New York — Stan Glasgow, president/COO of Sony Electronics, held his first press roundtable since taking the helm April 1 and outlined his goals for the U.S. operation at the company’s landmark building, here, this morning.
While many of the questions fielded by Glasgow revolved around Blu-ray and HDTV, the new Sony president and first American in the post for 9.5 years, Glasgow outlined a four-part strategy for Sony Electronics:
- Have double-digit sales growth during this fiscal year.
- Find new business areas, through partnerships, acquisitions and the like.
- Develop a detailed retail channel strategy for Sony products.
- Have Sony Electronics “truly collaborate” with the company’s PlayStation, movies and music operations “like we never have before and collaborate as a team.”
And Glasgow added that Sony’s U.S. employees should “take ownership of what goes on at Sony Electronics in this country. We must have the right products, feature set, sold at the right price and delivered at the right time.”
In detailing his four points, Glasgow noted that during the past four years “we made huge cuts in our company, but now is the time for double-digit growth.” He sees “opportunities” in HDTV “which will [continue] to grow at a phenomenal rate; camcorders, with Sony introducing its third-generation HD units; digital cameras, with Sony’s efforts being bolstered by the acquisition of Konica Minolta assets to boost its Digital SLR offerings; and the continued strength of its Vaio computer line, which he said “will never compete with Dell” but has been profitable for three years and will continue to introduce “uniquely featured products.”
Glasgow also stressed that company should get involved in new businesses and “look at things differently and do things differently than we have before. We can’t just sell boxes. We have to simplify and get better solutions to make it easier for our consumers to use and understand our products.” And he added from now on Sony should also be “more open” when it comes to helping set industry standards, as it has done in its work on the Blu-ray format with other manufacturers.
At retail, U.S. consumers have more places to buy CE products than ever before, he noted. “It is incumbent on us to come up with a channel strategy. We have to collaborate with our retailers to come up with a strategy, work on our own stores” and poll consumers on what they like and don’t like about Sony products and why they shop at certain stores.
Glasgow added that Sony is planning to put in kiosks at its own stores and other retailers so consumers can buy on line at retail locations.
He volunteered that the company plans more Sony Style stores, which is “tough to balance with our major retailers,” but downplayed their sales impact. “Will our stores ever compete with our retailers like Best Buy and Circuit City? No. But we can demonstrate technology more easily and educate the consumers more. It’s easier to change 30 stores and demo Blu-ray than if you are a major retail chain” with hundreds of locations.
When asked if he was satisfied when he visits retail stores selling Sony products in terms of sales expertise and service, Glasgow said he was not. “Consumers have to feel they are getting reasonable service. There is variability of service with our retail partners. Some are great, others are not so great.” But he added, “If Sony ran 800 stores like Best Buy, which we have no intention of doing, our performance [at the store level] would be up and down. It’s not an easy job.”
Concerning specific products, Glasgow was plain-spoken in his view of Blu-ray, saying, “Blu-ray is the best format out there … but the consumer will decide which format will win.”
In his view, the format battle between Blu-ray and HD DVD will be settled “over the next 12 to 24 months. Some say it will take 36 months, but I don’t think so. If [Blu-ray manufacturers] sell enough product, we’ll win.” As for the possibility of a combined Blu-ray/HD DVD format to end the format battle, or the possibility of a dual-deck Sony product supporting both formats, he downplayed both ideas saying, “anything can happen” and that a dual-deck product would be “expensive to produce.”
Glasgow said that when Blu-ray players are introduced in July “there won’t be enough product to meet U.S. demand,” and that gradually as supplies go up and component prices go down,” prices for Blu-ray will go down. He sees Blu-ray player pricing going down “in half the time it took DVD prices to be reduced, which was seven or eight years.”
And while there is no data on how the introduction of PlayStation video game consoles with Blu-ray drives will affect the market when it debuts in November, Glasgow noted, “It will have a significant assist on the HDTV market. I think gamers will buy the units first, for the best possible display, but it could have a positive impact on HDTV sales.”
He also said that Sony is working on retail promotions that couple PS3 consoles and Sony’s HDTVs later in the year, which “could include discounts,” but there are no details on the plan at this time.
At the E3 show Sony reported it plans to have 2 million PS3 units available by the November launch, an additional 2 million for the 2006 holiday season and a total of 6 million available in North America by the end of its fiscal year in March 2007. Glasgow said that based on the PS3 commitment, Blu-ray drives for that product will be more plentiful initially than for Blu-ray players.
In HDTV, Glasgow said that last year’s second-half introduction of Sony’s Bravia LCD line gave the company No. 1 market share in LCD “within 60 days of its introduction” and helped give Sony the No. 1 share in flat-panel TV and in all TV for the United States. The problem was supply, as it was and continues to be for many manufacturers.
He stated, “We won’t make the same mistake we made last year. We will be adding huge capacity on LCD panels in our partnership with Samsung. Unless we made mistakes with our forecasts, we should have more than enough inventory this year to meet demand.” When asked if pricing during the second half will fall at the same rate, or worse, than what happened during 2005, Glasgow volunteered, “This is all a case of the supply-and-demand equation. If more manufacturers bring on [too much] capacity, they will be forced to sell at lower prices. All I can say is that we are bullish on LCD at Sony.”
As for Sony’s SXRD (Silicon X-tal Reflective Display) rear-projection HDTV lineup Glasgow said that the company would “continue to migrate technology from professional products to the consumer side.” He said that as LCD screen sizes go up, “it will blur into the projection TV market, but SXRD will generally be the bigger sized sets, with LCD and plasma being smaller sized.” And Glasgow said that Sony will be introducing more BRAVIA and SXRD products at the Home Entertainment Show in Los Angeles which starts on June 1.
