Sony, who lost the Beta Vs VHS battle, then spent hundreds of millions of dollars on robots that no one wanted and roll in motion MP3 players that were the joke of the industry, is now convinced that consumers will flock to their products to buy content.
This is the same Company who has tried several times and failed to deliver proprietary Sony technology such as memory for camera’s and camcorders. Then there was the Sony S-AIR technology, which the Company claimed could get wireless audio up and running without “IP addresses, WEP keys and pin codes as long as you kept buy Sony only technology.
Now the Company is banking on SOS services, in the form of Sony Online Services to save the Company, with executives admitting that it will be 2013 before the Company has any hope of making a profit.
Analysts are saying that if Sony’s high risk content strategy fails then their future looks “grim”.
Sony genuinely believe that by making their TV’s gaming consoles, portable devices and camera’s IP enabled that consumers will flock to pay for Sony content or Sony services.
The only problem is that Sony seems to have forgotten about the likes of Apple, Samsung, LG, Panasonic, Nintendo and Microsoft all Companies that are adopting similar strategies, which will compete head on with Sony. The other problem for Sony is that all of these Companies are highly profitable while Sony is wallowing in losses.
The Sony Online Service, which Kazuo Hirai, game and network chief, says will be launched in 2010, is the company’s bid to return to profitability.
The future of Sir Howard Stringer, chairman and chief executive, of Sony hangs on the success of the strategy.
According to the Financial Times, David Gibson, head of research at Macquarie Securities in Tokyo, sums up the mood when he says: “Sounds good, Sir Howard, but show me the money.”
Sony’s strategic problem is devilish: it is caught between low-cost Korean TV makers such as Samsung on one side, and invaders from the information technology industry such as Apple and Amazon, with their iPhone and Kindle e-book reader, on the other. They will also have to compete with Google and their YouTube TV services which will deliver content to the TV’s gaming consoles and phones of Sony’s competitors.
The goal of the SOS is to offer services that Korean companies cannot, such as downloadable “apps” for TVs made by third parties, via devices the IT industry does not make, such as cameras and TVs.
The FT said that Sony would like to store the pictures you take on your digital camera for you on one of its servers, in return for a fee. It would also like to download films to your Sony TV for rental or purchase.
The mood at Sony is grim. In Australia the strategy has little chance of working as most of Sony’s competitors are already delivering content for devices. Apple with their iTunes and Apple TV services, Microsoft with their new Xbox 360 movie service that was launch last week and Samsung and Panasonic with TV based widgets that in the future will deliver movies and content from a variety of sites like Netflix and YouTube.
Even Telstra is jumping into the content arena with a new free set top box that will deliver movie, sporting and video content into homes over their BigPond broadband network.
Sony genuinely believe that they can generate significant revenue from people downloading content through the SOS to the extent that they have forecast revenues of $3.37bn in annual sales by 2012.
The Financial Times said that until the SOS is actually up and running, and it is clear whether buyers of Sony TVs, cameras and mobile phones are choosing to connect to it, analysts will remain cautious. They remember previous Sony buzzwords such as “Bravia Link” (connects your TV to the internet) and “Media Go” (allows you to share files between Sony devices) all failed.