Though Sony CEO Kaz Hirai made splashy news with the electronics giant’s plans to break into the U.S. pay-TV market, he spoke at length on a range of other topics at a reporters’ roundtable interview in Las Vegas today:
Well ahead of 4K TVs hitting the mainstream market, Sony CEO Kaz Hirai is already preparing for a looming price battle.
After all, Sony saw this movie play out in the last transition. The electronics giant got a good share of the initial HD-television market, but struggled mightily as sets dropped in price and became mainstream purchases.
“If and when this commoditization of 4K TVs comes along — and at some point it will — we need to have an organization that is working as efficiently as possible with the lowest cost but with the highest quality … to make sure we are withstanding the wave of price reductions that we will inevitably see,” Hirai said.
Hirai said the most important work it is doing to prepare for the competition is the work Sony has done to pare losses in the unit that makes TVs and other electronics. That unit lost nearly $2 billion two years ago and just $700 million in the last fiscal year. The most recent fiscal year results are not yet out, he said, but noted “we are headed in the right direction at a pretty good clip.”
“It goes to the heart of some of the restructuring we have done,” Hirai said.
There is still time before 4K becomes mainstream, both in terms of TV purchases and availability of broadcast content.
“It is not going to happen next year; it is certainly not going to happen the year after,” he said, adding that prices are coming down but that HD and even color television itself didn’t become mainstream overnight.
“We are talking about a longer haul — five years, seven years,” he said.
As for curved TVs, Hirai noted that Sony did bring one to market last year, though it was of the HD variety, as opposed to the 4K models introduced by Samsung and LG this year.
“Some people actually like it very much,” he said of curved-screen displays. “You do have that feeling of being a little bit more surrounded. It’s not for everyone. It is part of giving consumers choice.”
When it comes to wearables, Hirai said it is important to gain a spot early since there are only so many wrists and other appendages to outfit. The right combination of features and fashion will also be critical, he said.
“We are asking people to wear this stuff,” he said.
Hirai had nothing but nice things to say about activist investor Dan Loeb, who has urged Sony to consider strategic alternatives for its boom-and-bust entertainment business. Hirai said he wouldn’t even use the term activist investor, noting that Loeb and Hirai email frequently and go to breakfast when Loeb is in Japan.
“He and I have a great relationship,” Hirai said, adding that Loeb has had some good ideas and suggestions, not to mention bringing a lot of attention to Sony.
“Certainly a lot of people are more interested in the entertainment businesses thanks to the visibility he brought,” Hirai said.
Loeb is at CES and was in the audience for Hirai’s keynote earlier Tuesday, but Hirai said the two have yet to meet here in Vegas.
Hirai defended Sony’s progress in phones. While it remains weak in the U.S., Hirai said that the company has gained ground in markets where it was strong, particularly in its home market of Japan.
“There have been a lot of weeks we outsold our competitors from down in Cupertino,” Hirai said of sales in Japan.
He said the company has also made progress in other traditionally strong markets in both Europe and Asia. China and the U.S. remain longer-term projects, he said.
“We don’t want to just go in there and start small and leave it that way,” Hirai said.
Sony’s current bet in the U.S. is concentrating its efforts on No. 4 player T-Mobile which, like Sony, is a challenger in the market. T-Mobile has also done away with subsidies on new devices, potentially creating a more level playing field for Sony.
“My expectation is that we will see market share growth based on what I have seen in Japan,” Hirai said.
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