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Aoki Upbeat On Sony’s U.S. Performance

Sony Electronics president/CEO Teri Aoki provided an upbeat assessment of his company’s performance in the U.S., as well as an overview of new and existing consumer electronics technologies, during his biannual roundtable meeting with the press, held at the Sony Building in New York earlier this month.

Although Sony Corporation reported lower sales and operating income for the second quarter and first half ended September 30 (see Sony Reports 2nd-Qtr., 1st-Half Profits, Oct. 28, 1999), Aoki said that performance had less to do with current business conditions overall, and more to do with this year’s stronger yen — 105 yen to the dollar versus last year’s 127 to the dollar, about a 20% difference in value.

For Sony and other Japanese manufacturers, the biggest problem caused by the exchange rate is how rapidly the yen’s value has been changing, Aoki said. “We are complaining that it is fluctuating too quickly. If the yen went from 120 to 110 in one or two years, OK, we could plan for it. But a change like that in six months is tough.”

The Sony executive added, “If you look at all the numbers based on local currency, [Sony’s performance] is encouraging.” For instance, in the U.S., sales would have increased 10% based on dollars.

Speaking strictly about Sony Electronics in the U.S., Aoki said the Consumer Group specializing in audio/video products generates 50% of the company’s total revenue, “thanks to the strong economy and consumer appetite” for consumer electronics, particularly Sony’s. The Consumer Group is “clearly the number one audio/video product supplier in the U.S.,” he stated. “Our overall share is close to 20% of the entire CE market.”

Aoki was bullish on a number of categories as he provided an overview of the Sony Consumer Group’s performance in the first half of this fiscal year. One encouraging factor is the continued march from analog to digital technology. “With the move to digital audio/video products,” he noted, “there are plenty of ways for [Sony] to differentiate ourselves from others.” Here are his views on various categories:

  • Color TV: Aoki called color TV “one of our most important businesses.” Thanks to its FD Flat Wega line, Sony’s share of the market increased by 10% in units, and in dollar volume “we have a 20% share.”
  • Projection TV: “We had a 30% share during the spring, now we have a 25% share but still lead the market.”
  • DVD Players: “CEMA [now CEA] forecast 3.5 million units to be sold in the U.S. this year. We are maintaining the number-one spot and can sell 1 million units this year.”
  • Camcorders: “We introduced in January the D8 camcorder, a digital version of an 8mm camcorder, which has been very well received by consumers. We enjoy a 36% share of the [U.S.] camcorder business.”
  • Digital Cameras: “The Digital Mavica is dominating the marketplace. Our share is more than 45%. We thought that its flash memory-based products would be more accepted than the 3.5-inch floppy disk-based models. So far the 3.5-inch Mavica is selling well and the shift to flash memory hasn’t happened.”
  • MiniDisc: “The U.S. sold 450,000 units last year. This year our budget is for 700,000 in decks and portable units. We are doing fine in portable but are behind in deck [sales].” Aoki noted that the MD/CD deck offered by Sony this year “should build MiniDisc volume.” And in answer to a question, he said that this fiscal year’s promotional support is as extensive as last year.
  • Personal Computers: “We are doing very well with the notebook Vaio. In August and September at retail the Sony Vaio notebook took over the number-three market share position after Toshiba and Compaq. That means we passed IBM in the past year. We now have a 16.7% share.”