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Jul-05-2008Sony Wants to Make Blu-Ray More Interactive.(topic overview)
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Glasgow said Sony would be doing everything it can to boost mix of component procurement and operations it bills in dollar terms instead of other currencies. The company will begin using tighter distribution lines and simpler packaging, but U.S. plant production will remain the same, he said. Sony has developed its M-series line of electronics in Mexico using lower cost components than from Japan, he said, and are aimed at consumers who might not buy its high-end goods, providing a likely avenue for more cost savings. Sony products such as digital TVs and related accessories and Blu-ray high-definition video players have made Sony the overwhelming U.S. market leader. Glasgow said he sees no reason for this to change in the future. [1] Glasgow said the U.S. business is doing everything it can to boost the mix of component procurement and operations it bills in dollar terms instead of other currencies. These include efforts to wring out energy savings from tighter distribution lines and simpler packaging. Everything, that is, short of increasing U.S. plant production at sites like its Pittsburgh TV plant, he said, as longer-term operational changes were not appropriate to salve a temporary exchange rate benefit. Sony has developed its M-series line of electronics in Mexico using lower cost components than from Japan, he said, and are aimed at consumers who might not buy its high-end goods, providing a likely avenue for more cost savings.[2]
SAN FRANCISCO (Reuters) - Sony Corp is seeing little or no sign of softer demand among U.S. consumers for its range of digital TVs, cameras and computer goods despite a weakening economy, a top regional executive said on Tuesday. Sony is having to manage pressures on margins that are coming both from spiraling costs for energy and raw materials used in high-tech gadgets and from pricing overseas product costs into weaker dollars, the U.S. official said. "That's the problem," Stan Glasgow, president and chief of operating officer of Sony Electronics told a group of reporters in San Francisco, referring to profit margin pressures.[2] Glasgow says the company is also seeing some exchange rate issues for components as a result of weakness in the dollar against Asian currencies, which could lead the company to find ways to source more production inputs in dollars. While Glasgow says there has been no impact on demand from a slower economy, he does say that the company has expanded its product mix, particularly in televisions, to move down market, targeting mid-priced models. He notes that the company has increased the number of SKUs carried in Wal-Mart (WMT) stores, for instance. Glasgow also noted that the company chose to design its midpriced M series televisions in Mexico rather than the U.S. or Japan in order to cut costs. Glasgow emphasized the importance to Sony of adding connectivity to its products; he says that by 2010, 90% of its offerings will include either wireless or wired connectivity.[3]
"I didn't see so much good in the economic forecasts," Glasgow said referring to the start of Sony'''s current fiscal year that began in April. '''I am saying we are doing well," he said in response to repeated questioning by reporters over the threat that a sinking U.S. economy may pose to demand for its products. "Sony Electronics is growing at a substantial level in the U.S." relative to the fiscal year that ended in March of this year, he said.[1] Sony does not break out forecasts for regional businesses for the upcoming year. For the fiscal year ending March 31, 2008, the electronics business reported a 2 percent decline in Japan, a 2 percent increase in the U.S. market and an 11 percent jump in European sales, all in yen currency terms, according to its annual report. Heading into the company's current fiscal year that started in April, Glasgow said that he had taken into consideration the impact of spiraling oil prices and the housing credit crunch in forecasting Sony's U.S. growth for the coming year. "I didn't see so much good in the economic forecasts," he said.[2] "We saw some weakness in April, followed by a rebound in May and June," Glasgow said. "I don't know if it's a summer thing or not," he said of the apparent rebound in the past two months. For the fiscal year ending March 31, 2008, the electronics business reported a 2 percent decline in Japan, a 2 percent increase in the U.S. market and an 11 percent jump in European sales, all in yen currency terms, according to its annual report.[1]
'''Today, we are competing well for first place for worldwide market share due to the strength of our Bravia lineup.''' The company'''s goal is to add Blu-ray disc-related operations to its portfolio of '''trillion-yen businesses''' ($9.45 billion), which include LCD TVs, gaming and mobile phones, by the year ending March 31, 2011, Sony said in a statement. Studios and entertainment analysts have predicted that Blu-ray disc sales would more than triple this year to about $1 billion, largely because Toshiba discontinued its competing HD DVD format in February, spelling an end to the so-called '''format war.''' [4] Just as well then that its maker Sony is looking for an impact in U.S. homes as well as at the box office. Stan Glasgow, Sony Electronics U.S. president, told us at a press dinner in San Francisco last night that Hancock would be Sony's first experiment with streaming a movie into the homes of buyers of its Bravia TV sets. They would need to have purchased a $299 Internet Video Link accessory to attach to the TV and they will also have to pay a fee, yet to be determined, to watch the stream. Their viewing experience will be in standard definition as broadband speeds were not up to high-definition standards, said Mr Glasgow. The deal has about the same lukewarm attraction as the movie, except for the benefit of getting this streamed version ahead of the DVD release and a copy of the subsequent DVD being included in the price. Sony says this is an industry first - getting a movie directly to the consumer from the content provider - but it also raises questions about Sony's relationship with the middle man it threatens to cut out.[5] Mr Glasgow insisted Sony's goal in the future was to work on more open standards. It also has to work with the industry on sharing access to content. All parties agreed to adopt Java-based tru2way as the national interactive "plug and play" standard that would enable interactive features such as video on demand. He said he expected both the Video Link accessory and cable boxes in future to be replaced by chips inside the TV. This would mean content direct from Sony being offered alongside the video-on-demand services of the cable operators in a shared interface. "The consumers deserve to make the choice of what content they want to watch, it shouldn't be dictated by the cable companies," said Mr Glasgow. "Part of the agreement we have with them is we're able to integrate on that front page to allow consumers to make those choices. That was a very critical part of the agreement." This sounds like another industry first - competing on-demand services on the same screen as cable technologies merge with internet-protocol streaming.[5]
Glasgow touted the company's new Bravia Internet Video Link offering, a $299 device that adds connectivity to Sony televisions. As an experiment, the company will do an early exclusive release of the new Will Smith movie Hancock on a streaming basis to customers of the new service before the movie is released on DVD. No pricing was announced for the movie; he says this will be an experiment. Glasgow did not say how people have signed up for the service so far. (But I would guess it isn't very many at this point.)[3] The signs of change came this week when the company outlined its planned for a movie service via the PS3. Sony isn't containing its movie streaming to its games consoles, as the company has also revealed that it is looking to deliver streaming movies and television to broadband-connected Bravia TVs in the U.S. this autumn. Even though Sony has a vested interest in Blu-ray, it is great to see a company actually use its initiative and become competitive in all aspects of movie distribution, rather than staying stubborn and putting all its film eggs in one basket.[6] Sony is hedging its bet with Blu-ray as the high-definition (HD) movie distribution to consumers medium. It has added an ability for movies to be downloaded direct to its PlayStation 3 games consoles with a PS3 firmware update. Sony has also announced a Bravia Internet device to enable the same function for its Bravia HD TVs.[7] Sir Howard Stringer, chief executive, has been encouraging joined-up thinking by the different divisions of Sony. This means coming up with synergies that promote products, from a Sony Pictures movie encouraging users to buy a Blu-ray player and high-definition TV or buying a games console to watch it on the PlayStation Network. As well as this marketing network, Sony has a hardware target of having 90 per cent of its consumer electronics products featuring wired or wireless network connectivity by 2010, including Blu-ray players, cameras and its Reader digital book.[5]
The BD profile 1 only allows to watch movies in high-definition (1920x1080, 1080p) resolution; the BD profile 1.1 supports picture-in-picture function, which allows to watch a 1080p movie while simultaneously listening to director's comments or see how the particular scene was filmed; the BD profile 2.0 (also known as BD Live) is projected to offer Internet connectivity to allow downloading of additional content as well as Java-based games in addition to some other Java-based features that content providers may enable. It is unclear whether the additional features will require a new profile, but another hardware change may further slowdown penetration of the format. Sony is relatively optimistic about the progress of the format right now, but the company admits that those customers who are satisfied with DVD will hardly acquire Blu-ray shortly.[8] Just in case customers were sure that Blu-ray disc (BD) profile 2.0 was the final one for the format, Sony Corp. said that it would be glad to add further features would add features that will further differentiate Blu-ray from DVD, but which may potentially involve a new profile and hardware changes.[8] View Larger Image A model displays a Sony Corp's new 50 gigabyte (GB) Blue-ray disk during an unveiling in Tokyo September 12, 2007. Toshiba Corp said on Sunday its HD DVD high-definition video format is not dead despite being dealt a big setback by Warner Bros studio's decision to exclusively back Sony Corp's rival Blu-ray technology.[2]
The DVD Forum is an international organization that reunites hardware manufacturers, as well as software, media and content providers that work on ideas about DVD and the HD DVD format. It was initially founded in 1995, when it became known as the DVD consortium. Since the beginning of this year, many retailers have started swearing allegiance to the Blu-ray format, and Toshiba officially unveiled the decision to stop manufacturing HD DVD players.[9] As our sister-site Tech Digest points out, this sounds a lot like some of the ideas that HD DVD was throwing around about 12 months before its demise. It's plan was to enable users to make their own edits of their films and share them with other HD DVD users. There were big problems with the idea itself, a lot because there's extremely limited potential in the idea of sharing personalised cuts of films as they currently stand. HD DVD had an advantage then because all of its players were equipped with the technology, such as an Ethernet port. Blu-ray has since caught up and destroyed the rival format and looks like it's adopting many of its ideas. We're not sure how we feel about that, nor about the strength of the idea itself (currently, we're erring on the side of 'it's bollocks') but either way, the PS3 and the strong community surrounding has the most to gain.[10]
With DVD players now cheap as chips and pervasive, plus the blow to consumer confidence with sub-prime mortgage-inspired credit difficulties the Blu-ray ramp is reckoned to be quite slow with DVDs outselling Blue-ray for some time yet. Microsoft is publicly resistant to the idea of adding a Blu-ray drive to its Xbox 360 and not many notebook computers come with Blu-ray drives. Against this background of a slow Blu-ray take-off it could look a good idea for Sony to get involved in the streaming media distribution business as a delivery mechanism for Sony Entertainment and other producer's material to its PlayStations and TVs.[7] Sony, which trailed Samsung among worldwide liquid-crystal display television set makers in the first quarter, said last week that it expects to be the market leader in high-definition TVs by 2011. By then, Sony expects to return its LCD operations to profitability while building its Blu-ray-related operations into a business that will approach $10 billion in annual sales. The company also said 90% of its electronics categories would be both network-connectable and wireless-enabled in an attempt to capitalize on its leadership position in LCD TVs, high-definition DVD players and game consoles.[4] Sony certainly will have to try to excel in something now that they have polluted and confused the marketplace with their own high definition DVD players with features (who knows what you get) that only techno-geeks want. Their PR people managed to invent all kinds of sales figures about Blu Ray. It was only because of the mindless Playstation that Blu Ray had any significant numbers.[4] A smaller percentage of Sony purchasers vs HD-DVD purchasers had bought blu ray for movies. They Playstation buyers only knew there was a DVD player in there. That campaign ran a better solution (HD-DVD) out of the marketplace, and Sony still can't come up with a definitive spec for their Blu Ray player to allow people to buy it with confidence. I won't buy one until they are $80.00. They have shot themselves in the foot. and I don't think they will recover. At one time I thought I wanted both formats.[4]
A lot of people may be happy with an upconverting DVD player. (Blu-ray) may not turn over, it may not penetrate to the same extent, because (DVD) was such a big medium change from tape.[11] Toshiba apparently sees a world beyond Blu-ray, and is reportedly working on enhancing DVD players' image scaling capabilities to a level that is said to rival the Blu-ray performance. The new DVD players are still much of a mystery in terms of the exact technology used, but they are expected to be released later this year.[9] Ever since Toshiba officially surrendered to Sony's Blu-ray format in February this year, everyone's been wondering what their next move will be, and if they'll ever decide to go to the dark side and start manufacturing Blu-ray players.[9]
Sony is enjoying a strong secular wave of growth in demand for digital TVs and related accessories, including Blu-ray high-definition video players, where it is the overwhelming U.S. market leader, and Glasgow sees no let-up.[2] Sony Electronic's U.S. head, Stan Glasgow, has some interesting ideas for the future of Blu-ray.[10] Some type of social interaction in the future," said Stan Glasgow, president and chief operating officer of Sony Electronics USA, in an interview with Cnet.[8]
The company plans to offer video services for Vaio, Bravia, Walkman and other products by 2010. Sony expects to double its revenue in the BRIC countries - Brazil, Russia, India and China - by 2010. He says the company is growing faster there than in any other part of the world. Glasgow says the company is making progress on its recycling program, and has recycled 8.2 million pounds of electronics since September. He says one goal is to recycle one pound of material for every one pound sold. Sony, he says, has targeted a "zero footprint" within 3-5 years.[3] Sony, once a company that pursued only high-end markets, has made a dramatic change over the past two years. Glasgow said this change doesn'''t imply that the company has shifted away from high-end products. "We are increasing our (product) mix overall," Glasgow said of how the company has moved to embrace the market for mid-priced products sold in mass market retailers such as Wal-mart.[1]
Sony is currently selling an 11 inch OLED TV ([[ XEL-1 ) for about $2,500. This TV is more like an expensive executive desk decoration than a home entertainment product. Sony's COO Stan Glasgow said this week at a dinner event in San Francisco that Sony is "awfully close" to selling a 27" OLED TV. What "awfully close" means in terms of time frames can only be guessed. I assume though that Sony will try to sell a 27 inch OLED TV this holiday shopping season, at least in Japan.[12] At the moment, Sony sells an 11-inch OLED TV for $2,500, which means it is hardly a mass market product. The next step, he says, will be a 27-inch version, followed by a 40-inch version. He says they are "awfully close" to selling a 27-inch OLED version commercially.[3]
After the 27 inch OLED Sony plans to offer a 40 inch OLED TV. More details on Barrons.[12] The biggest problem in producing OLED TVs lies in the amount of manual labor needed according to Sony.[12]
The Entertainment Merchants Association said last week that Blu-ray disc revenue would surge to about $9.5 billion in 2012, overtaking sales of standard-definition discs in the process. Sony last month said its electronics division'''s operating income for the year ended March 31 more than doubled to 356 billion yen ($3.36 billion) as electronics sales rose 8.9% to 6.61 trillion yen ($62.5 billion). [4] Glasgow contends that sales of Sony's eReader electronic book have picked up in the wake of Amazon.com's (AMZN) introduction of the Kindle e-book device. Asked whether Sony might follow in Amazon's footsteps and add cellular networking capability for the download of new books, he said "obviously, we're working on it." He says the ebook market has obvious environmental advantages - you aren't buying paper, for one, and the device users zero power in a standby mode, for another.[3]
Speaking at a dinner with reporters and industry analysts in San Francisco last night, Glasgow did however indicate that Sony was seeing margin pressure from shipping costs, and that the company was changing some of its shipping procedures to reduce costs. He said the company is now doing some shipping direct from factories to retail stores, "trying to cut whatever is in-between" production lines and retail shelves. He also notes that the company is feeling an impact on materials costs from higher oil prices, which affects the cost of plastics and other materials. "We have to find ways to offset that," he said.[3] Rick Clancy, a spokesman for Sony, said at the dinner that the company has been stepping up production of Blu-Ray players to meet demand. He says that the stock rate has been less than 20% in retail stores.[3] On Blu-Ray players, Glasgow says the company has 46% market share in units, 44% in dollar, if you don't count the Playstation 3.[3] "50 is better, and its great at 60," he says. Glasgow says the company thinks it can grow its share of the PC market in the U.S. with its Vaio brand; they think there is a big potential market in people buying a second laptop specifically targeting multimedia. He contends the company is gaining share in consumer notebooks.[3]
On the company's new OLED televisions, Glasgow says the company is making progress on moving to larger screen sizes.[3]
For the first quarter, Sony'''s 13% market share trailed only Samsung'''s 20% among global LCD television units, though it was just one percentage point behind Samsung in dollars spent, NPD Group unit DisplaySearch said last month. [4] Hancock, staring Will Smith will be the first film Sony offer for download and critical to the success of the service, movies will be offered before general release on DVD.[13] In theory, the consumer could choose to watch Hancock delivered by Sony or by the cable operator, based on whoever offers the cheaper price. Of course, Sony Pictures may not make its movies available to cable operators for video-on-demand in order to help its streaming service. That would be a real test of revenue models and the extent Sir Howard expects his divisions to help one another.[5]
With intense competition in the flat panel LCD arena, Sony, along with other manufacturers are looking at innovative ways to gain a competitive advantage. Film downloads are likely to play a pivotal role in Sony's entertainment strategy with their PlayStation 3 games console becoming a medium for such purposes. Despite their heavy investment in Blu-ray, Sony recognize that the way consumers watch films is in a considerable state of flux.[13]
Competition from satellite and cable providers as well as other internet streaming services indicate that Sony's return on investment from Blu-ray may be minimal.[13]
"If we had a dream (for) Blu-ray, it would be much more interactive than it is today: No. 1, where you could interface and change things as you want to see them on the screen. No. 2, you could socially interact with other people, it's connected through the Internet, but theoretically you and your friend could watch the same movie, and you could change themes, change endings, all sorts of strange things in the future.[8] As Blu-ray became the sole competitor on the HD DVD market, many began to wonder what's going to happen next. Toshiba is pretty shy when it comes to confirming some of its future plans, but if the Blu-ray is doomed to fail, they might be the first to get the benefits.[9]
Glasgow contends that viewers should be able to see the difference in quality between a Blu-Ray disk and an "upconverted" DVD player using conventional disks, but that it requires a screen size of at least 40 inches[3] On June 11, at the Los Angeles DVD Steering Committee meeting (DVD Forum), the DVD Download Logo received full approval. This became the starting point for all sorts of speculations, including the possibility to add Internet connectivity to DVD players, but nothing has been confirmed so far.[9]
"We are not seeing clear signs of softness," Glasgow said. "In the high end, it is hard to keep up with the full demand," he said of demand for its pricier flat-panel TV models. The one category that has given Glasgow pause in recent months are digital camcorders, which he said are more sensitive to demand because they lack the must-have status that flat-panel TVs now have with many consumers. [2] Glasgow did admit some weakness in sales of digital camcorders over recent months, de to the fact that the must-have status lies with flat-panel TVs right now.[1]
Instead it should be an active, social experience instead. Allow Mr Glasgow to explain: "We're going to have to open this up as a social network--not just contributions of Sony and other Blu-ray partners," he said.[10]
HD movies use a 1080p resulution but DVD-class or better-than-DVD class viewing can be appreciated with lower 720p streaming media resolution which is what the PS3 and Bravia TV can now enjoy. [7]
SOURCES
1. Sony Sees No Change in U.S. Gadget Appetite - Business - redOrbit
2. Sony's U.S. gadget demand good despite rising costs
3. Tech Trader Daily - Barron's Online : Sony: U.S. Exec Says No Demand Impact From Slowdown; Struggling With Higher Shipping Costs
4. Sony Predicts HDTV Leadership - TVWeek - News
5. FT.com | Tech Blog | Sony to host Hancock at home
6. Sony to stream movies straight to TV -- Electronics NEWS - about-electronics.eu
7. Blocks and Files
8. X-bit labs - Sony Wants to Make Blu-Ray More Interactive.
9. Toshiba Doesn't Give In, Might Add Internet Connectivity To DVD Players
10. PSPSPS
11. [H] Enthusiast www.hardocp.com
12. Sony ''awfully close'' to selling a 27-inch OLED TV - I4U News
13. HD News - Sony to stream films over the internet
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