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Archive for Monday, January 14, 2002

Online-able gadgets a pillar of new Sony strategy

January 14, 2002

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— In the future home envisioned by Sony Corp., the TV that features online stock trading and the game console that downloads movies will be just a few of the gadgets enabled for fast Internet access.

Those devices will, of course, proudly wear the Sony brand.

Satoru Maeda, senior general manager, shows off an upgraded model
of Airboard, Sony's Net-linking portable TV. The gadget, which
connects by wireless LAN to other home appliances, offers an
improved monitor and broadband access.

Satoru Maeda, senior general manager, shows off an upgraded model of Airboard, Sony's Net-linking portable TV. The gadget, which connects by wireless LAN to other home appliances, offers an improved monitor and broadband access.

While Sony now offers only a few such products, this internetworked dream is no fantasy for the Japanese electronics and entertainment giant. It is central to the multinational company's new business strategy.

True, Sony currently lacks two key ingredients vital to a dominant role in the networked future: software platforms and telecommunications properties that fuse the end user with the information cloud at large.

But many analysts believe that what ultimately determines the winner in the broadband era lies not in networking or operating systems but in entertainment content.

"The big question is what moves the entertainment companies will make," said Kazuharu Miura, an analyst with Daiwa Institute of Research in Tokyo. "For Sony, the idea of linking up content with hardware is a step in the right direction."

Under a strategy announced last year, Sony predicts that what it calls the "ubiquitous value network" will arrive by 2005.

The idea: gadgets will "seamlessly" communicate with each other, beaming back and forth music, movies, e-mail, stock market information and video and telephone conversations.

Leading off the new product parade is Sony's palm-sized camcorder, introduced last fall in Japan and last week in the United States at the Consumer Electronics Show in Las Vegas.

The Network Handycam IP camcorder, which sells for about $1,200, can send short video clips via e-mail, so you need not wait until the vacation is over to ship some choice images to relatives. And it comes with a Web browser.

Getting off the ground

In its quest for dominance in networked content that bland-sounding noun that is everything in online merchandising Sony has several advantages over many rivals: a powerful brand name and a treasure-trove of films, shows and musical acts.

And in Japan and to a less extent across the Pacific, Sony enjoys a public receptive to fancy experimental gadgets.

Already, the company is working to make the distribution and creation of content by consumers a part of its business.

Screenblast.com helps people create music and videos and show them online. Another Sony Web site, Image Station, stores and distributes digital photographs. In Japan, a Sony-run site called PercasTV broadcasts live shows on the Net.

Some of the services are free, others require a fee. And the sites are all designed for optimum performance with Sony digital camcorders, cameras, audio recorders and AV-oriented computers.

That will help Sony pack its machinery with original content and services, once the business gets off the ground, said Masayuki Yonezawa, an analyst with BNP Paribas in Tokyo.

In Japan, Sony is already an Internet provider with nearly 2 million subscribers, or about 4 percent of the market.

Unlike the United States, which is dominated by America Online and to a lesser extent Microsoft, Japan's provider market has many smaller players.

This spring, Sony plans to start offering broadband service through the PlayStation 2 game console. Subscribers will be able to download games, participate in online auctions and get news and entertainment.

In Japan, Sony has also gone into banking, credit cards and insurance, seeking a foothold in a variety of online businesses though the company readily admits it will have to wait years before turning profits in these realms.

They're not alone

Rivals such as Toshiba Corp. and Hitachi are already hot on Sony's heels, adding value to their consumer electronics.

Yoshiaki Kushiki, a managing director who oversees multimedia research at Matsushita Electric Industrial Co., argues that Sony's advantage in traditional entertainment content does not necessarily make it sovereign.

"Network appliances are a totally new area for which content must be created," Kushiki said.

For example, Matsushita is developing a refrigerator that records voice messages and sends them to mobile phones. Another is a "vital sign box" that looks like a fax machine and relays health data to a doctor.

The manufacturer behind the Panasonic brand has also set up a venture called "ep" with about 30 partners including electronics makers, Toyota Motor Corp., several broadcasters and banks.

Starting this spring, ep is to offer online shopping and interactive TV services along with digital broadcasts.

Details have not yet been disclosed.

Satoru Maeda, senior general manager in charge of Airboard Sony's Net-linking portable TV so far on sale only in Japan acknowledges the difficulty in trying to sell products in a new, unknown market.

Sony won't even say how many Airboards have been sold since they hit stores December 2000 for $990. The gadget, which connects wirelessly to other home appliances, recently underwent an upgrade to offer a brighter, easier-on-the-eyes monitor and broadband access.

Many Japanese are still confused, though. about Net appliances and can't tell the difference between an Airboard and a flat-panel TV, Maeda allowed.

"We still need to create the market and raise awareness," he said.

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