Sony's Hirai Talks About An i-Tunes-like Store

Posted by: Kenji Hall on November 20, 2009

Sony’s Kazuo Hirai has a lot of ideas about what he would do if it had an iTunes-like online store. The company wouldn’t just sell digital music, movies and books for Sony products, said Hirai, executive vice-president for networked products and services. It would also try to connect users with each other.

Hirai, who unveiled plans for the service—tentatively called Sony Online Service—on Nov. 19, said he hopes for a release next year. “Earlier in the year would be a lot more preferable,” he said, during an interview at Sony headquarters in Tokyo.

Since taking over in mid-2006, Sony’s CEO and Chairman Howard Stringer has repeatedly said he wants to create a link between the company’s electronic products and digital content such as music from Sony’s recording label and TV shows and movies from Sony Pictures Entertainment. What’s taken so long? “There was always a vision,” Hirai said. But before Stringer appointed a new management team and changed the organization chart in February, the company was riven by too many warring factions, he added.

The new online service online is expected to see a gradual rollout to different Sony products. The company plans to have consumers register for the service the moment they pull a TV or music player out of the box. That would lock them in, much like Apple does with its iTunes Store. If done right, the online store concept could also win a following for the brand.

Hirai said Sony would take the iTunes idea a step further: social networking features. So consumers could use their online accounts to save home videos or photos they shot for friends and family to see. “It’s not just access content, stream it, and enjoy,” he said. “What are your friends watching right now? There’s a screen that says all the programming that’s available. It highlights all the things that your friends are watching, for example. It’s a community experience.”

The hope is that all of the online content available would differentiate Sony’s products from competitors. “Take LG or Samsung,” he said. “They have some great devices. No services.”

The store has huge potential to become a fount of cash. Consider the PlayStation Network. The Web-based gateway for PlayStation 3 video game consoles has been Sony’s most successful push into online commerce so far. Launched three years ago, the PlayStation Network has 33 million registered users and sells thousands of downloadable games, TV shows, and movies. It has helped win converts inside the company, Hirai said.

Sony expects the PlayStation Network to bring in $500 million in revenues this fiscal year through March 2010—triple last year’s total. Add in the new online service and the hundreds of millions of networked products Sony expects to sell, and the company’s revenues from downloads and other paid-for services on the PlayStation Network and the new online service could top $3.3 billion by March 2013, Hirai said.

The new online service will be based on the PlayStation Network. Sony will encourage gamers to sign on to the new service by letting them do so through their PlayStation Network accounts.

In the future, Sony could connect its online service to other Web sites. That might let users easily flip between Sony's site and YouTube's video sharing site, photo site Flickr, or Facebook.

Still, there are plenty of things the company has to work out. For instance: Will users get to share their content with family? And how many gadgets will work with movies or music downloads that users have bought? "That debate is still going on," Hirai said.

And there are limitations to linking devices. You would download a movie to watch on your big-screen TV at home, a laptop, a portable gaming console or a cell phone. But you wouldn't do the same on a digital camera.

At some point later on, Sony might consider selling its products below the cost of manufacturing them, making up the difference with revenues from digital content and online services. "But the most important thing now is that we hit our revenue targets," he added.

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Reader Comments

Outr8ged

November 20, 2009 07:38 AM

Sony please stop copying competitor products and start inventing!!! "Me Too" products will not turn your company around. Sony should look at how consumers are consuming their competitors products and make the process better while at the same time discrupting the current status quo to entice customers to change the game. Sony please stop playing it safe. The PS3 franchise was almost destroyed by trying to play the "synergies" across our entire company game (hint: Most conglomerates are breaking up to allow focus and eliminate the synergy strategies). Think differently and start creating "Wow me" products that consumers want and need.

outr8ged

November 20, 2009 07:47 AM

The term "I-Tunes Like" should never come out of the mouth of a Sony Executive. By saying this, Sony is basically admitting that they are introducing a product that is playing catchup to one of its competitors. Sony should be focusing its efforts on underserved products segments that it can win (ie. a #1 or #2 Market Leadership Position). Focus on your strengths!!! Create a new customer experience!!! Leverage all platforms customer are currently using vs. trying to create yet another competitor for I-Tunes!!!

Jeff B

November 20, 2009 09:58 AM

I wish Sony good luck with this new strategy, but my guess is that it will fail dramatically. Sony has long since given up on innovation & customer-oriented thinking. Nowadays all Sony cares about is stopping 12 year old kids from copying it's movies & CD's. So who cares if Sony's malicious software code affects thousands of user's machines, or if their DVD's are unplayable on lots of DVR's? Customers -- that's who. Until Sony replaces greed with innovation again, and dumps the RIAA, the people who used to buy Sony products (like me) will stay away.

realitybites

November 20, 2009 12:56 PM

Neither Sony’s Kazuo Hirai or Howard Stringer is capable of having the vision of creating an online store experience like what Apple has achieved.

There's a lot of "Me too, just like Apple" going on here that will go largely ignored by a buying public, the same buying public that ignoring Sony and their products now.

They need a visionary to chart their future, not someone to help them catch up with Apple's past.
Unfortunately, they don't get that either.

paul

November 20, 2009 02:00 PM

no innovation here, moving on. I stopped buying Sony products some time back and I intend to stay away. I am not going to reward a non-innovative company.

jambo

November 20, 2009 04:36 PM

Apple became the leader by taking risks, and failing, and taking more risks. When they don't fail, they survive and make $ in a spectacular manner. Sony, on the other hand, is waaaay too late to the game. Dear god, are they that stupid? If this is Stringer's "vision," there is hope for me to be the CEO of Sony.

Robert S

November 20, 2009 11:16 PM

I hate to agree but Sony has definitely lost its way. Why can't you be innovative in the synergies and develop some awesome products are simplistic, intuitive designs? I remember reading in my undergraduate days about how you guys were amongst the best for creative products that required no reading of instruction booklets because the products were intuitive. It is a hard task but Sony has definitely lost its way. It needs to search for the right leadership with charisma to pull this all through a cohesive strategy. Copyrights are a big concern but this is a tree vs forest argument.

vsp

November 22, 2009 09:12 AM

When Sony jumped on the bandwagon of churning out low-cost products and abandoned their much touted innovativeness and risk-taking, they succumb to the disease of the low-cost producers. They cut down on quality, service, margin and innovation just to survive. Look at the the former high-flyers such as Dell, H&P and the Window-centered PC manufacturers wallowing in the current economic mess.

And look at Apple, its products are higher priced yet it achieved one of the most successful and profitable years in its entire history.

Disgusted

November 22, 2009 06:14 PM

To win back customers, Sony should sack management and engineers who were resonsible for making the so-called "Sony Timer", and apologize customers for selling products that last only waranty period. People bought Sony products because they were good and lasted long. Somehow Sony *invented* Sony Timer and start selling products that only last waranty period. People start not buying Sony products. So the trouble began for Sorry Sony. Sony should go back to original value and focus on quality and long lasting products.

Notamused

November 25, 2009 10:36 AM

I think the name for the service is very appropriate: Sony Online Service, i.e., SOS.

Anonymous

November 27, 2009 09:51 PM

To say first, I have no loyalty to Sony and no great appreciation for some of the compatibility issues that have arisen in the past. But I am a Playstation 3 owner, and I have some slight optimism that a device I already own could over-reach simply being a game/Blu-ray machine and become a fully functional gateway to non-game applications, entertainment content, and a docking point for syncing *easily* with other devices. This really is something that Sony will have to fail at itself, because in theory the idea itself doesn't have a weak enough link.

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BusinessWeek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies. Eye on Asia’s bloggers include Asia regional editor Bruce Einhorn, Tokyo reporter Ian Rowley, Korea bureau chief Moon Ihlwan, Asia News Editor and China Bureau Chief. Dexter Roberts, and Hong Kong-based Asia correspondent Frederik Balfour.

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