Tuesday, October 10, 2006

Consumer electronics dying, Sony chief says

NOBUYUKI IDEI, chairman of the advisory board of Sony, and chief corporate advisor, said he's started a new company to take advantage of the skills of CEOs his age, and to push forward the next stage of convergence.

But, he warned, the Japanese consumer electronics industry is dying. He told delegates at Etre that consumer electronics had already broken 10 years ago. People want to use the TV as a portal to the net and consumer electronics companies should change themselves.

The Playstation is late because Microsoft is not a technology company. Sony and IBM made a next generation CPU. A technology-based company like Sony can create something new. But Microsoft is buying a "very normal chip" from IBM.

As for Sony itself, Idei said that, until 1998, Korea hadn't woken up but it did after the Asian currency crisis. Since then, global competition started. Sony made a lot of transition costs during this period but can reposition its three major divisions. He is optimistic about the future, but Sony paid in advance, he said.

He said that Steve Jobs at Apple studied Sony carefully, and perhaps even wanted to be the chairman of Sony. He talked to a lot of music companies but had difficulties with Sony because it has a music division too. Apple's iPod is the trigger to a product like a PC becoming an entertainment tool. A PC is very complicated to use and if Apple can create something like a consumer TV type of product it could make some "quantum leaps".

All companies have to change, and that's the reason, he said, why he created a company called Quantum Leaps. This company, he said, will use the knowedge and experience of skilled CEOs and leverage manufacturing and quality in Asia.

He said that it's a challenge for Sony to be globalised. Sony is well accepted in America as a best brand. The firm, according to the Roper Report, ranks number one in 30 countries. He said: "It's very difficult to continue the evolution of the brand for the future. We made a soft alliance with Ericsson because we couldn't export our own phone to other countries. It's a good system, but it doesn't work in other countries."

A soft alliance doesn't involve huge capitalisation costs to spread a company's wings. He showed a picture of two voles emerging from their burrows and shaking hands. The other major soft alliance is with Samsung on LCD screens.

He said: "I had a lot of criticism for cooperating with a Korean company like Samsung. You cannot do everything by yourself. If you do everything you end up damaged. "

He said that in the next 10 years the telecommunication industry will experience huge changes. "The border between mobile phones and PCs is becoming very blurred," he said. "Google could be on a phone or in a game. This is a big challenge to government. BT has a totally different approach by saying they're not a telephone carrier but as a service supplier on the internet. The big telecoms companies can either promote themselves as open platforms, or defend themselves.



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