With bigger TVs, the triumph of the BluRay format and plans to provide exclusive content, Sony is taking the fight to its rivals, writes Mike Butcher
IN GRAHAM Greene's classic screenplay for The Third Man, the hero Holly Martins goes in search of an old friend, Harry Lime (played by Orson Welles).
In a ravaged, post-war Vienna, he finds Lime waxing philosophically about the products of war: "In Italy, for 30 years under the Borgias, they had warfare, terror, murder and bloodshed, but they produced Michelangelo, Leonardo da Vinci and the Renaissance. In Switzerland, they had brotherly love, they had 500 years of democracy and peace, and what did that produce? The cuckoo clock."
It's just as well that the chief executive of Sony, Howard Stringer, collects first-edition books by Greene. The products of the wars between Sony and its competitors, from Apple to Samsung and even Amazon, may not need to be quite up to Michelangelo's standard, but to succeed they will have to be good. Very good.
South Korean electronics leviathans - Samsung Electronics and LG Electronics - are battling in Asia for Sony's market share. Simultaneously, the credit crunch in the US means the consumer electronics war is shifting from its US battlefield towards Europe.
Market researcher GfK estimates the size of the flatscreen TV market in Europe will reach €24.6 billion this year, from €10.9 billion in 2007. Key product sizes - 30-inch and 40-inch TVs - will account for 62 per cent of the total. In the year to March, around 75 per cent of Sony's sales came from Europe, the US and Japan.
Although it expects a slowdown in the overall consumer electronics market in the second half of 2008 in western Europe, it sees double-digit growth in the television market. Sony is the world's second-largest LCD TV maker, behind Samsung Electronics. Its goal is to achieve the number one position in LCD TVs globally and in Europe by 2010.
Large-sized flatscreen TVs with high-definition or full HD are invading the living rooms of Europe in large part due to new HD-quality DVD players and the proliferation of HD-TV programmes, many of which, increasingly, are free.
Sony's opening salvo at the IFA consumer electronics show in Berlin this year didn't disappoint. The Bravia ZX1 40-inch TV was revealed at an ultra-slim 9.9mm - the thinnest in the world.
The Motionflow 200Hz Bravia Z4500 TV sent a whopping 200 frames a second across the screen, giving an extremely crisp picture - and the XEL-1 OLED 3mm screen (organic light emitting diode) TV will go on sale in Europe for the first time after launching in Japan.
OLED TVs, which are thinner and more energy-efficient, offer brighter colours than LCD and plasma sets and are expected to be a promising next-generation flat TV. There were new BluRay Disc players capable of full HD. It was the triumph of the BluRay high-definition DVD format over Toshiba's HD DVD format that first signalled Sony could be on the comeback trail. The key moment came last December when Warner Bros threw its weight behind BluRay. It was the culmination of three years of work by Stringer to break down the distinction between the console and the DVD divisions of Sony.
But crossing barriers is part of Stringer's make-up. Born in 1942 in Cardiff, Wales, he went to Oxford University, and then moved to the US with $200 in his pocket. Despite not being a US citizen at the time, he accepted the draft and served in Vietnam. Afterwards, he joined broadcaster CBS and rose to become president, eventually joining Sony as chief executive in 2005 as the first foreign-born chief of a major Japanese electronics corporation.
However, being billed as the man to deliver a BluRay victory was no certainty. "It went down to the wire," says Stringer. "It became clear through movies like Harry Potter that people were buying movies and games for the PlayStation 3, which made it clear to Warners. The PS3 was the deciding factor."
Jokingly, he adds: "You guys would have written my obituary if BluRay had failed. You would have said Howard Stringer, BetaMax 2. RIP!"
The PlayStation might be a BluRay player, but it took its time arriving, and at considerable cost. Sony spent over $3 billion (€2 billion) to get the PS3 to market. Stringer says PlayStation 3 is now profitable, although Sony is still losing money on the hardware.
Another key component for Sony's war on competitors will be its Bravia televisions. The Bravia internet link enables the TV to stream content direct to the home. "We'll be delivering Hancock [the movie] directly onto TV sets before the video release," he says.
"That's the beginning of a dual strategy - PlayStation is downloading, Bravia is a streaming strategy. These are tributaries of the same river. We'll be making sure the TV is the centre of the home more than the PC and, of course, we're in direct competition with Microsoft and Apple."
How important is it to own the content companies, as Sony does with Sony Pictures and Sony BMG? Surely other electronics firms have managed without?
"I'm always surprised when people ask me why we own content - if we hadn't, we couldn't have won the BluRay format war. Content is central to everything we do now . . . If you have content, you can steal a march on your competitors because you can get early access to the content that drives the market and uptake."
To bolster his argument, Stringer refers to Apple's relationship with Pixar and Disney. But for the content rivers to flow, there needs to be a channel. Thus, Sony's target for 2011 is a product portfolio in which 90 per cent of the devices will be capable of networking and connecting wirelessly, allowing the content to pass between their devices.
But there is no shortage of competitors: Canon on cameras, Amazon with the Kindle electronic book and the ever present Samsung. Have they opened too many fronts on which to compete?
"Yes, you can have too many businesses, but those businesses protect us on the downside. A relationship between the hardware and the content is totally key . . . with the exception of Apple, there is no other company that is going to have as many networked devices over the next two years - and the more they talk to each other, the more unique they will become."
