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Hirai, Molyneux Outline Sony’s Plans, Challenges

LAS VEGAS — Sony Corporation president/CEO  Kaz Hirai and Phil Molyneux, president/COO of Sony Electronics, discussed the importance of 4K, the current state of the company and the industry, and unilateral pricing policies (UPP) for 2013 during an informal press reception after its press conference on Monday evening.

Hirai said that when he took on his new role and stated that mobile, imaging and gaming would be key categories for Sony as it rebuilds, he did not mean the company was downplaying TVs.

“The TV business is vital and 4K is very important. It was [misinterpreted] that we were getting out of the TV business … that we can’t invest in that space,” Hirai said.

What Hirai stressed was that Sony does not manufacture all the key components of the TVs anymore, but its strengths are now design, engineering and the “secret sauce” that makes Sony products desirable.

“If you go on the show floor and see our new TVs, they are as good or better than anyone else’s” at CES, he said.

When asked about the challenges facing Sony — downsizing to be more competitive, the economic downturn and the yen — Hirai said, “Yen problems are huge, but Panasonic, Nissan, Toyota and other Japanese companies are facing the same challenges. I’d like to say [Sony’s challenges] were just due to the yen, but that’s not the case.”

The new Japanese prime minister is said to be looking at some aggressive financial moves to bolster the yen, according to Hirai, which is now 87 or 88 per $1 — a far cry from the “360 yen per dollar in the 1960s when I first came to the U.S. with my parents,” he said.

“We need to overcome the challenges we face, and what we would like to do is be measured in dollars,” by manufacturing more in other countries, Hirai said.

During Monday’s press event Sony mentioned the “wow” factor its new products must have, and Hirai said, “Our RX1 camera, our 4K TV, they have it. That’s what we have to do. Introduce products that show that Sony has its mojo back.” He added that it won’t happen overnight.

When asked about returning to profitability in TVs, Hirai said, “We have reviewed the cost structure,” and Sony pared down its line and did not ship as many TVs because “they were losing money.”

He did note that Sony is “ahead of our plan” to be profitable in TVs by 2014 and that once that is achieved, “we will go back on plan and get share.”

Hirai admitted that due Sony’s moves it has lost market share in the past year. The Sony president/CEO is optimistic that OLED and 4K will be winners and will generate a strong and profitable TV market.

Molyneux discussed the U.S. market and said that there has been strong demand for its 84-inch 4K set since it was introduced here last fall.

When asked about the UPP of the past year and how it will evolve in 2013, Molyneux said, “We began this year before [UPP] began with retailers having to meet certain commercial terms, measurable ones, and once UPP began we had 125 products under the program.”

He noted that the whole effort helped Sony “promote our products better and helped retailers improved the way they sold Sony and positioned the brand correctly” to consumers.

The program will be restarted in April 2013 with “new commercial terms” for Sony’s consumer products, and UPP will now cover 150 product categories.

When asked what effect Apple TV may have on the TV market overall, if it debuts this year, Molyneux said, “We are really centered on our own brand, our 4K 84-inch TV which we said in the press conference is like ‘looking through a window.’ With the addition of 65- and 55-inch 4K TVs, we are in a strong position, especially when matched with new Sony speakers.”

 Molyneux said that Sony’s expertise in 4K is being positioned to retailers this way: “We have designed products and have the video processing [technology] to present 4K as a top notch technology. Coupled with our audio expertise these new sets are really … works of art.”

He noted that a consumer 4K camcorder is being demonstrated at CES but there are no plans to introduce one yet. Professional Sony 4K cameras are either $20,000 or $30,000 currently.

And while Sony will provide 4K programming via server later this year, when asked if the Blu-ray format might be suitable for 4K, Molyneux said, “That is a decision for the Blu-ray group to decide.”