Sony Electronics, upbeat on its prospects for the holiday season, gave some Q4 pricing guidance on its Blu-ray players and commented on possible year-end shipments of its 11-inch OLED TV in the United States.
That was some of the news to come out of a twice-a-year media roundtable hosted by Sony last Thursday with Stan Glasgow, president of Sony Electronics, and Jay Vandenbree, president of the Sony Electronics Consumer Sales Company, at the Sony building.
When asked about Blu-ray player pricing from Sony for the holiday season, Glasgow said it should be “in the $399 range … I don’t expect it to go much lower than that.”
On the format battle between Blu-ray and HD DVD, he noted, “It continues. I still find it curious that there are 170 companies backing [Blu-ray] and two companies behind [HD DVD]. I find some abnormality in that. Hopefully when all the [movie] titles reach the market this season and the beginning of 2008, [consumers] will see the [difference] in performance.”
Concerning talk from this week’s Blu-ray meeting in Los Angeles where Panasonic debuted a 1.1 player, the specification mandated by the Blu-ray Disc Association, Glasgow also said that Sony plans its own for next year, possibly with 1.2 features.
He added, “1.1 is a set of features. Step-by-step we will be adding features and have to work with the studios” which can add plenty of features to a disc. Glasgow added that certain existing Blu-ray decks could be “upgraded with firmware” to have some 1.1 features.
Vandenbree quoted CEA’s Holiday Purchase Patterns study, saying, “Based on what CEA said we expect 9 to 10 percent growth. We see all of [Sony’s] major categories growing except microdisplay TV. Home audio continues to grow. We can’t keep portable music players on the shelf. Do we have a dominant share? No, but we have a great business. Digital cameras have been a great success.”
When asked if Wal-Mart’s Black Friday-like pricing on certain CE products this past weekend will hurt margins at retail overall, forcing some chains to match those bargains, Vandenbree noted, “I’m not sure that gets people in the Christmas shopping mode. I don’t think that will pull in [more holiday] shoppers. I’m sure [retailers] would love to funnel more holiday business earlier in the cycle. I don’t think it will have an overall effect on retail.”
On the traditional Black Friday, Vandenbree said the industry will see little promotional efforts from Sony and he expects few from other manufacturers.
Glasgow commented that he expects holiday sales of the Bravia line to be “extremely strong” and that he doesn’t see much price erosion happening in 32-inch because supplies are short on anything under 40 inches because “pricing already came down a bunch.” He does see price erosion in 46- and 52-inch displays.
The Sony Electronics president was very candid about a major competitor, Panasonic, and what occurred in flat-panel pricing during last year’s holiday season. “Panasonic moved the industry [with its 42-inch plasma TV pricing] and some retailers lost a lot of money. Some retailers are in trouble today because of it. I don’t expect Panasonic to do that again. To do a 1080p in plasma is more expensive than LCD … and to [make a price move] it would eat into their cost structure.”
Vandenbree said that the success of its Bravia line is “not just happening because of product. Our ‘HDNA’ [advertising] program is working. We have over 25,000 retail displays in place across the country. We have TV ads out there,” and more assisted sales people and retail product trainers than ever before.
Glasgow said the HDNA program is “breaking now and we are trying to explain to U.S. consumers the HD business. We are telling them that Sony starts with the [broadcasting] lens to the living room. [A majority] of all sports broadcasts are done with Sony cameras. And we have Dale Earnhardt Jr. and Peyton Manning in our ads, people who consumers can identify with.”
Sony’s momentum into the holiday season is reflected in its fiscal second-quarter report which showed that its consumer electronics sales worldwide went up 20.7 percent vs. the previous year, hitting $14.5 billion, while operating income was up a whopping 1,231.6 percent to $930 million, said Glasgow. About the fiscal second quarter performance in the United States, Glasgow noted, “We always wish for better. But our performance was strong. It exceeded expectations.”
Glasgow was asked about Sony’s OLED 11-inch display that was shown at CEATEC in Japan last month and he revealed, “There may be limited quantities available in the U.S.” He explained that OLED “is in its early production mode … and as always yield could be a question. It is about to ship in Japan, but if there is enough supply [for the United States], you might see it here before the end of the calendar year.”
And concerning Sony’s “store within a store” concept where it takes the Sony Stores look and feel and puts it into other retail chains, Vandenbree said, “This enables us to go to market in a certain way. If a retailer agrees that it is the way they want to go to market, we partner with them.” But to sign up for the program a retailer must commit to a minimum staffing level and other major commitments, which is why Sony signed six chains like Nebraska Furniture Mart, Abt Electronics, Ultimate Electronics, Electronics Expo, Bjorn’s and Toys R Us. Vandenbree said Sony plans to open “no more than six more” Sony departments next year.
