Sony's content platform and business strategy *spawn

[SedentaryJourney]

I agree the ease of use and industrial design are key success factors. But they are insufficient. iPod had both in its first year but it didn't take off in a huge way. The iTunes ecosystem is the key reason it took off because (1) it further simplified the use cases by incorporating direct download, and (2) it freed the users from draconian DRMs common in that era.

I doubt the "Apple never intended to get into the music retail business" statement. It may be true before the iPod creator showed up in Apple. But the iPod business model was conceived with a sister online operation in mind from day one. Unfortunately, no hardware vendor would believe him. Only Jobs recognized the potential and made it successful. According to published materials, Jobs had to negotiate with the music execs for 2 years before the contracts were nailed down.

Today, iTunes is ever more important to Apple. At the beginning, like iPod, iPhone sold based solely on industrial design and ease-of-use. In fact, mobileme was problematic at launch. However AppStore and iTunes have further allowed Apple to build a self-feeding ecosystem for both app and media. Without both, iOS is significantly weaker because competitors like Google can just introduce cheap devices.

Which is why any iOS competitor need to deliver both the hardware, software plus the online experiences now.

Found a nice run down of the history of the iPod. Without turning this thread into the Apple show, I'd like to mention a few things about why the iPod took off. By the time the iTunes store was ready two generations of iPods were already on the market, and were largely successful selling over a million units. Around the announcement of the iTunes store several things happened: iTunes was ported to PC, the third generation iPod was announced and was the first to natively support the PC in the form of iTunes(!) as well as being the first model to sport USB(!). So there's multiple reasons why the iPod took off when it did, of which the iTunes store was a part. From what I've read the iTunes store was not part of Apple's initial plan for the iPod but followed as a natural consequence of the failure of Napster in 2002 and the popularity of the iPod.

Yes, Sony will need to integrate not just any network services, but a unique set of network services to stand out. As it stands, Music and Video Unlimited may be a fine start, but they are insufficient. From integration and user perspective, Sony should roll their game contents into the online platform as well.

I think Sony's on the right path here, although PSSuite should just be PSN on smartphones instead of something separate.

 

[patsu]

Yes, I read that brief history but it skimmed on Fadell. As I understand, Fadell is the one who first had the idea to combine MP3 player with an online store:
http://tech.fortune.cnn.com/2008/11/04/losing-tony-fadell-the-man-who-made-the-ipod/

And when Fortune tried earlier this year to handicap who might be best equipped to replace Steve Jobs as Apple's CEO, Fadell came in No. 2, after COO Tim Cook. Here's how we described him then:
Tony Fadell
Title: Senior vice president, iPod division
With his American swagger and his hair bleached white, Fadell stood out at button-down Philips Electronics, where he led an in-house pirate operation designing Windows CE-based devices. It was there that he came up with the idea of marrying a Napster-like music store with a hard drive-based MP3 player. He shopped the concept around the Valley before Apple's Jon Rubinstein snapped it up and put Fadell in charge of the engineering team that built the first iPod. Ambitious and charismatic (and no longer a bleached blond), he now runs the hardware division that makes two of Apple's three key product lines: the iPod and the iPhone. (link)

At the beginning, Apple might not want to do the music store themselves, but they eventually decided to do it. Two of my young staff joined the "founding" server team shortly after our startup tanked. In fact, Apple was shopping around for a server lead to implement the iTunes Music Store around 2002. Another of my friend (A WebObject expert who architectured the entire USPS tracking system) wanted to apply but skipped it because he wanted to start his own business. ^_^

I think there should be another more detailed article about Fadell pitching his music player + online store concept to other companies. I can't remember where I read it anymore.

I think Sony's on the right path here, although PSSuite should just be PSN on smartphones instead of something separate.

They are fumbling at the execution again (for the tablets). Vita seems more tight, more interesting than the Android pads, but we have not seen their Vita marketing yet. ;-)

The Vita user experience is also too "normal" and too cute. Should try to reinvent handheld gaming experience since it has good power, features and space.

PSSuite should be a virtual Playstation for pads and smartphones. They should do it as if their future depend on the platform. They should also optimize it for Vita.

Starting with smartphone may be fine.

In due time, the tablet may be a more formidable device than smartphones where entertainment is concerned. Also the current online concept/notion will likely change. Video streaming may change too. ^_^

 

[Shifty Geezer]

Why would a global electronics giant move away from electronics?. Sony's problems are bad management. Sony electronics are a $60billion+ business.

I didn't say 'move away'. They need to grow in another direction to support their electronics. Sony are struggling because there's more comeptition than there used to be in their hey-day and they've been unable to keep up with changes. Apple have come to ascendency by offering a software layer. Irrespective of how great Sony's hardware might be, their software and services are fairly crap, so they can't compete.

If Sony had gotten their act together with PS3, it'd have launched leveraging Sony's extensive media arm to establish a content and services infrastrtucture that'd promote Sony products in the same way Apple is supported via apps and content, and Sony could add considerable revenue to their hardware through content sales. If they drop the content side and just produce hardware, they'll be struggling in a world of razor-thin hardware margins against the likes of Samsung, because there's no room any more to have the same technological-forefront devices that Sony used to have. Triniton, Walkman, and all those pioneering devices, are old history. Everyone's inventing new tech today and no electronics company can look to an RnD product to catapult them to success.

Yes, Sony's failings are due to management, but because they didn't focus on pulling all their different faculties together to make a cohesive experience, which was the whole point of getting those faculties in the first place!

 

[boommoob1]

Why dont Samsung, Apple, Panasonic, LG, Toshiba etc own content companies?. Answer: Because in and of themselves they hold little strategic value. Sony should appoint Stringer as CEO of Sony pictures, Hirai as CEO of Sony music and sell both companies and then get some competent tech guys to run Sony.

 

[patsu]

That is one very common/mainstream perspective. In general, the value of something depends on whether you have the time and smarts to realize it. It doesn't necessarily mean the inherent value is not there.

In a hardware and software company, few execs know how to manage contents businesses and people properly. The Wall Street traditionally has looked down on these "irrelevant" side businesses. Then again, they also looked down on low margin manufacturing businesses, and advocate massive outsourcing (to focus on high value adds). Look where that got China and us. ^_^

After so many years, I find that there is no one single truth. It's a matter of your team capability and opportunities. In addition, this is a very western centric view primarily because US is a homogenous market. In the highly fragmented Asia market (and they are growing richer and richer everyday), our MBA theories may also need some tweaking, and "flexible application". ^_^

There are risks and downsides to owning a contents arm. At the end of the day, it's the execution (and sometimes luck + timing) that counts most. Sometimes, the observers will change the business and history books to reflect your outcome, instead of you following the books and straight history.

 

[boommoob1]

What advantage does owning content companies give Sony electronics?.

 

[Shifty Geezer]

Why dont Samsung, Apple, Panasonic, LG, Toshiba etc own content companies?. Answer: Because in and of themselves they hold little strategic value.

How can you say that?! Clearly owning these companies gives a strategic advantage. It's just Sony failed to use it particularly well. It certainly is a boon for establishing a new content portal though. SonyNET would have access to all Sony's content from Day 1 without having to negotiate, helping get the foot in the door. When Netflix was starting up negotiating contracts, Sony could have trumped them with an extensive library on their own service and attract other studios in to their market. It's the lack of a cohesive, company-wide strategy that's failed to capitalise on the assets Sony's accumulated that has held them back. As Stringer has said, Sony wasn't a single company but structured as independents, and you could have the movie business doing deals with other networks rather than working to strengthen Sony's position.

There's nothing wrong, and indeed everything right, with Sony wanting to bring together the content and the platforms. The only thing at fault, unfortunately the most serious fault, was their ability to bring it all together and use their arsenal to better effect.

What advantage does owning content companies give Sony electronics?.

Sony is not just Sony Electronics, and the thought process that treats each division as a separate entity is exactly the wrong thinknig that's let Sony lose its leadership position.

 

[patsu]

What advantage does owning content companies give Sony electronics?.

e.g. Pushing standards that cut across industries.
How did Blu-ray win despite a $99 HD-DVD player ?

This is just one example. ^_^

 

[patsu]

They are fumbling at the execution again (for the tablets). Vita seems more tight, more interesting than the Android pads, but we have not seen their Vita marketing yet. ;-)

The Vita user experience is also too "normal" and too cute. Should try to reinvent handheld gaming experience since it has good power, features and space.

PSSuite should be a virtual Playstation for pads and smartphones. They should do it as if their future depend on the platform. They should also optimize it for Vita.

Just saw this:
http://forum.beyond3d.com/showpost.php?p=1579408&postcount=663

Imagination Technologies Group plc (LSE: IMG; "Imagination"), a leader in System-on-Chip Intellectual Property ("SoC IP"), has signed a further license agreement with Sony Corporation, (“Sony”), a leading consumer electronics company, for IP cores from Imagination’s PowerVR SGX Series5XT graphics family.

Sony will deploy Imagination’s technologies in SoCs targeting consumer markets.

Under the terms of the licence agreement Imagination receives licence fees and royalty revenues based on shipments of semiconductor products incorporating Imagination's IP.

Good idea if focusing on SGX affords more time for Sony engineers to polish their software platform. It's one of the reasons I think the Sony management is fumbling with the tablets.

At least Vita is more interesting because of the exclusive titles, control options and Playstation (everything) tie up. The tablets feel like stepchildren, and get none of the above. PSSuite seems like a weak excuse so far.

 

[archie4oz]

Why dont Samsung, Apple, Panasonic, LG, Toshiba etc own content companies?. Answer: Because in and of themselves they hold little strategic value. Sony should appoint Stringer as CEO of Sony pictures, Hirai as CEO of Sony music and sell both companies and then get some competent tech guys to run Sony.

I can't speak for LG, or Samsung, but Toshiba actually had a record label going as far back as 60's before forming a joint venture w/EMI in the 70's. They only just sold their stake in TOEMI about 3-4 years ago. JVC (sold to Kenwood by Panasonic) also has an entertainment subsidiary that produces music and TV shows...

 

[-tkf-]

Sony have all the puzzles to build a picture of awesome.

A big Music selection with top artists.
A big Movie selection with top movies
A giant selection of devices that can use the content.

Create a one stop music/video store that is global and that offers something unique, for example non DRM´d 24bit audio files instead of 16 bit. And that offers the Videos with a non intrusive DRM scheme with a single login that is based on your email and not a "special" Sony account, ala PSN

Make sure that all the electronic you sell and that can use the content has a build in easy way to access it, be it from a USB drive/key/nas or just the internet.

Of course Sony being Sony they do what they often do, stumble in the wealth of choices and land on the sword.

If i could buy music from Sony in a 24bit format that i could access anywhere in the world i might consider dropping CD´s from Sony.

 

[Shifty Geezer]

I really doubt 24bit will be a selling point to combat iTunes. Most people are happy with lossy 16bit. Most people can't hear the difference between 16 bit and 24 bit, and if the music is authored properly there's shouldn't be. 24 bit is good for processing (well, recording, as processing is done with 32bit floats) but it's overkill for listening; a waste of data. May as well request TVs with 32 billion colours instead of 16 million!

The only thing I think Sony could do to differentiate in a valuable way is but once, listen on lots of devices. iTunes is tied to iOS. If Sony's services work on an open standard and is supported on Android etc., it'd be well worth using. Other than that there isn't much room to compete IMO.

 

[mrcorbo]

I really doubt 24bit will be a selling point to combat iTunes. Most people are happy with lossy 16bit. Most people can't hear the difference between 16 bit and 24 bit, and if the music is authored properly there's shouldn't be. 24 bit is good for processing (well, recording, as processing is done with 32bit floats) but it's overkill for listening; a waste of data. May as well request TVs with 32 billion colours instead of 16 million!

I partially agree with you, though I vote for overkill to allow for the cases where the source material, listening equipment and listening environment do allow for the advantages to be perceivable. Storage is cheap and plentiful, DACs and ADCs have improved in quality while getting less expensive and there are signs that smartphone manufacturers, at least, are going to start pursuing better audio capabilities as a differentiator (HTC & Beats audio partnership).

The biggest problem, though, is that most people are listening to music in non-optimal conditions and because of this the source material is often mixed with this in mind (compressed dynamic range, etc.). The benefits of higher resolution couldn't really be realized without re-engineering the recordings, which is not gonna happen.

 

[patsu]

I really doubt 24bit will be a selling point to combat iTunes. Most people are happy with lossy 16bit. Most people can't hear the difference between 16 bit and 24 bit, and if the music is authored properly there's shouldn't be. 24 bit is good for processing (well, recording, as processing is done with 32bit floats) but it's overkill for listening; a waste of data. May as well request TVs with 32 billion colours instead of 16 million!

The only thing I think Sony could do to differentiate in a valuable way is but once, listen on lots of devices. iTunes is tied to iOS. If Sony's services work on an open standard and is supported on Android etc., it'd be well worth using. Other than that there isn't much room to compete IMO.

There is no DRM on music and AAC is pretty established these days. Rolling out a straight digital song delivery platform is rather boring now.

From user perspective, I like a combination of VidZone (music videos) + SingStar + DanceStar + GuitarHero/Rockband + SoundShape + ginormous song library. ^_^

They should make it for consoles, phones, pads and PC/Mac.

 

[Carl B]

Sony have all the puzzles to build a picture of awesome.

A big Music selection with top artists.
A big Movie selection with top movies
A giant selection of devices that can use the content.

The (partial) problem with this has been industry concerns (and by industry I mean Hollywood/Music) that for Sony to both be a big player in content, and then further to establish a powerful 'gateway' presence as the portal to said content for other companies as well, would make them too powerful and controlling in the space.

A lot of those fears seem things of the past now, and moving beyond those even, we're still in the situation where Sony has had very poor ability to bring commonality across platforms and to leverage useful assets across the company.

In my mind, the old Sony is now officially dead; there is now a new Sony that needs to carve out for itself a new identity and strategy out of the disparate pieces left to them. What should have occurred over the past couple of years IMO would have been a strong focus on software development, and an emphasis on preserving the industrial design heritage of the firm. There has been inconsistency in how they have pursued the outsourcing vs insourcing cost reductions, and I feel there has not been a unified vision save for the very vague and nebulous 'increase sales.' Sony is a firm whose designs are considered on some level still to be 'stylish,' but the message is lost and the focus is muddled... and the perception is one which fades a little bit more as years go by.

I have concerns about the strategies vis-a-vis Google.

I am not against the stronger ties, and the efforts with things such as Google TV, but I think that Sony has made a mistake in de-emphasizing their own internal OS/UI/platform efforts. The only ultimate beneficiary of an Android world is Google, and it will be harder as the years go on to fend off entry of competitors running essentially the same hardware/software if that trend is accelerated. Not to mention, what keeps Google itself from one day becoming your direct competitor?

Of course I have multiple and myriad thoughts concerning every aspect of their business, but I'll pause for now due to work.

 

[boommoob1]

I think the gamestop android tablet perfectly illustrates why Stringer has been a car crash for Sony. Stringers thing was him transforming Sony into a digital company. All he's done is deliver a half assed movie, music store in 7 years. Sony NEED there own software platform not ownership of content. Commodity hardware makes it a free for all and because of Stringer Sony has no advantage. Sony problem is Stringer wants another tech non entity to succeed him in Hirai. That should be stopped.

 

[patsu]

I think the gamestop android tablet perfectly illustrates why Stringer has been a car crash for Sony. Stringers thing was him transforming Sony into a digital company. All he's done is deliver a half assed movie, music store in 7 years. Sony NEED there own software platform not ownership of content. Commodity hardware makes it a free for all and because of Stringer Sony has no advantage. Sony problem is Stringer wants another tech non entity to succeed him in Hirai. That should be stopped.

I doubt GameStop's Android tablet will have any major impact on Sony. Similarly, I doubt Sony's tablet S and P, in their current known form, will have any major impact on Sony. ^_^

Hirai needs a hit hardware product everything else is a sideshow. After the reveal of the tablets i think the Hirai/Stringer axis rests on Vita to prove that they should of been allowed anywhere near the leadership of Sony.

Electronics still makes up 75% of Sony. You dont have the necessary expertise running that and no amount of pssuite, movie store, movie studios will stop Sony from collapsing. Sony have been leaderless for atleast 8 years.

Sony NEED there own software platform not ownership of content.

PSSuite is a software platform. I agree they should work hard on it but we have not heard much yet.

OTOH, you may want to decide for yourself whether you want Sony to work on hardware, electronics, or software platform, or something else. ^_^

 

[patsu]

The (partial) problem with this has been industry concerns (and by industry I mean Hollywood/Music) that for Sony to both be a big player in content, and then further to establish a powerful 'gateway' presence as the portal to said content for other companies as well, would make them too powerful and controlling in the space.

Yes. That's why they should continue to adopt an open approach, and stick to standards. Create new ones where there's none. Blu-ray and 3D contents are some recent examples, but I think they can do more.

A lot of those fears seem things of the past now, and moving beyond those even, we're still in the situation where Sony has had very poor ability to bring commonality across platforms and to leverage useful assets across the company.

Yap ! Hardware is still all over the place.

In my mind, the old Sony is now officially dead; there is now a new Sony that needs to carve out for itself a new identity and strategy out of the disparate pieces left to them. What should have occurred over the past couple of years IMO would have been a strong focus on software development, and an emphasis on preserving the industrial design heritage of the firm. There has been inconsistency in how they have pursued the outsourcing vs insourcing cost reductions, and I feel there has not been a unified vision save for the very vague and nebulous 'increase sales.' Sony is a firm whose designs are considered on some level still to be 'stylish,' but the message is lost and the focus is muddled... and the perception is one which fades a little bit more as years go by.

High level goal was/is to increase profit margin, not just sales. ^_^

But I think it should be to create best in class product, and then figure out the business model to work the margin in.

I have concerns about the strategies vis-a-vis Google.

I am not against the stronger ties, and the efforts with things such as Google TV, but I think that Sony has made a mistake in de-emphasizing their own internal OS/UI/platform efforts. The only ultimate beneficiary of an Android world is Google, and it will be harder as the years go on to fend off entry of competitors running essentially the same hardware/software if that trend is accelerated. Not to mention, what keeps Google itself from one day becoming your direct competitor?

Of course I have multiple and myriad thoughts concerning every aspect of their business, but I'll pause for now due to work.

Yes, they should stack their services. Instead of breaking all up. Android is a good base to start for time-to-market, but they should claim a bigger chunk of space (on top), and then possibly replace Android where it makes sense. They can also go iOS if necessary. Right now it looks like their Tablet S and P enhancements are just small, tactical benefits. They may be neat and nice features, but they are also irrelevant in the grand scheme of things. Not sure what PSSuite is. I would re-evaluate the top manager handling the Tablets.

OTOH, the Vita has a more interesting software layer and content library, but it seems different and separate from everyone else, even from PS3. ^_^ [size=-2]As it stands, Vita still have room for improvement before it can redefine handheld gaming from tablets and pads.[/size]

So... what is Playstation ?

 

[Carl B]

But I think it should be to create best in class product, and then figure out the business model to work the margin in.

I agree with this, and I think that this should have been the primary push on the TV front for the last several years. They made a very poor choice IMO when after the XBR8 they determined to dial things back in terms of image quality and expense. Even as a loss-leading flagship model, something on the order of "the best" should have been maintained. And then the rest of the line derived appropriately. This thrust the last several years about competing with off brands and infiltrating Wal-Mart has been the wrong direction for this company, and a lot of that was rooted in the pursuit of economies of scale tied to their outsourcing.

I'm not saying the outsourcing itself was right or wrong as a move relative to TVs, but the strategy has been confused and unfocused. Likewise, pulling back on the OLED investment a couple of years ago was absolutely the wrong move at the wrong time, and now they find themselves playing catch up in a field they were initially leading development in.

 

[-tkf-]

I really doubt 24bit will be a selling point to combat iTunes. Most people are happy with lossy 16bit. Most people can't hear the difference between 16 bit and 24 bit, and if the music is authored properly there's shouldn't be. 24 bit is good for processing (well, recording, as processing is done with 32bit floats) but it's overkill for listening; a waste of data. May as well request TVs with 32 billion colours instead of 16 million!

The only thing I think Sony could do to differentiate in a valuable way is but once, listen on lots of devices. iTunes is tied to iOS. If Sony's services work on an open standard and is supported on Android etc., it'd be well worth using. Other than that there isn't much room to compete IMO.

VETO!

The CD specs are just good enough, they are in no way as good as they should be. I want 192khz 24 bit sound and nothing less. I want transparency, i want headroom i want "soft" music instead of music that has been sampled in borderline lowres.

With that of my chest.. back to the good part. The reason they should go for better quality is first and foremost to be the service with the best quality. To be different than other services. Of course they should serve the lowres stuff like iTunes does. Btw we have 30 BPP monitors so it´s coming

Sony´s true advantage is the sheer numbers of electronic devices they sell that could use an unified service. I would call it SONY ON because whatever device you bought from SONY you would be ON and lots of ways to play with the logo sONy.

Buy a bluray? put it in your PC, Laptop, BluRay player and enable the sONy copy. Bought a CD? Do the same and enable the sONy digital copy in 24 bit or whatever lowres you wanted. There is nothing but advantages in owning both content and content devices. But Sony is so big fat and useless that they can´t do anything good with this advantage. I bitched at them about the MP3 player and it´s actually from there they started to do everything "wrong".

If there were a Microsoft thread i would be there trying to be just as clever. Because they have if anyone really pissed in their bed when it comes to being the center of the music and video universe.. and it pisses me off when i look at the Apple world.