Sony has unveiled an astonishing array of products over the past two weeks, including a postage stamp-sized TV and FM radio tuner "for cellphones and other mobile devices", a Vaio Pocket portable music player, and a music download service.
At E3, it showed the PSP handheld games console and an advanced cell-based development system. On the PC front, its new offerings ranged from the world's smallest Windows XP machine, a pen-operated system weighing just 550g, to an XP Media Center PC that can handle 1.6 terabytes of storage. And this is far from being a complete list. Sony is trying to innovate its way out of trouble. In its annual financial results, announced on April 27, it said sales grew only 0.3% to Y7.5 trillion (£37bn) while operating profits fell by 47% to Y99bn (£0.5bn) "mainly due to an increase in restructuring expenses".
Sony is also suffering from declining sales in its profitable PlayStation business. Despite price cuts, it sold almost 6m fewer consoles in the financial year. But while you have to admire Nobuyuki Idei, Sony's chairman and chief executive, for his strategy of getting into new businesses, he's taking on some powerful rivals.
Enemy number one is Apple, which has invaded Sony's home ground in the portable music market. Enemy number two is probably Microsoft, which has invaded the games console business with the Xbox. Enemies three and four are Nintendo and Nokia. Having smashed Nintendo's console business, Sony is now attacking its portable Game Boy franchise, and this is where Nokia is aiming its N-Gage phones. Sony has also allied with Ericsson, Nokia's traditional rival, in the mobile phone business.
Just how many platform wars can Sony handle? Sony's Music Connect download service has been criticised because Sony is using its own Atrac music compression format, and copy-protected tracks will only play on Atrac-compatible handhelds. This is much like Apple's approach with iTunes, where licensed downloads will only play on iPods. However, Sony's portable music devices include Net MD MiniDisc players, Memory Stick Walkmans, CD Walkmans, Clie handhelds and Sony Ericsson phones. The iPod will outsell Sony's Vaio Pocket, but it is not going to outpace all of these worldwide.
Also, while Apple still won't let anyone else use its technology, Sony has learned from the VHS v Betamax battle, and is trying to get the rest of Japan Inc to support Atrac downloads. Today, eight manufacturers are launching the Any Music service in Japan, using Atrac and Sony's proprietary OpenMGX (MagicGate) digital rights management system.
The brands in the consortium include Sony, Kenwood, Pioneer, Sharp, Onkyo, Marantz, Denon, JVC and Yamaha. But in some respects, Sony may be its own worst enemy. For example, its PC business might do better if Sony's top executives did not spend so much time attacking PCs.
And while there is some synergy to owning content (movie and music studios), the delivery system and the players, I am sure Sony would sell far more devices if it allowed the degree of copying that users actually want.
