Bloomberg News

Stringer Says Movies Give Sony Edge Over Apple in Tablets

September 01, 2011

(Updates with closing share price in 14th paragraph.)

Sept. 1 (Bloomberg) -- Sony Corp. is betting its tablet computers will rival Apple Inc.’s iPad by luring buyers with music and movies, even as the Japanese company arrives more than a year late in the booming market for such devices.

“Yes, yes, Apple makes an iPad, but does it make a movie?” Sony Chief Executive Officer Howard Stringer said in a presentation at Berlin’s annual consumer electronics fair yesterday. “We will prove that it’s not who makes the tablet first who counts but who makes it better.”

Sony, reeling from three straight years of losses without a hit product, is matching the iPad’s price in Japan and the U.S., offering a 16-gigabyte model for $499 and a 32-gigabyte version for $599, Yuki Shima, a spokeswoman for the Tokyo-based company, said today. Stringer needs to differentiate the device from those of its rivals by adding the ability to download PlayStation Suite games, movies and music from its subscription services.

“The tablet has to be significantly better than the iPad for consumers to want to buy it at that price point,” said Alexander Peterc, an analyst at Exane BNP Paribas. “Sony’s big advantage is that they have the content. If they can make it easy to use and hassle-free, they have half a vote from me.”

Sony, owner of the Sony Music record company and the Sony Pictures movie studio, first presented its two tablet models in April, a year after the iPad spurred a surge in demand for the devices. The tablets unveiled today will run on Google Inc.’s Android system and will integrate Sony’s music, video, gaming and digital book offerings.

Videos, Games

Neil Mawston, an analyst at Strategy Analytics, said the Sony tablets will need to make these content services as easy to use as Apple’s iTunes music, film, television and application offerings.

“Anything at an Apple price has to have an Apple offering,” Mawston said via phone. “There is still potential to grow in this market.”

Worldwide sales of tablets are set to triple by value to $30.6 billion this year, according to Strategy Analytics estimates. Apple will probably dominate with a share of 73 percent, compared with 88 percent in 2010.

“We will aim to win the No. 1 share in the Android-based tablet market in 2012,” Akihiro Matsubara, a director at Sony Corp.’s marketing unit in Japan, told reporters in Tokyo.

Sony, Japan’s largest consumer-electronics exporter, must connect its TVs, Blu-ray players, game consoles and digital cameras via the Internet to music, movies and video games, Stringer said this year. Unconnected devices rapidly become commodities as rivals compete for customers, he said.

Apple Vs Samsung

“Sony will have to differentiate its products with services,” said Keita Wakabayashi, an analyst at Mito Securities Co. “Sony’s online services will be much more important than designs to lure customers.”

The Tablet S will cost from 45,000 yen ($583) in Japan when it goes on sale on Sept. 17, Sony said in a press release today. That compares with 44,800 yen for the iPad. Sony’s Tablet S will be available in Europe from the end of this month for 479 euros ($689).

The Tablet P, a foldable compact, will be available in Europe from November for 599 euros. Apple’s iPad 2 costs from 479 euros in European markets including Germany.

Sony shares rose 2 percent to 1,698 yen at the 3 p.m. close in Tokyo, trimming this year’s decline to 42 percent. Apple has gained 19 percent this year.

The maker of Walkman music players may benefit as Samsung Electronics Co. faces a legal challenge from Apple against its newest tablet computer, which also runs on Android.

Patent Wrangle

A German judge said Aug. 25 that Apple’s intellectual rights are probably strong enough to ban the sales of Samsung’s Galaxy 10.1 tablet in that country. In the U.S., Samsung is arguing that Apple stole the design for its iPad from the Stanley Kubrick 1969 film “2001: A Space Odyssey.”

On Aug. 29, Samsung said it will defer the launch of the 10.1 tablet in Australia pending a hearing scheduled the week of Sept. 26.

“The Samsung injunctions might help Sony,” Mawston said. “If the perception among retailers and operators is that it’s riskier to work with, that might make them turn to Sony.”

Sony, suffering from the March earthquake that crippled its factories and disrupted supplies, cut its full-year profit forecast in July by 25 percent, citing sluggish demand for TVs.

Stringer said yesterday Sony’s sales are now higher than before a hacker attack on its network this year. The CEO said in June that Sony would strengthen network security and seek to regain customer trust after hackers forced the company to shut down its online entertainment services in April.

Harry Potter

The maker of Bravia televisions also said yesterday it will offer a new version of its Sony Reader, a digital book reader.

Sony is working with Pottermore.com, the Internet venture of J.K. Rowling, the billionaire author of the Harry Potter books, to offer exclusive products and services.

“Harry Potter and the Deathly Hallows,” the final Harry Potter novel, was released in July 2007, ending a series of books that began in 1997. Rowling broke a publishing industry record when the latest book sold 8.3 million copies in its first 24 hours and 11.5 million copies in its first 10 days.

Stringer says the new devices and services may help the company move on from the difficulties earlier this year.

“In this year, we’ve been flooded, flattened, hacked and zinged,” Stringer said in Berlin. “But the summer of discontent is behind us.”

--With assistance from Cornelius Rahn in Berlin and Mariko Yasu and Naoko Fujimura in Tokyo. Editors: Anand Krishnamoorthy, Dave McCombs

To contact the reporter on this story: Ragnhild Kjetland in Berlin via rkjetland@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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