Sony Executives Tackle Blu-ray,Retail Pricing, Audio Questions
By Steve Smith -- TWICE, 3/12/2007
NEW YORK — Sony's Stan Glasgow, Randy Waynick and Steve Haber fielded questions on a variety of company-related and industry issues during their roundtable discussion with the media. Here are a few of their responses:
Blu-ray market and reaction to LG's combi player, Warner's combi disc
Randy Waynick: "Since we began shipping Blu-ray [home decks] in November we have a No. 1 share in both dollars, with 50 percent, and units, with 40 percent. Software sales are three to one vs. HD DVD titles and growing. We will be introducing new models [in Las Vegas] this week."
"If you look at the installed base of Blu-ray by itself plus PS3 sales [at over a million units] and the rest of the industry, we have a great installed base so far. What was revealing in the last quarter was that HD DVD in the market since June or July. Blu-ray was introduced in the fall and since its introduction it has outpaced HD DVD sales on a weekly and cumulative basis."
Stan Glasgow: "It is not cost effective to manufacture a multiformat deck. And on the software side it is not cost effective to offer a multi-format disc because retailers would now have to carry three formats: Blu-ray, HD DVD and the combi disc."
HDTV competition and pricing
Glasgow: "There are 70 to 80 [HDTV suppliers] out there that can buy panels, chips and put sets together. It is a lot tougher to make a good HDTV. With the competition out there, we see 20 percent price erosion this year. If a customer wants to buy an HDTV just on price, it won't be a Sony. Our consumers pay a premium. Color reproduction makes a difference, design makes a difference and reliability makes a difference. Is it tough to make money [in HDTV]? Absolutely."
Waynick: "The ASP [average selling price] in TV is going down across the industry so it is challenging, but for us our ASP went up. Consumers are aware of performance of our sets. It is not a subtle difference. Plasma TV has lost market share and its ASPs have gone down ... in unnatural price erosion [in recent months.]"
"We made a commitment a year and a half ago based on performance and manufacturing costs to go with LCD. Some said we should have spread our bets and include plasma. We see 1,080p taking over and we see that LCD taking over in larger screen sizes going forward."
Making audio more portable
Steve Haber: "How do you deal with audio content you want with you in car, home and portable? Make it seamless as possible. Bluetooth home, portable and mobile products moves audio from component to component no matter where you are. We are emphasizing Bluetooth adapters and headphones." (See details, p. 8.)
Retail changes
Glasgow: "We are seeing a retail restructuring. It is difficult for medium-sized retailers to survive. Best Buy is now different than Circuit City, Target is different than Wal-Mart, since the large chains are trying to differentiate themselves for customers. What we are trying to do is deliver a unique message [about Sony] via our stores and online."
"Concerning Sony Stores, we will keep the growth rational, about five new stores this year and five next year, and stress value. These stores allow us to experiment on merchandising strategies and logistics, which are critical in areas like HDTV. We can then share that information with our retail partners. During the [fiscal] third quarter our online sales grew 16 percent and at our 40 Sony Stores sales were up 35 percent."
Haber: "One of the key elements in having our stores is getting direct feedback from consumers on products and technology ... like Bluetooth and our Sony eBook."
