Sony's Nishida Hopeful About Retail

New York — Hopeful that the economic slowdown in the United States can play itself out by the fourth quarter, Sony Electronics president/COO Fujio Nishida said that the next couple of months are critical for the industry's retail sales prospects this year.

During his twice-annual reporters' roundtable at Sony headquarters here, Nishida commented that the U.S. market has been "restructured" during the last six months, but that should end by the third or fourth quarter. What is critical for any potential turnaround at retail for the CE industry this year is "strong sales during the next [few] months, May, June and July. That is when many chains plan for the holidays and place orders. If sales are dismal in the next couple of months, they will be cautious. If [sales rebound] the industry will see some upside."

While Nishida is cautiously optimistic about retail sales for the industry, he was proud of Sony's performance in its fiscal year ended March 31 (TWICE, May 7, p. 3) and upbeat about the company's sales prospects for the balance of this calendar year.

Sony Electronics sales in the United States for the recently ended fiscal year was $14 billion, a 14 percent increase over the previous year and accounting for about 22 percent of the company's consumer electronics sales worldwide. Driving the business during the last fiscal year were the usual suspects: VAIO PCs, flat-screen FD Trinitron WEGA TVs, digital imaging products (both still and camcorder items) and DVD video players.

In fact the largest contributor to Sony Electronics' growth rate in the United States is the VAIO PC line with a 40 percent increase in sales. VAIO sales have been strong during the first three months of this year, a period where overall PC sales have declined.

"In March the VAIO notebook PC held the number one spot, the first time for us. The VAIO desktop held the number three market share. It shows that our differentiation strategy of targeting [VAIO] as entertainment PCs is working," Nishida said.

Other categories also had strong performances last year for Sony: digital imaging sales were up 30 percent; digital cameras alone were up 20 percent; WEGA flat-tube TVs were up 25 percent; personal audio was up 10 percent; and car audio was up 40 percent.

Nishida also addressed Sony's recent reorganization (TWICE, May 7, p. 1) to become, in the long term, a "personal broadband network solutions company."

Broadband networking is the future for the company and the industry, Nishida said. "We must be ready for that," he added.

"Real broadband is a very high-speed environment. It may roll out in two or three years, but it might be five years," he said. "Some U.S. homes have accepted it now and the rollout could be done with fiber optic systems."

But the problem for the United States, as Nishida sees it, is that the rollout will be slow because "the U.S. is such a big country and you need time to install the system."

When asked if today's retailers can sell the wide variety of digital-based products that are flooding stores nationwide, Nishida was philosophical. "When WebTV was introduced four years ago the first obstacle was getting retailers to get a phone line connection to demonstrate the product."

But today, Nishida said, "the big guys are changing. Circuit City, Best Buy, that class of trade, including Sears, have transformed themselves to survive [the digital] transition. They are transforming themselves as service-oriented retailers, using e-commerce."

He said, in the parlance of the Web, "Retailers can't be 'click' alone or 'brick' alone, they must be both, and they are changing."