Sony is expected to report $63.23 billion in sales, but only $1.23 billion in net income -- representing a ninefold increase in profit derived mostly from continuing strong sales of PlayStation2 and game software.
Still, both the flood of gadgets and the strategy tying them together are signs that Sony is trying to adapt. Last week in Yokohama, at its first "Sony Dream World" exposition1, Sony for the first time offered a glimpse of what it has in the works.
Sony showed a prototype, under glass, of the "Vaio Contents Egg," a plastic pod that will be able to wirelessly serve up movies, music and games to Sony gadgets around the house. The company also is at work on camcorders that can wirelessly ship video to the home server for storage or to a PC for editing. Sony wouldn't say when many of the devices would hit stores.
There were gadgets intended to anticipate users' wants. The "sensing computer," a hexagonal-shaped hand-held device, promises to "learn" its owner's behavior and then offer suggestions, such as when to stop for a drink while shopping or when to grab an umbrella on cloudy days. Why would anyone want this? That's the same question a lot of people asked back when they first heard of Sony's tiny, portable music player.
Sony's CoCoon is a small box that can hook to a broadband Internet connection and store 100 hours of television programming, analyzing the user's viewing patterns and selecting suitable programming. The product, which houses a 160-gigabyte hard disk, is expected to ship in Japan from November for about $1,068. Sony hasn't announced when it will sell the unit overseas.
During a keynote speech at the Yokohama exhibition, Mr. Ando placed a call using his Dick Tracy-style wrist communicator, which has a liquid crystal display and a camera for video phone calls.
The gadgets follow a period of unease at Sony. Through the 1990s, Sony was thrown by the unexpected rapid rise of Samsung Electronics Co. and other Asian rivals, even as Internet businesses like Napster were turning the content business on its head by spreading free music online. Striving to find new areas of growth, Sony pushed into unlikely areas such as Internet banking at the expense of electronics, Sony insiders say.
Sony named Mr. Ando, a spunky gadget freak, to the president's post in 2000 and charged him with refocusing. Known for building Sony's personal computer business, Mr. Ando immediately set out to reinvigorate electronics. At first, the tech meltdown slowed his reforms, as demand for many of Sony's products dried up. But more recently he has made headway, merging Sony's struggling cellphone business into a joint venture with Sweden's Telefon AB L.M. Ericsson and slashing costs at Sony's low-end electronics maker, Aiwa Co., by absorbing the formerly stand-alone public company into Sony's operations.
Mr. Ando also has pushed Sony's disparate product lines -- TVs, PCs, Clie hand-helds and mobile phones -- to improve video and music capabilities and work more closely with Sony's music and movie operations. One example: a Sony Ericsson phone in Europe can access a game based on the hit movie "Men in Black II."
There are no guarantees. With the technological building blocks of the digital age so freely accessible -- be they memory chips, processors or the MP3 music format -- the question for Sony now is whether it can use the music and movies that it does own to set its gadgets apart. Says Howard Stringer, head of Sony Corp. of America, "Sony is going through a transitional period which makes it a dangerous but exciting place."