Aoki Outlines Sony's Position On Industry Issues

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While Sony Electronics has a dominant market share in several existing and emerging CE, computer and communications categories, the company clearly has its own views about recordable DVD video decks, Super Audio CD and other areas.

Aoki outlined Sony's positions on those subjects and explained what it plans for wireless phones, set-top boxes -- and generating revenue from content and services through set-top boxes and e-commerce -- among others.

  • Recordable DVD: Sony sees DVD-RAM as a computer peripheral, according to Aoki. "The group that is promoting DVD-RAM right now is trying to make it a consumer video disc recorder. Our position is that 4.7GB is not large enough to record reasonably good pictures in real time. We must go one step further. 4.7GB is fine for a PC peripheral."

    Hitachi, Panasonic and Toshiba have all backed DVD-RAM, while Philips and Mitsubishi have backed DVD+RW. Sony is also part of the DVD+RW camp but only as a computer peripheral. Pioneer is backing its own DVD-R/W format.

    Aoki stated that two years ago Sony thought at least 10GB was needed for video recording. Now, with HDTV, Sony "is working on a new DVD [recording deck] ... that should have discs of 1.1mm layers and should use a blue laser, which can easily achieve 20GB recording. We have demonstrated that internally." The company has been talking to "potential partners" about its approach, but Aoki said, "we are still not ready to make an announcement."
  • Super Audio CD: Aoki described it as being "the ultimate high end of audio products" and called DVD Audio "an extension of CD, from 16-bit to 20- or 24-bit." While pleased with initial sell-through to audiophiles, he said the format needs "more demonstration ... and more discs have to become available."
  • Cellular Phones: While Sony announced in July that it would close its wireless telephone business, it has not completely dropped out of the market. Aoki said the company did get out of the wireless handset business in the U.S., but "we will continue to do research on CDMA 2000 in San Diego. We will not give up on this business. We will come back with a fully featured 'Sony-like' product. Right now we are just selling handsets to operators."
  • HDTV set-top boxes and the Sony/Cablevision deal: Sony sees its investment in TiVo and its partnership with Cablevision to build set-top boxes as "an opportunity to sell hardware and sell systems," he said. "But our intention, with TiVo for instance, would be to provide more services with the programming guide and storage. Surely you can find recurring revenue, but Sony cannot do it alone."

    As for HDTV, Sony should have a major introduction at CES. Aoki said that by the middle of 2000, "we will have a comprehensive lineup of HDTVs, including set-top boxes, projection and direct-view sets."
  • E-Commerce: Sony currently sells its Vaio PCs over the Web along with accessories. In answer to a query about selling services through the Web, Aoki said, "Thomson recently announced RCA.com. Some retailers complained, but they have their own Web sites too. The Web is a different way for consumers to get excited about consumer electronics products. It can lead to incremental sales."

    Concerning Sony's policy, he said, "Just recently a company like Crutchfield is able to sell Sony products over the Web, as well as other selected dealers. Sony will expand Vaio direct into more products, but we are still not ready to make an announcement about audio/video products yet."

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