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Sony Sets Reviving Electronics A Priority


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Source: SEATTLE POST-INTELLIGENCER

Sony sets reviving electronics a priority

By YURI KAGEYAMA

AP BUSINESS WRITER

Thursday, June 23, 2005

TOKYO -- Howard Stringer, a Welsh-born former journalist who became the first foreigner to head Sony, vowed Thursday to make reviving the Japanese company's battered electronics sector a priority by focusing on key products that can bring long-term growth.

Stringer - whose appointment as Sony Corp. chief executive and chairman won shareholders' approval Wednesday - gave no details on what businesses or products he may drop, saying a turnaround plan will be announced in late September.

"First and foremost, my responsibility is to revitalize Sony's electronics business," he told reporters at a Tokyo hotel. "Cost-cutting is one thing but growth is even more vital."

But Stringer hinted Sony would have to drop some product lines, comparing the company - which also has movie, music and video-game segments - to jam that was spread too thin.

"We can't do everything," he said.

Ryoji Chubachi, the new president and head of electronics, voiced similar sentiments. Sony was struggling because rivals were getting an edge in specific products, while Sony was fighting on all fronts, making a quick response to competition too complex, he said.

"We are setting sail in a storm," said Chubachi, who is expected to work closely with Stringer, a 63-year-old former executive at CBS Inc. who joined Sony in 1997.

Sony has seen its profits eroded and its once mighty brand power diminish in recent years because it has failed to churn out the hit products that made it a household name over the half-century since its founding. Sony started with the transistor radio and more recently developed the Walkman portable music player, Trinitron TV and PlayStation video-game console. Sony shares have lost more than half their value in the last five years.

Some analysts say Sony has fallen behind in portable music players, crystal-display panel TVs, DVD recorders and other products to rivals like Samsung Electronics of South Korea, Apple Computer Inc. of the United States and Sharp Corp. of Japan.

Kazuya Yamamoto, an analyst at UFJ Tsubasa Securities in Tokyo, says he wants to look at the September proposal before assessing Stringer but said there's no doubt Stringer faces a tremendous task.

"He has a good track record in North America, but it all depends on what he does from now, and it's going to be difficult," he said.

Stringer, who headed Sony's North American and entertainment operations, was credited with having achieved results in the United States through job cuts and other key moves such as Sony's acquisition of Metro-Goldwyn-Mayer, whose library of films such as the James Bond series is expected to be crucial in boosting sales of digital electronics gadgets.

When asked to name his favorite Sony gadgets, Stringer smiled and said he had just bought a high-definition rear-projection TV set, one of Sony's hits in the United States. He also mentioned the PlayStation Portable, which he said will become a main tool for watching movies, and the upcoming next-generation game console, the PlayStation 3.

But he acknowledged it will take time to get Sony on the right track.

"We are not looking for a short-term fix. We are looking for long-term growth," Stringer said.

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But Stringer hinted Sony would have to drop some product lines,

This will be inevitable.

Sony's HDD-Players is one example, where it is possible to cut down a bit.

Three to four product lines from two different departments.

The question: Is this necessary?

But finally, the sales numbers will decide, what survives...

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I think Sony is always capable of churning out appealing products, they've got an innate understanding of the human need for glamour. They just have to be prompted that something requires serious effort, or they'd slack.

They've placed a lot of emphasis on DVD/HDD recorders (Cocoon, sugoroku), Vaio, the playstations, even Wega. Portable audio hasn't been high priority for (what I think must be) at least a decade, so it's not going to be able to compete with someone like Apple.

Apple doesn't bring new concepts to the table, but their products make it obvious that a lot was at stake for them - they're so meticulous with every piece of the puzzle. Same with Sharp, which was piss-poor in the whole of 70s cause it invested so much just to get LCD to work, then suddenly every music video insisted on Aquos. The one thing Sony invested heavily in those times was the CCD - I'd like to think that's got something to do with CyberShot's staying power.

The duplicate product lines happened because there were multiple "companies" within Sony and their competing with each other was considered a good thing.

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