At the Table January 7, 2010, 1:26PM EST

Sir Howard Stringer: Why Sony Is About to Snap Back

Charlie Rose talks to Sony's Sir Howard Stringer

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Stringer, in Tokyo, believes Sony's advantage in 3D technology will soon pay off Sarah A. Friedman/Contour by Getty Images

By Charlie Rose

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On the eve of the Consumer Electronics Show in Las Vegas—the annual debutante ball for tech—I talked with Sir Howard Stringer, chairman and CEO of Sony (SNE), which because of cautious consumers and currency woes has been battered by the recession. But Sir Howard, who has sat atop Sony for almost five years, believes that the worst is behind him and that the products unveiled in Vegas—especially those involving 3D—will make quite a splash.

CHARLIE ROSE

What will you say at CES about Sony's product lineup?

SIR HOWARD STRINGER

This year we're going to swamp the marketplace with innovation and new products, and we're going to particularly focus on 3D because we have so many assets compared with anybody else—from cameras to projectors to 3D video games to TVs to Blu-ray—everything can be 3D with us. Size finally matters again, so that is an advantage we intend to demonstrate at CES.

And how cost-effective will 3D be?
When you embark on anything involving technology, you have a hiatus between the vision and the experience. So the profitability will come in unpredictable ways. Obviously we're now making money on 3D in movies. We are equipping theaters with 3D projectors. We are making 3D cameras. Avatar was done with Sony cameras. But with creativity, you have to be there at the beginning. You have to plant a stake in the ground, and you have to be prepared to spend money to make money.

This is a big bet for Sony?
I think you would have said that a year ago. But already, half of it is paying off. So the next half is the extension of 3D into your computer, camera, video game, and so forth. And as it migrates from device to device, our basic investment is the same. We had no choice but to drive into 3D because, for one thing, piracy is such an enemy. It's the villain of content, and 3D is harder to pirate. And it's a bet we had to make because if you stand still with technology, you're crushed.

In November you announced cutbacks at Sony. What was the strategy?
Well, first of all [laughs], we wanted to be profitable.

And that would be a change.
Well, yes. But remember, two years ago we had record profits. Then we rolled into the recession. And I do have to remind people that we were hit harder in part because of the high yen. So we lost 10% or 15% of our profitability just on currency and foreign exchange alone. Then you have high labor costs in Japan. And if you add to that all the other aspects of recession, there's an easy explanation, but you get tired of saying it. Toyota was poised to become the biggest motorcar company in the world and then walked into the same problem. We've done a lot of really tough things that people hated but rallied around to do. We laid off 18,000 people.

So you ought to be poised in 2010 to have a profitable year?
Well, certainly that's the goal. We're trying to break even for 2009. That's what we've been trying to accomplish. I can't really talk about that at the moment, but I think the most difficult things are behind us, and I hope CES will demonstrate that all the cost-cutting we felt was necessary hasn't slowed the ability to create. We have three different e-readers, you know, including the wireless one.

You have acknowledged it was a mistake not to have wireless delivery as Amazon (AMZN) did with the Kindle.
Wasn't a mistake, we just didn't do it.

O.K. It was a mistake because it helped the Kindle gain market share.
Yes. We were the first to put the E-reader back into the market, but there was hesitation in Japan because it had failed in Japan previously. So there was a tug-of-war between different parts of Sony. There isn't anymore.