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Komiyama: Improving Economy Will Boost Sony Sales

New York — The improving U.S. business climate and recent reorganizations will boost Sony’s North American electronics sales in the “upper single-digit” range for the fiscal year that began in April, said Hideki “Dick” Komiyama, president/COO of Sony Electronics.

Display, PC and digital still cameras will be the main drivers of that growth, said Komiyama, who became Sony Electronics president in April and is responsible for North American sales of consumer and b2b electronics, excluding PlayStation.

Komiyama, a 36-year Sony veteran, projected growth despite declining sales in the first half of the fiscal year. “The macroeconomic climate in the U.S. for the second half is reasonably bright,” he said during a briefing with select reporters. The U.S. economy “is reasonably good” compared to other countries, he added.

The previous two years have been “rather difficult” for Sony Electronics, and sales failed to meet expectations, even though the company enjoyed No. 1 market share in many major product categories, he said.

For the current fiscal year, Komiyama also cited NetMD as a key growth category, but not DVD. Because of dramatic declines in DVD prices, “total industry value is already starting to decline,” he lamented. Although Sony has the leading market share in DVD, the market “is not necessarily promising,” even with growth in the DVD-recorder market, he said. High-definition discs, however, hold promise in the future.

Komiyama was also cautious in his comments on the SACD market. “It still remains to be seen” whether the multichannel music format eventually creates “a major wave of future business,” he said, citing a “long lead time to build up [the market].”

For now, Sony worldwide has no plans to offer universal players that play SACD, DVD-Video and DVD-Audio discs players and will continue to offer only SACD/DVD-Video players. “On the other hand, when the market evolves, there could be a different strategy,” he said, noting that the decision is not his. He called SACD “a splendid technology” with great consumer value, but in light of “so many consumer choices,” he asked, “will this technology be mainstream or not?”

In other sales-building initiatives, Komiyama said Sony Electronics will “most likely” launch its first headphone HDD stereo in 2004.

Sony will also bring the Qualia brand to the U.S. in the spring after its introduction in Japan, where it is positioned as representing the company’s highest quality, highest style products.

He also said Sony will “most likely” offer PSX, the hybrid game/consumer electronics device, in the U.S. next year, but it’s not certain whether it will be marketed by Sony Electronics or PlayStation marketer Sony Computer Entertainment of America, which reports independently to Sony Corp. in Japan. “I’d like to sell it,” Komiyama quipped.

In the meantime, TV-display sales will be one of the company’s biggest growth contributors this year, with dollar sales of Sony displays targeted to grow at a high-single-digit rate, he said. Sales of all Sony display technologies will rise, including Sony CRT sales despite a declining CRT market. “The decline of CRT is less in the U.S. than in the rest of the world,” he noted.

Even though Komiyama expects his CRT-TV sales to rise in dollars, his CRT sales will account for a shrinking share of display dollar sales in the current fiscal year because of faster growth in flat-display technologies. In dollars, CRT’s share of display sales will fall to 70 percent in the current fiscal year from the previous year’s 90 percent “We are one of the only companies with every [display] technology available for consumers,” including LCD, launched in the spring to “good reaction,” he added.

Although Vaio sales suffered a recent slowdown “for many reasons,” Komiyama said, the brand has been repositioned and is “already experiencing stronger growth ” compared to the previous fiscal year, he said.

He also attributed expected Vaio growth to a recent reorganization and a planned increase in direct-to-consumer sales of Vaio PCs and PC accessories. In April, Komiyama created the Vaio America business unit to unify responsibility for product and software development, engineering, manufacturing, marketing and sales. Many of these functions were previously separated and “not necessarily well-coordinated,” he said. With “one leader” for Vaio, Sony can make speedier decisions in a fast-moving market and add “uniqueness.”

Digital still cameras, a third key growth area in the U.S., is a “major contributor to Sony overall” because the company manufactures about 65 percent of the CCD image sensors used in cameras worldwide, he noted.

(For more of Komiyama’s views, see the August 18 issue of TWICE.)