Scroll down, interesting parts (only slightly so) is bolded.. hehe. Just an article, nothing that good, but can't find a link so here's the whole thing... whatever.
Heard In Japan: Sony Seeks New Growth Businesess (Dow Jones News Service)
By Robert A. Guth
Tokyo -- SONY IS HOPING that 2003 will be the year in which it can end its corporate housecleaning and get on with building new businesses.
Sony has long talked up its plan to be a central player in the emerging market for delivering entertainment to homes over high-speed Internet links. The vision sounds good, but in recent years Sony has instead focused on getting its own home in order. With the exception of its innovative and fast-growing videogames business, the emphasis has been on restructuring, revamping product lines and cutting costs.
Much of that work is now behind Sony. Last week it announced the latest measures to restore competitiveness in its flagging Aiwa subsidiary, and it installed a cost-conscious American television-network executive to revamp Sony's unprofitable U.S. music unit.
Now Sony desperately needs a new growth engine to go along with its PlayStation 2 games business. That is why during the next 12 months investors will be looking to see if Sony can deliver on its broadband vision. It could be years before it is clear whether Sony succeeds, but the steady growth of broadband links, combined with a host of product introductions from Sony, could make 2003 a telltale year.
In a keynote speech last week at the Consumer Electronics Show in Las Vegas, Sony President Kunitake Ando touted the recent expansion of the number of homes world-wide that have broadband connections, and said that 2003 is a crucial year for expanding the services further. "We're at the threshold of this new age that will have a huge impact, not only on people's lifestyles, but also on all our industries," Mr. Ando said.
And, he hopes, an impact on Sony. While Sony still makes some of the world's most recognized electronics products -- its Vaio line of personal computers and its Wega televisions to name two -- growth at the electronics unit has slowed in recent years, while profit at the unit is under constant assault from competitors. Meantime, Sony's music sales are down thanks to an industry-wide slump in compact-disc sales. Sony's movie-studio revenue also is expected to be down in the next fiscal year, ending March 31, 2004, following what is shaping up to be record sales in the current fiscal year.
Only videogames, based on Sony's popular PlayStation 2 console, are supplying Sony significant growth. Videogames in the current fiscal year will yield most of Sony's profit, and sales of more than $10 billion. Sony is tooling the PlayStation 2 so it can play videogames over high-speed networks. But most videogame-software makers say it will be several years before they dive into online games, because the current method of distributing games on disks is so profitable.
So Sony is adding broadband functions to its other electronics products -- televisions, storage systems, cameras and hand-held computers to name a few -- that allow them to easily send, receive and view many sorts of broadband entertainment, from music to movies.
At the Las Vegas exposition, Sony showed some early steps in that direction, including Cocoon, a box that connects to a television and allows users to download and customize content from a high-speed Internet connection. The device, which has been on sale in Japan since September, is designed to trade data with other devices including digital camcorders. Sony showed off a host of data-storage products, mobile devices and other gadgets that connect to one another and can handle broadband content.
The debut of such products is timed to coincide with the long-awaited growth of broadband Internet services. In Japan, rival Internet-service providers have drastically cut the price of so-called digital subscriber lines, enticing millions of consumers to the high-speed Internet services in the past year. Meantime, by the end of 2003 nearly 20% of the 107 million households in the U.S. are expected to be wired with broadband connections.
Analysts in Tokyo say Sony needs to capitalize on this growth. Kun Soo Lee, at WestLB Panmure Japan, says he thinks Sony is well positioned for broadband, and rates the company a buy with a target price of 7,000 yen ($58.74). In Tokyo trading Friday, Sony's shares closed at 5,110 yen, up 1.2%, or 60 yen, from the previous day. Financial markets in Japan were closed Monday for a national holiday.
Merrill Lynch analyst Hitoshi Kuriyama says he expects that the growth of broadband infrastructure won't really start to contribute to a new era of growth for Sony for two years or so. Until then, restructuring is one reason he expects a "major earnings rebound" for Sony's electronics business during the next two years. Mr. Kuriyama has a buy rating on Sony's shares.
But Sony needs partners to prosper from the broadband boom. One reason: if consumers are to easily use data across multiple products -- from storage systems to PCs to televisions -- the products have to be connected and be able to understand one another. Currently, they all run on different types of software. Sony's Cocoon, for instance, runs the Linux operating system, a rival to Microsoft's Windows.
At the electronics show last week, Mr. Ando and executives at other companies including Microsoft and Intel talked up the need for such "interoperability" of products, and said they hoped to announce a joint plan to develop common software that makes consumer gadgets work more easily with PCs.
That cooperation could help spur the broadband market for everyone. And it could unleash fresh competition for everyone, too. The challenge isn't lost on Sony. "The broadband society is really an opportunity and also a threat," says Sony Chairman Nobuyuki Idei.
