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Sony Stresses Market Gains, Strategies At NYC Briefing

New York — Sony Electronics accentuated the positive, emphasizing market share gains across the board and in HDTV in particular, and revealing plans to broaden use of the BRAVIA brand name in the line, during its Executive Media Roundtable at the Sony Building, here, this morning.

Stan Glasgow, president/COO of Sony Electronics — who was joined by Randy Waynick, senior VP of its home products division, and Steve Haber, senior VP of its newly formed digital imaging and audio division (which will begin operations on April 1) — outlined Sony’s progress during the past year and hinted at new products that will be introduced during its line preview in Las Vegas later this week.

Glasgow said that Sony’s U.S. consumer electronics business “continues to participate positively in the company’s growth” and cited the brand’s No. 1 position in units and dollars for calendar year 2006 in 11 different product categories, according to numbers from The NPD Group. The categories where Sony was No. 1 included home theater audio, home DVD, Blu-ray, camcorders and several others. To illustrate the success of the Sony brand, Glasgow cited examples, such as HD DVD camcorders where “Sony has a 60 percent market share.”

Waynick picked up on that theme in his remarks, saying that in home products, 2006 was “an exciting year for the industry and for Sony.” He quoted more NPD statistics for the year, saying Sony was “No. 1 in units and dollars in total TV and No. 1 in units and dollars for 27-inch and above LCD TVs.”

Much of the success Sony enjoyed in TV and LCD was due to the growth of the BRAVIA brand. In fact, Waynick noted, “BRAVIA has come to be known as a top-quality brand so [we have] decided to expand it into microdisplays, home audio systems and the

BRAVIA Internet Video Link

. We will transfer the best of BRAVIA’s design elements into other categories.”

In his remarks Haber stressed that the future is now for HD camcorders with Sony offering tape, DVD and hard-drive units now. “We expect HD to be the major part of the camcorder category in two years. You want your memories in HD? You can have that now, even on a hard-drive camcorder that can store 20 or 30 hours of video.”

Whether consumers use HD camcorders or Sony still cameras such as its Cybershot T100, the company will provide an HD output so “consumers can see their still memories in HD on a BRAVIA LCD screen, making it a picture frame for your home.” Haber said, again going back to the theme of BRAVIA become a major part of Sony’s strategy for 2007.

Glasgow noted that for seven years Sony has been the No. 1 brand in the Harris Poll in the United States, with the challenge being “to keep top brand share.” Sony will be changing its ad approach this year, calling it “a ‘silver bullet’ program that is clear and hard-hitting. We want our message to be positive.”

But the Sony president does want it focused since, “We have been fragmented [advertising] too many categories. We want to locate themes about Sony vs. 50 product campaigns. We want to use three or four major campaigns and a bunch of small ones.” Emphasis will be placed on HDTV, Blu-ray and digital imaging, he noted.

Speaking of Blu-ray Waynick said that Sony will introduce a $599 home deck during its line show tomorrow. “We achieved the price based on manufacturing efficiencies. The features and performance of this new deck were not compromised” compared to Sony’s current Blu-ray deck. (More on Sony’s products from its Las Vegas line show later this week.)

Here is an issue-by-issue overview of subjects discussed the assembled media this morning and the responses by Glasgow, Waynick and Haber:

Blu-ray market and reaction to LG’s combi player, Warner’s combi disc reaction

Waynick: “Since we began shipping Blu-ray [home decks] in November we have a No. 1 share in both dollars, with 50 percent, and units, with 40 percent. Software sales are three to one vs. HD DVD titles and growing. We will be introducing new models [in Las Vegas] this week.”

“If you look at the installed base of Blu-ray by itself plus PS3 sales [at over a million units] and the rest of the industry, we have a great installed base so far. What was revealing in the last quarter was that HD DVD in the market since June or July. Blu-ray was introduced in the fall and since its introduction it has outpaced HD DVD sales on a weekly and cumulative basis.”

Glasgow: “It is not cost-effective to manufacture a multi-format deck. And on the software side it is not cost effective to offer a multi-format disc because retailers would now have to carry three formats: Blu-ray, HD DVD and the combi disc.”

HDTVcompetition and pricing

Glasgow: “There are 70 to 80 [HDTV suppliers] out there that can buy panels, chips and put sets together. It is a lot tougher to make a good HDTV. With the competition out there, we see 20 percent price erosion this year. If a customer wants to buy an HDTV just on price, it won’t be a Sony. Our consumers pay a premium. Color reproduction makes a difference, design makes a difference and reliability makes a difference. Is it tough to make money [in HDTV]? Absolutely.”

Waynick: “The ASP [average selling price] in TV is going down across the industry so it is challenging, but for us our ASP went up. Consumers are aware of performance of our sets. It is not a subtle difference. Plasma TV has lost market share and its ASPs have gone down … in unnatural price erosion [in recent months.]”

“We made a commitment a year and a half ago based on performance and manufacturing costs to go with LCD. Some said we should have spread our bets and include plasma. We see 1,080p taking over and we see that LCD taking over in larger screen sizes going forward.”

Making audio more portable

Haber: “How do you deal with audio content you want with you in car, home and portable? Make it seamless as possible. Bluetooth home, portable and mobile products moves audio from component to component no matter where you are. We are emphasizing Bluetooth adapters and headphones.”

Retail changes

Glasgow: “We are seeing a retail restructuring. It is difficult for medium-sized retailers to survive. Best Buy is now different than Circuit City, Target is different than Wal-Mart, since the large chains are trying to differentiate themselves for customers. What we are trying to do is deliver a unique message [about Sony] via our stores and online.”

“Concerning Sony Stores, we will keep the growth rational, about five new stores this year and five next year, and stress value. These stores allow us to experiment on merchandising strategies and logistics, which are critical in areas like HDTV. We can then share that information with our retail partners. During the [fiscal] third quarter our online sales grew 16 percent and at our 40 Sony Stores sales were up 35 percent.”

Haber: “One of the key elements in having our stores is getting direct feedback from consumers on products and technology … like Bluetooth and our Sony eBook.”

Digital camera market

Haber: “Digital cameras have become fashion products and more consumers now own their third or fourth camera. SLR cameras are important because we feel that premium camera sales will go up with consumers wanting faster cameras and a choice of lenses in many cases.”