<Press Release>
The press releases on this website are provided for historical reference purposes only. Please note that certain information may have changed since the date of release.


March 9, 1999

Sony Announces New Group Architecture for Network-Centric Era
to seize further growth opportunities in the 21st century and enhance shareholder value



Tokyo, Japan - Sony Corporation today announced plans to realign and strengthen its Group architecture. The objective of this change is to enhance shareholder value through what it calls "Value Creation Management."

Sony will also establish a "unified dispersed"1 management model, in which resources within the Sony Group will complement each other. The new Group architecture will have self-contained, autonomous business units and a headquarters with a strong coordination role.

The basic framework for the new Group architecture is the following:

- Strengthening the electronics business
- Privatizing three Sony Group subsidiaries
- Strengthening Group management capability

Commenting on today's announcement, Sony Corporation President Nobuyuki Idei said, "With the ongoing evolution in digital network technology, the three pillars of Sony Group - electronics, entertainment, and insurance and finance - are facing rapid changes. Over the next three years, Sony will invest aggressively in R&D, capital equipment and facilities so that our electronics business, which is our core business, can evolve to best meet the needs of a network-centric world. We are committed to creating new lifestyles and providing new forms of enjoyment to people in the network-centric society of the 21st century."


STRENGTHENING THE ELECTRONICS BUSINESS

Sony will implement the following changes to reinforce its electronics operations:

1.Realigning the Electronics Operations
Effective April 1, 1999, the current Sony Corporation divisional companies will be grouped into the following three main business units, and computer entertainment will be positioned as the fourth pillar of the electronics business:

- Home Network Company
- Personal IT Network Company
- Sony Computer Entertainment, Inc.
- Core Technology and Network Company

To enable each network company to operate autonomously, essential support functions and R&D laboratories will be transferred from the corporate headquarters to each unit. Authority will be delegated to a Board and a Management Committee within each network company, to allow it to operate independently, while enjoying the benefits of the current company system.

To provide a flexible system for pursuing new business opportunities in the network- centric environment, network companies will create venture companies that will utilize technologies and expertise available within each unit.

For further information, please refer to the organizational chart at the end of this announcement.

2.Sony's Network Business
Sony will establish Digital Network Solutions directly under Group Headquarters. Digital Network Solutions will strive to create a network business model by charting strategies and developing essential technologies to materialize future opportunities.

Sony aims to create a network platform for providing customers with digital content such as movies, music, and financial services.

3.Improving Profitability
To improve profitability of the electronics business, Sony will continue to reduce the number of Sony manufacturing facilities worldwide from the current 70 to 55 facilities by the end of March 2003.

Sony will proactively change the composition of the Sony Group workforce by reducing headcount by about 10% by the end of March 2003, re-training and reallocating employees from analog to digital businesses and from hardware to software operations, and promoting valuable and competent employees.


PRIVATIZING THREE SONY GROUP SUBSIDIARIES

Sony intends to make Sony Music Entertainment (Japan) Inc., Sony Chemical Corporation and Sony Precision Technology, Inc., wholly owned subsidiary companies of Sony Corporation on January 1, 2000. This is part of Sony's effort to create a Group structure that respects company autonomy, while promoting coordination between businesses.

Sony plans to carry out the integration of these companies by utilizing the exchange offer proposal included in the amendments to the Commercial Code and other laws which are expected to be deliberated at the ordinary session of the Japanese Diet (Parliament) this year. However, if the exchange offer proposal does not pass, Sony will integrate these subsidiaries under the current regulations.

Sony Music Entertainment (Japan), Inc.
Sony Music Entertainment (Japan), Inc. will expand profitability by creating new business opportunities focused on long-term viability, rather than short-term gains. Sony Corporation will strengthen ties between its music and electronics units, while respecting the independence and autonomy of Sony Music Entertainment (Japan), Inc.

Sony Computer Entertainment Inc., which is currently owned by Sony Corporation and Sony Music Entertainment (Japan), will also become a wholly owned subsidiary company of Sony Corporation.

Sony Chemical Corporation
Sony Chemical Corporation will increase its printed circuit board business by pursuing new opportunities in cooperation with the Sony Group circuit board and mount engineering operations. At the same time, the recording media and battery operations will adopt more efficient manufacturing systems and strengthen their supply chains by directly linking production and sales with Sony Corporation.

Sony Precision Technology, Inc.
Sony will expand its line of disc and semiconductor inspection equipment and precision measuring devices by combining its precision technologies with those of Sony Precision Technology, Inc. As a result, Sony Precision Technology, Inc. will be able to grow its production systems manufacturing business.

Please refer to a separate press release issued today on the privatization of Sony Music Entertainment (Japan) Inc., Sony Chemical Corporation and Sony Precision Technology Inc.


STRENGTHENING GROUP MANAGEMENT CAPABILITY

Sony will establish a new strategic Group Headquarters to pursue Value Creation Management. In addition, Sony will reinforce its Group operations by improving the headquarters' strategic function and speeding up management processes.

1.Further Distinction Between Board Duties and Management Duties
In 1997, Sony Corporation reorganized its Board of Directors and created a new position of management called "corporate executive officers," in an effort to distinguish those individuals responsible for oversight from those responsible for management. Sony will make a further distinction by reviewing the current list of Board members and reducing the number of individuals who also serve on the Management Committee. Additionally, to pursue Value Creation Management, Sony will enhance its system of check and balances by increasing the number of outside directors. To reinforce cooperation, the Management Committee will be comprised of top management of major business units.

2.Strengthening Group Headquarters' Function as an "Active Investor"
Sony's headquarters will be divided into two distinct functions: Group Headquarters and business unit support. The size of Group Headquarters will be kept to a minimum. It will oversee Group operations, organize business units and allocate resources speedily, taking on the role of "active investor," in order to maximize the Group's overall value. Many of the support functions will be transferred to the appropriate network companies, enabling them to operate autonomously.

Sony will separate support functions such as accounting, human resources and general affairs from Group Headquarters to improve the quality of their service and allow them to compete in the market, with a view that Sony Corporation may become a holding company in the future.

Effective April 1, 1999, personnel from the corporate Human Resources Division will transfer to a newly established subsidiary company, tentatively called Sony Human Capital, Inc.

Both long-term R&D projects and those related to future network businesses will remain under the direct supervision of Group Headquarters. Immediate and short-term projects will be transferred to the relevant network companies.

3.Implementing a New Value-Based Performance Measurement System
To pursue Value Creation Management, Sony will implement a new value-based performance measurement system, starting in fiscal year 1999, that accurately reflects the cost of capital. This measurement is based on the concept of Economic Profit, which is calculated by subtracting the cost of debt and equity from the operating profit after tax. Sony will use this measurement to set targets and evaluate business unit performance, linking it in the future with management compensation.

Sony's new corporate architecture will enable it to seize new business opportunities and pursue Value Creation Management in the 21st century network-centric era. Sony hopes to accomplish these objectives by realigning and strengthening its core operations in electronics, and combining the electronics business with music, pictures, insurance and finance businesses.

Sony Corporation is a leading manufacturer of audio, video, communications and information technology products for the consumer and professional markets. Its music, pictures and computer entertainment operations make Sony one of the most comprehensive entertainment companies in the world. Sony recorded consolidated annual sales of over $51 billion for the fiscal year ended March 31, 1998, and it currently employs 170,000 people worldwide.

Note:1 A management model for the network-centric era that allows quick decision making and flexible coordination to take place, as well as increases the corporation's overall value. The "unified dispersed" model can be contrasted to the current hierarchical or centralized business model.


Sony Group Organizational Overview

(as of April 1, 1999)

Organization


Business Unit Objectives and Domains

( effective April 1, 1999 )


Network Business

Digital Network Solutions (organization directly under the headquarters)
President & COOSunobu Horigome

< Objective >
- To create Sony's network platform
- To create value added services and nurture new businesses
< Business Domains >
Network services

Electronics Business

Home Network Company
President & COOShizuo Takashino
Deputy PresidentMasayuki Takano
Chief Production OfficerTadakatsu Hasebe

< Objective >
- To establish a business model centered on digital televisions for the network-centric era
< Business Domains >
Television, video, and audio products


Personal IT Network Company
President & COOKunitake Ando
Deputy PresidentKatsumi Ihara

< Objective >
-To create new businesses by converging tele-communications products, IT and personal AV technologies
< Business Domains >
Phone, personal computer, and digital imaging products


Sony Computer Entertainment Inc.
PresidentKen Kutaragi

< Business Domains >
PlayStation, next-generation PlayStation


Core Technology & Network Company
President & COOSuehiro Nakamura
Deputy PresidentYoshihide Nakamura

< Objective >
-To enhance shareholder value as an independent business unit handling recording media and devices, by collaborating with other business units.
< Business Domains >
Semiconductor, storage media, battery, and device products



Sony Corporation Personnel Changes (effective April 1, 1999)
(new job responsibilities are underlined)

<Board of Directors>
Norio OhgaChairman and Representative Director, CEO
Nobuyuki IdeiPresident and Representative Director, Co-CEO
Minoru MorioExecutive Deputy President and Representative Director, CTO
Kozo OsoneExecutive Deputy President and Representative Director, CPO
Yoshiyuki KanedaExecutive Deputy President and Representative Director,
Executive Representative, Western Japan
Tamotsu IbaExecutive Deputy President and Representative Director, CFO
Akiyoshi KawashimaSenior Managing Director
Oversees network business and regional strategy
Peter G. PetersonDirector (Chairman of The Blackstone Group)
Kenichi SuematsuDirector (Counsellor of The Sakura Bank, Limited)


<Corporate Executive Officers>
(excluding directors)
(new job responsibilities are underlined)

Kiyoshi YamakawaCorporate Executive Vice President
Oversees Corporate External Relations Division
Suehiro NakamuraCorporate Executive Vice President
President and COO, Core Technology & Network Co.
Kenichi OyamaCorporate Executive Vice President
Oversees Accounting and Finance Division
Hideo NakamuraCorporate Senior Vice President
Oversees Manufacturing System Business Center
Masayuki TakanoCorporate Senior Vice President
Deputy President, Home Network Co.
Oversees Home Display Business
Yasumasa MizushimaCorporate Senior Vice President
Oversees Procurement Center
Oversees Logistics Center
Masayoshi MorimotoCorporate Senior Vice President
Oversees Corporate Human Resources, Employee Relations &
General Affairs Center, Capital Market & Investor Relations, and
Corporate Communications
Shizuo TakashinoCorporate Senior Vice President
President and COO, Home Network Co.
Mario TokoroCorporate Senior Vice President
Oversees Corporate Laboratories
Kunitake AndoCorporate Senior Vice President
President & COO, Personal IT Network Co.
Toshitada DoiCorporate Vice President
Oversees D-21 Laboratory
Seiichi WatanabeCorporate Vice President
Oversees Corporate Laboratories
Kenji HoriCorporate Vice President
Oversees Customer Satisfaction Center
Katsuaki TsurushimaCorporate Vice President
Oversees audio related new businesses, Home Network Co.
Oversees R&D laboratory, Core Technology & Network Co.
Takeo EguchiCorporate Vice President
Oversees Technology Development, Personal IT Network Co.
Shigeyuki OchiCorporate Vice President
Oversees R&D laboratory, Home Network Co.
Nobuyuki WatanabeCorporate Vice President
Oversees Corporate Environmental Affairs
Sunobu HorigomeCorporate Vice President
President and COO, Digital Network Solutions
Tadasu KawaiCorporate Vice President
Oversees Corporate Marketing Division
Oversees Corporate Regional Strategic Planning Department
Mitsuru OhkiCorporate Vice President
President, Broadcasting & Professional Systems Co.
Yoshio NishiCorporate Vice President
Corporate Research Fellow, Core Technology & Network Co.
Yutaka NakagawaCorporate Vice President
Oversees ME business, Home Network Co.
Yukio KubotaCorporate Vice President
Oversees Home Display business, Home Network Co.
Katsumi IharaCorporate Vice President
Deputy President, Personal IT Network Co.
Mitsuyuki WatanabeCorporate Vice President
Oversees Electronic Devices Sales, Core Technology & Network Co.
Tadakatsu HasebeCorporate Vice President
CPO, Home Network Co., oversees CRT business
Kenichiro YonezawaCorporate Vice President
Oversees Legal and Intellectual Property Division
Yoshihide NakamuraCorporate Vice President
Deputy President, Core Technology & Network Co.
Akira KubotaCorporate Vice President
President, Corporate IS Solutions
Takeo MinomiyaCorporate Vice President
Oversees Semiconductor business, Core Technology & Network Co.
Mitsuo KurobeCorporate Vice President
Oversees New Business Development


Sony Computer Entertainment Inc., Personnel Changes
(effective April 1, 1999)


NewCurrent
Tamotsu IbaChairman, Director
Sony Computer Entertainment Inc.

(concurrent with position at
Sony Corporation)
Executive Deputy President and
Representative Director
Sony Corporation
Ken KutaragiPresident, Representative Director
Sony Computer Entertainment Inc.
Executive Vice President
Sony Computer Entertainment Inc.
Teruhisa TokunakaRepresentative Director
Sony Computer Entertainment Inc.
(also, Deputy Chief Financial Officer,
Sony Corporation)
President
Sony Computer Entertainment Inc.
Nobuyuki IdeiDirector
Sony Computer Entertainment Inc.
(concurrent with position at
Sony Corporation)
President and Representative
Director, Sony Corporation