The following information is true and accurate at the time of publication.
March 14,2002
Accelerating Strategic Linkages
between Core Sectors to Create Group Corporate Value
Sony Fiscal 2002
Corporate
Strategy
Tokyo, Japan
For the coming broadband era - Electronics, Game and
Content,
which are deployed on a global basis, will be the three
core sectors to sustain Sony's growth. Sony continues to
identify key businesses within each core sector and
to concentrate
resources in these areas, aiming at strengthening
competitiveness
and maximizing the overall economic and brand value
of each
core sector. At the same time, Sony has established the
Network Application and Content Service Sector (NACS) on
April 1, 2002, which will support the core sectors
and allow
them to mutually reinforce each other.
Sony will also continue to create new business models
through
the promotion of "soft alliances" with partners outside
the group, the development of network based financial
settlement
services centering on Sony Finance International, Inc.,
and the promotion of "My Sony Card" in its financial
services
sector and other sectors. Through these endeavors, Sony
believes that it will be able to achieve a unique
corporate
position in the broadband era as a global media and
technology
company.
Group Corporate Strategy
1) Mission for Three Core Sectors
- Electronics
Develop attractive digital products for the home and
mobile
environment to become the top Network Consumer
Electronics
Company
- Game
Evolve current game business and develop a completely new
broadband computer entertainment industry
- Content
Establish a leading position as creator and distributor
of music and picture entertainment content for the
broadband
age (network distribution etc.)
2) Creating a New Business Model through Strategic
Linkages
between Core Sectors
- The Network Application and Content Service Sector
(NACS)
was created on April 1, 2002. Its mission is to
ensure that
our three core sectors are linked effectively through
network
services which will create synergies and new horizontal
business models.
- The strategic linkage between our core sectors promoted
by NACS will ensure that the Sony group retains a leading
position in the key business areas of the broadband
network
society. Sony will concentrate the resources of the
entire
group to create new, appealing products and services for
the future.
3) Soft Alliances to Create an Open Operating Environment
Sony will actively seek partners who share our vision to
create a truly open environment for the broadband future.
We will continue and strengthen our strategy of soft
alliances
with these partners.
FY2002 Sectoral Overview
Electronics
1) Strengthening the platform for AV/IT Products Geared
to the Broadband Era
- Enhancing gateway products (Home AV products centered
on Wega and mobile AV/VAIO products including mobile
phones)
- Promoting connectivity of "client" products to the
above
gateways and PS2 (Digital Still Camera, Camcorder, Net MD
etc.)
- Identifying the device business as a core engine to
differentiate
products in the growth areas listed above and thus
maximizing
total profit
- Creating new business models based on the integration
of network services and content
2) Further promotion of structural reform to strengthen
corporate system and ensure profitability
- Enhanced productivity and appropriate operational scale
through strengthened global EMCS system
- Inventory Control further strengthened through enhanced
Supply Chain Management
- Target of 10% cut in consolidated inventory by end of
FY02 (FYE, March 03). Inventory stood at ¥513.4
billion
at end of FY01.
- Continuation of "concentration and selection"
policy
- Aiwa brand will use the Sony production and sales
platform
to the fullest extent to respond to the challenge of
commodification.
Game
- PS2 has secured its position as the leading
computer entertainment
platform. PS2 business will now be expanded and
continuing
profitability confirmed (hardware/peripherals/software).
- PS2 Broadband development will continue in order to
make
it a computer entertainment platform for the network era.
Content
- The core business of content creation will be
strengthened
and profitability enhanced while improvements continue in
operational efficiency. Digitalization of picture content
will proceed and new artists discovered and
developed.
- Linkages with electronics and game segments will be
forged
and the creation and network distribution of digital
content
(game/picture/music) further strengthened.
NACS
- Sony's network service business will be positioned in
order to create new business for the broadband era
through
the linkage of Sony's operational sectors. The key areas
for linkage will be:
* Hardware: Network Compatible AV/IT products, PS2 etc.
* Network Services - The ISP So-net as well as the
contactless
IC card technology FeliCa and its related settlement
services
Edy and eLIO
* Content - Game, Music and Picture sectors.
- With NACS at the core, Sony's network service business
will be reorganized and strengthened with the objective
of creating a common group platform which will contribute
to increasing corporate value.
Financial Services
Corporate value will be enhanced through
strengthening financial
services from each company. The possibility of a capital
partnership between Sony Life Insurance Co., Ltd. and a
major US or European life insurer will continue to be
evaluated.
The objective is to strengthen the operational base
of Sony
Life and secure long-term growth for the company.
Financial
services and network services will be expanded
through the
development of Edy/eLIO settlement services promoted by
Sony Finance International, Inc. and the introduction of
the My Sony Card from April 2002.
REFERENCE
FY2002
Electronics Business Strategy
R&D
R&D Laboratories were reorganized as of April 1, 2002 in
order to strengthen R&D functions through enhanced focus
on key technological areas and more effective linkage of
research to product development.
- New laboratories established which integrate the
technology
domains of existing corporate labs. Laboratories to focus
on component technology or applied development with
component
technology at the core.
- Technology management system solidified with Chief
Technology
Officer (CTO) at the top.
Main areas of research: Displays, Storage, Materials,
Network
Applications
Technology/Device
Strengthening core device development as enhancing agent
for net-compatible AV/IT products
1. Display Devices
Developing devices for flat panel displays/pursuing
development
of technology for high quality/high resolution pictures
(1) Product development using Sony proprietary technology
- Low-temperature polysilicon LCD (for mobile AV
products)
- FED/OEL (for home displays)
- High-temperature polysilicon LCD/GLV*(for Home
Theater/Projector)
* GLV: Grating Light Valve
(2) Product development and procurement in alliance with
other companies
- Amorphous LCD (for computer displays) PDP (for home
displays)
2. Optical Disks
- DVD +/- RW, Blu-Ray technology development etc.;
further
strengthen device development
3. Semiconductors
- Joint development of most advanced semiconductor
production
process technology with IBM, Toshiba, SCEI to
continue with
a view to breaking out of purely game-oriented uses and
applying to consumer AV devices.
- Joint development with Toshiba of System LSI
process technology
for image processing in network compatible products (by
end of FY 2003).
- Promote internal development of LSIs for dedicated use
in Sony products, in order to differentiate from
competitors
(e.g. single chip LSI for MPEG signal processing in
Network
Handycam IP and signal processing chips for cameras.)
- Differentiate products through strengthening areas such
as CCDs, high temperature polysilicon LCDs, bipolar that are generating high profit.
Network Connectivity of Gateway/Client
Products
Development of net-compatible VAIO, Home AV and Mobile AV
products
Schedule:
Phase 1: Begin construction of network with VAIO as home
server
Phase 2: Market introduction of network compatible Home
AV products centering on Wega
New Product Categories to Sustain Growth
Strategy
1. Home AV
- Strengthen development of FED/OEL
- Expanding disk business from DVD players to DVD +/- RW
and Blu-ray
- Market introduction of net-compatible Home AV devices
(in addition to PCs)
2. Mobile AV
- Products like Digital Still Cameras, Camcorders, CLIE,
Net MD etc. which until now have been connectible to PCs,
will connect directly to Net-compatible Home AV products.
This will give high added value and differentiate
from competitors.
- Sony will continue to cooperate with Sony Ericsson
Mobile
Communications from the AV/IT technology, device and
design
perspectives.
3. VAIO
- Maintaining the superior value and leading position of
VAIO
- Develop unique applications in order to strengthen
linkage
to Mobile AV and Home AV products
- Development of services based on VAIO through liaison
with NACS
Production and Inventory
- EMCS will work to achieve the optimal worldwide
production
system.
Cooperation in production activities (technology support,
efficient manufacturing allocation) will be strengthened
between Japan, South-East Asia and China.
- The work of the Procurement Center and allocation
of basic
materials to Network Companies and production facilities
has been centralized under EMCS as of April 1, 2002.
Costs
will be reduced through centralized purchasing practice.
- Consolidated electronics inventory is targeted for
reduction
by 10% by end of FY02 (¥513.4 billion at end of
FY01.)
Distribution and Sales (Japan)
Sony Marketing (Japan) Inc. has adopted a new sales and
marketing system in response to changes in the domestic
distribution environment.
- In addition to the existing structures based on product
categories, a new organization will be established
focusing
exclusively on mass-retailers.
- Marketing functions will be strengthened in order
to respond
to demand for broadband era products, network
services etc.
- AV/IT sales functions will be integrated to more
effectively
deal with changes in the distribution structure.
Reductions in Headcount/Consolidation of Production
Facilities
At the end of FY01, the consolidated number of permanent
employees was approximately 150,000. This has been
reached
in advance of the original target for reduction of
employees.
As of May 2002, the number of production facilities was
54. This has been reached in advance of the original
target.
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