A high-definition view of the 21st Century

20 Apr 2005

Sony Europe’s president Chris Deering is all fired up. It’s easy to see why. A predominantly Japanese enterprise is about to hire its first non-Japanese CEO — Welsh former journalist Sir Howard Stringer — and the company’s most ambitious product strategy is about to unfold, embracing everything from opportunities in digital music to laying the groundwork for the future of high-definition TV (HDTV), video storage and gaming as we know it.

Over the next three years Sony will invest some US$1bn in product marketing as well as sponsoring the FIFA World Cup for 2008.

Deering puts the company’s 21st-Century strategy succinctly: “We are not simply a technology company, we are an entertainment company.” The simplicity of this statement belies the sheer size of Sony, which encapsulates not only hardware devices that range from the obvious television, video products and audio products but everything from mobile phones and laptops to digital cameras, camcorders and IT storage.

The company’s PlayStation division occupies some three quarters of the games console market in Europe alone and has some 500,000 game titles on the market worldwide. In fact, Ireland has the highest percentage per capita home penetration of PlayStation consoles in the world outside of Japan and there are even suggestions that Ireland has already passed out Japan.

Sony also has interests in the music business with Sony BMG and it has its own movie business with Sony Pictures, releasing major titles such as Spider-Man 2 and the forthcoming XXX2.

Deering’s confidence is bolstered by a belief the company has broken down the bureaucracy that in the past stymied market growth and sales and marketing are now working in perfect harmony with research and development.

“Today’s consumer electronics landscape is the most complex it has ever been and the consumer has more power than at any time in history. Much has been written about Sony missing the boat, from the MP3 players to flat screen televisions. No company gets it right all the time. When you get knocked down you get up again. We have a passion for excellence and we are stronger than ever. We are seeking the sweet spot between hot centres such as the revolutions taking place in communications and fashion. My vision is clear, not just leading consumer electronics but the essential entertainment brand of the 21st century,” Deering explains.

The lynchpin of his vision is an alliance between Sony’s €1bn semiconductor business and IBM and Toshiba to develop what he described as “the cell chip”. The cell chip will form the core engine of future entertainment systems and will feature in the forthcoming PlayStation 3 (PS3) product.

Kicking off Sony’s strategy will be a “revolution” in high-definition television (HDTV), which will be the standard Sony will be pushing for the next decade and will feature strongly in its World Cup 2008 campaign. At a press event in Bordeaux last week, Sony unveiled some 25 new LCD HDTV products for the European market, including a massive 70-inch rear projector TV aimed at the home cinema market. He also pointed to synergies between HDTV and the next generation of DVD, entitled Blu Ray, which includes is capable of storing 50GB of content per disk He also unveiled a new HDTV-based HandyCam camcorder capable of recording wide-screen cinema and surround sound.

HD broadcast services are already available in the US, Japan, Canada, South Korea and Australia, which Deering said demonstrates a clear consumer demand for higher-quality and accurate viewing. Broadcasters in Europe have concluded that HDTV is both technically and commercially viable.

Deering also unveiled the first Sony Ericsson Walkman phone, the W800, which could hit the marketplace as early as July. The move comes as a shock to other players in the market such as Motorola, which is working with Apple to roll out phones with iPod technologies later this year. The first Sony Ericsson Walkman phone model to hit shops will be a standard GPRS phone but will boast a two megapixel camera and a Walkman capable of storing some 512MB of music. However, a newer version of the phone aimed for the Christmas market will be capable of storing some 4GB of music, equivalent to most iPod mini devices on the market at present. Sources at Sony Ericsson predict the W800 will retail for around €500.

Deering acknowledged that even though Sony had its own flash memory and removable media technologies at least five years ago, the company did not move fast enough and allowed Apple to steal the limelight with its iPod portable music player, quickly followed up by its iTunes music store. However, in the past year Sony has moved to reassert the Walkman brand and last week in Bordeaux unveiled the latest version of its Network Walkman, the HD-5, capable of storing 20GB of music (equal to 13,000 tracks) and with up to 40 hours playback on a single battery charge. In May, the company will be launching its Connect music store in the Irish market, which will compete with iTunes.

“To be honest iTunes is very good, but globally iTunes has less than 5pc of the market for digital music, our aim is to deliver a compelling and exciting experience for transferring MP3 files. We will push the standard and ultimately we aim to obsolete ourselves. Globally the digital music revolution is only kicking off. Only 10 million people have digital music players worldwide. This will grow to between 25 million and 36 million within a year. Our aim is to capture 50pc of that market.”

Deering offered a rare insight into the forthcoming PS3 reckoned by many to be launching this Christmas. While he wouldn’t elaborate on a date, Deering said networking will be key to the PS3 and that with the cell chip included, it will be 1,000 times more powerful than the PlayStation 2. “Imagine 256 billion floating point calculations — that’s your engine room. The graphics will be fantastic if you have a HDTV. We will pioneer a new realm of HD gaming. It’s exciting and it’s coming your way.

“It will herald a new era in TV-based home services and play a vital role in IT,” Deering concluded.

Sony Europe president Chris Deering. Photo: Laurent Attias/Le Public Système

By John Kennedy