Banking on high-def

Early last year, when Sony claimed victory against rival Toshiba in the much-publicised DVD format war, the BluRay success was hailed a coup of sorts for the conglomerate. Some even called it a milestone in the history of consumer electronics.

But that was February 2008, and much has changed since. As consumer spending dwindles worldwide due to the downturn, corporations are announcing falling revenues, drastic budget cuts and reduction in manpower as focus moves from gaining market share to revenues.

Market dynamics have also shifted in the consumer electronics industry, where cheaper, no-fuss products are being touted as the devices that will lead companies and their slumping sales through.

According to tech-driven ABI Research, worldwide shipments of netbooks will go up to nearly 35 million this year, rising to an estimated 139m in 2013.

But however attractive this new segment might seem, and no matter how many manufacturers are staking a claim, Sony refuses to be drawn into a price war, says Osamu Miura, Managing Director of Sony Gulf.

"We are very clear where we are and our products have never been targeted at the price oriented," he says. "That is the brand image we have and something we've always stood for."

Sony did have an answer to the mini-computer craze – it announced the Vaio P early this year. Marketed as a "Pocket-style PC", the 8-inch notebook is an extension of the Vaio brand and, unlike the stripped-down and simplified netbooks, is a full-function PC.

Although it is still early days for the Vaio P, Miura says the response in the Middle East and globally have been very "satisfactory".

"There is a trend moving towards smaller sized PCs and we wanted to capitalise on that. As with all our products, we are looking at the mid-level and high-end markets."

Still, the past few months have not been the best for Sony, Miura admits.

"These are difficult times and Sony has seen negative growth, but I have confidence we are going to recover this year," he says.

Late last year, Sony, the second-biggest consumer-electronics maker after Panasonic, said it was cutting 8,000 full-time jobs as consumers curb spending on televisions, game machines and music players amid a global recession. The reductions represented five per cent of the electronics workforce at Sony, which also said it will curtail investments, farm out production and move away from unprofitable businesses by March 2010 to save more than ¥100 billion ($1.1bn) a year.

Sony Ericsson, the joint venture mobile phone company with Swedish Ericsson, has also been dogged by rumours of a complete takeover by Sony.

First-quarter sales fell 36 per cent from a year earlier because of weak demand for mobile phones, the company said early last month. In response to the decline, Sony Ericsson said it would cut 2,000 jobs to reduce costs by €400 million ($525.3m) annually by mid-2010.

Miura, however, refuses to comment on whether or not Sony would eventually take over Ericsson's stake. The Middle East market, he adds, is still "quite vibrant" and that his company is looking at emerging technologies to offset the effects of lowering sales.

"High-definition (HD) is the direction we are headed across our product portfolio," he says. "It's really where the action will be in the future and we want to be able to lead in that category."

Although HD broadcast is yet not available in the UAE, Miura says his company is pushing for the technology to be available by the time the Fifa World Cup kicks off next year.

Sony's is one of the official partners of Fifa, in a deal worth about $305m.

"We understand how passionate people in the Middle East are about football and we want them to experience it like never before," he says.

Sony Gulf, which began operations 20 years ago, has drastically grown over the years, says Miura, a veteran at the company who took care of local operations two years ago.

"It has grown from a $50m business to a $1.4bn entity last fiscal. Through our local distributers and direct sales point, we have managed to dominate a number of products segments," he says.
While Sony holds majority market share in the Middle East in the gaming arena with its range of PlayStation formats, sales are also strong in the Bravia TVs, handycams and CyberShot cameras, adds Miura.

The PlayStation 2, for instance, has sold more than 136 million units worldwide since its debut in 2000, making it the world's most popular gaming system.

While the BluRay victory was a significant event in the firm's history, Miura reiterates that the future lies in development of the HD technology and its availability across its products.

"High definition as a concept is what we're banking on," he says.

Keep up with the latest business news from the region with the Emirates Business 24|7 daily newsletter. To subscribe to the newsletter, please click here.

Follow Emirates 24|7 on Google News.