Is Sony coming back?

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Is Sony coming back?

This has not been a great couple of years for Sony. We had the rootkit catastrophe late last year and the Sony Battery disaster this year. A number of us have been increasingly concerned that the Playstation 3 would be a stillborn and even the PSP didn’t start particularly well. However things can change: It looks like Sony has hit the bottom and, and with the exception of batteries (which may be a dead division), may be on the way back up.

Let’s have a look at a few interesting items:

Playstation 3 (slide show)

This week I’ll get my deep dive on the Playstation 3. However I’ve been reviewing the reports from others who have already done this and most have, with the exception of the PS3 controllers, raved about the new box. In addition, the games – while not particularly prevalent – do appear to be very compelling visually. Finally, Sony has dropped the launch price in Japan only (US price drop is expected) of this product significantly bringing it more closely in line with the Xbox 360.

Still, the Nintendo Wii (slide show) is also getting glowing reviews and appears to have the better controller and certainly has a more attractive price. It may not be as capable, but it may still be the system, assuming they can make enough of them, that could be the #2 seller (after the Xbox 360, which is the only system that won’t be manufacturing constrained) in the fourth quarter.

Sony included an HDMI interface which should have it favored for HD content (recall that Apple’s iTV has this as well) and the Xbox 360 chose not to support this powerful, from an ease of installation standpoint, new standard. This should allow Sony to better tie their system with their receivers and TVs.

Given HDTVs are likely to be the biggest selling product in the fourth quarter, folks will want to show something on them and just as the new HD-DVD Xbox 360 accessory will be the cheapest way to get HD-DVD functionality, the PS3 will be the cheapest way to get Blu-ray – but is the only one that has HDMI. Of course, the two will still have to compete with vastly less expensive DVD players with HD upscalers (an upscaler allows a regular DVD movie to almost look as good as an HD movie), which also have HDMI interfaces. But DVD players don’t play games.


The PSP seems to be coming back. Second only to the iPod in terms of the number of accessories you can get on the product, the games are getting better and the multi-media features are becoming more appreciated. When used with software like InterVideo’s iVideo to Go or Tivo Desktop 2.3 Plus (and a Tivo, of course) it is a stunning product to watch movies with and it isn’t bad for music either.

The packaged movies died in the US but appear to be resurging in Asia after a sharp price reduction of the movies (which originally were way too expensive). So they may be coming back as well.

Sony MP3

This is a space that Sony should have owned and unfortunately gave it up to Apple, because of an over use of DRM technology to protect their Columbia Records products from piracy. Recently, the ex-Sony Chairman pointed to their acquisition of Capital Records as one of the reasons they weren’t able to compete in this segment.

Not too long ago, Sony announced a new line of stunning flash based MP3 players with noise cancelling ear buds. There is a new sports MP3 player called the S2 that appears to be a much better product for folks doing actual workouts than any Apple product. While they won’t work with either iTunes or services like Urge or Rhapsody, they are a vast improvement over what Sony previously had and are very attractive products.

Given many of us are refusing to buy DRM protected music anyway, preferring to buy CDs and rip them so we can do what we want, this line should be vastly more popular than what Sony had before. Still, if they had at least supported secure WMA as well, it would have been stronger given the fact that few are likely to use Sony’s own on-line service for music downloads.

Whether these are better than Apple or not (iTunes is still a tough act to follow), they are vastly improved over what Sony had in the past. This is a clear trend in a positive direction.


Sony has always built nice computers but they have simply not sold well against Dell, HP, or even Apple systems in recent years. Currently Sony has the only Media Center computer with a DVD changer, lines of laptops with a variety of colors and graphics, arguably the best (if price is nearly no object) Ultra Mobile PC on the market, and an All-In-One that has a better industrial design than the iMac.

While Sony clearly does not have Apple’s marketing, which continues to be a huge problem for the company, it is making strong progress with its product lines. However, Dell has become aggressive with its XPS series and the Alienware acquisition; plus HP is doing some amazing things with Voodoo PC. Expect the competition among those guys to be heating up.


One of the most beautiful TVs on the market is the Sony Bravia XBR LCD Flat Panel 1080 52″ TV. At $6800, this certainly is far from being a bargain, but it is a stunning set and arguably the best in its class. When I was growing up, Sony was known for having the best TVs and this product sets the bar until LED-lit TVs show up in a few months. Interesting enough, Sony had the first large LED-lit LCD TV a few years ago but it was way too expensive for anyone but the Monte Carlo set.

Of course, there was Sony’s LED-lit 82″ LCD TV prototype that probably costs more than my car. Unfortunately, we won’t see that puppy any time soon. However, this one set does show that Sony is effectively moving back into the lead in TVs again and that may be an indicator that the company has hit bottom and is improving again.

Sony’s remaining problems

Sony has historically been its own worst enemy. With divisional infighting nearly destroying the company before the Root kit and Battery disasters, it is almost amazing to see that the company is still around.

The products are vastly better and indicative of a company that is recovering, but it still isn’t competing as a company and products that should be better together from different divisions are often better with other company’s products. For instance, the Sony Vaio PCs work better with the Xbox 360 than they have ever worked with a Playstation.

Properties like Sony’s movie, and music divisions and technologies like Blu-ray and Memory Stick continue to work against each other rather than for the company, which has never had the the capability to drive industry standards. Sony seems to have to relearn the Betamax lesson every few years – and that is an incredibly expensive lesson every single time.

Conclusion: Sony is strengthening but key problems remain

Sony is moving back to making stunning products but historical problems of being overly wed to their own core technologies and infighting also continue to prevent the company from reaching its full potential.

Sony desperately needs strong central leadership like HP’s Mark Hurd, Dell’s Michael Dell, or Apple’s Steve Jobs.

If Sony can compete as a company as opposed to a bunch of warring divisions, their potential is unmatched. If they can’t, great products simply don’t make up the difference and companies like Apple, HP, Microsoft, Nintendo and Dell will continue carve out sales that otherwise would be Sony’s.

Rob Enderle is principal analyst for the Enderle Group. He can be reached at [email protected]


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