Tag Archives: sony

Bad Times for Sony

sony-ceo

Sony just announced its Q4 results with a 95% decline in profits. Extracted from Associated Press :

Sony Corp. said its net profit shriveled to 10.4 billion yen ($115.6 million) in the third quarter from 200.2 billion yen a year earlier. Revenue fell 25 percent to 2.15 trillion yen from 2.86 trillion yen. The quarter includes the year’s peak shopping season and is usually a big one for its core electronics division, which generates over half of its total revenues with well-known products like Bravia TVs, Cyber-shot digital cameras and Vaio computers.

[…] its usually dependable electronics division posted its first-ever operating loss in the fiscal third quarter. It also reiterated its forecast for a net loss of 150 billion yen ($1.67 billion) for the full fiscal year through March — its first loss in 14 years.

The Japanese giant blames the poor economic conditions, but Chief Executive Howard Stringer should re-consider Sony’s strategy to bring it back to a leading position, as things have not been rosy for Sony lately:

The economic downturn is not helping Sony’s strategic bets on PS3, Vaio or Blue-ray. Still a change is required, or Sony will end up entertaining the future only with their movies.

Blue-ray Won the Battle but Lost the War

bd-sony

It is already one year since Sony signed with the four big movie studios and knocked out Toshiba in the war for the high-definition video format. Seagate’s CEO said then “Blue-ray won the battle but lost the war”, referring to hard-drives as the end winners that will store HD movie downloads. Time is predictably confirming his point, as broadband speed grows, movie downloads gain popularity and storage costs drop.

As NYT writes in Blu-ray’s Fuzzy Future, DVD was a big step forward compared to VHS, but Blue-ray quality improvement versus a DVD is not enough to compel consumers to invest into it, less in the middle of a recession. And time plays against Sony’s format. A Blu-ray disc (BD) has 25 GB capacity,or 50GB for two-layers BDs. By next year memory cards of 32GB will be available, and that will kill the adoption of BD-ROM units in computers. The Mac Air and all netbooks already said good-bye to DVD-CD discs. The popularity of external Terabyte drives makes the use of a 50GB Blu-ray disc irrelevant for back-up too.

Not even Microsoft is considering anymore to include Blue-ray in the Xbox 360. Why would they make it more costly when the 360 already has an Internet connection to download movies and games?

With the growth of  broadband speed and cheap storage, do not be surprised if Blu-ray is not in the picture(s) in ten years. As flash get cheaper, even SanDisk could venture into SlotMovie to distribute movies in micro-SD cards, as they did with SlotMusic.

KDDI LISMO: Best Mobile Music Service in the World

KDDI Neon KDDI au

Few people are aware about the huge success that KDDI, #2 mobile operator in Japan, has achieved in selling music to mobile phones. LISMO is the name of the music service available to KDDI au subscribers, that offers song downloads over the air.

In a press release back in February 2007, KDDI already announced that they have exceeded 100 Million song downloads, since the EZ “Chaku-Uta Full” full track download was launched in November 2004.

The following table shows the remarkable growth:

KDDI and Sony announced in October 2007 that LISMO will now enable ‘Chaku-uta Full’ files downloaded to au mobile phones to be transferred to Sony audio equipment via a new ‘LISMO Port’ PC software. It is to work with Sony Walkman and with Sony Net Juke, HDD Stereo System. The service is named ‘au x Sony MUSIC PROJECT’. The intention is to make the protected music available to other devices than the au phones, in response to international music labels embracing DRM-free downloads.

The move also highlights how Sony and KDDI defend from the imminent iPhone assault to Japan. KDDI has a portfolio of music phones quite impressive, that will give a tough battle to iPhone. Sony may have lost the worldwide battle for mp3 players to Apple but, in cooperation with KDDI, might still resist in its domestic market. 3G iPhone in Japan will also be required to download songs over the air, to compete with KDDI service and devices.

KDDI LISMO shows how an operator with determination and courage is able to provide mobile entertainment without giving away the Service and Customer ownership, as AT&T’s has done with the iPhone and Verizon Wireless with the MTV/RealNetworks Rhapsody music service. Even NTT DoCoMo, number one operator in Japan, has been unable to replicate KDDI success after seeking agreements with Napster and Microsoft.

Well done KDDI. Keep giving example to other mobile operators.

Blue-ray or HD DVD? The Hard Drive

Blue-ray is winning the battle for the next-gen DVD. Warner has announced that they will release high-definition movies only in Blue-ray format starting July. With Warner announcement, Sony has secured support for Blue-ray from most of the big film studios.

This is a big win for Sony, specially for the push it will generate in sales of PS3, which includes a Blue-ray reader. The cost optimization that Sony has engineered on the new models of PS3, plus Blue-ray, will make PS3 gain ground on the console battle. Since Xbox 360 supports the “losing” Toshiba HD DVD format, there will be a hit on Xbox 360 sales in the short term. Some Microsoft spokesman already mentioned that Microsoft could consider Blue-ray, if it finally becomes the de facto standard.

Nonetheless, with the predictable increase of bandwidth in our broadband connections, and with High Definition being offered by more and more IPTV service providers, the winning format of the next-gen DVD becomes less relevant than in previous standard wars. In the future, we will consume HD movies through video-on-demand or movie download services, as Amazon Unbox, instead of through a disc format. The CEO of Seagate, one of the biggest hard drive manufacturers, states it clearly: “Blu-ray won the battle but lost the war“. If on-line distribution triumphs over physical disc distribution as expected , the hard drives will be the storage for the movies distributed on-line. Not even backups are likely to be made on discs in the future, once we have Blue-ray writers. As network storage gets cheaper and cheaper, and broadband better and better the Net will be the right place to host your backups.

Nonetheless, congratulations to Sony for winning this battle.