January 7, 2004 6:25 PM PST

Sony unveils music store, gadgets at CES

LAS VEGAS--Sony Electronics unveiled a slew of new gadgets at the annual Consumer Electronics Show and threw its hat into the ring for music download services, as part of its parent company's ongoing efforts to meld its content and electronics businesses.

As expected, Sony announced a music download service called Connect, which will be available this spring and will offer more than 500,000 titles for 99 cents per track. The service, demonstrated at CES, will aggregate content from all the major labels and will be run as a wholly owned subsidiary.

Connect will be headed by Jay Samit, a former EMI Recorded Music executive, and ATRAC will be the audio format used by the service.

The music download service is part of an effort by its parent company to stem declines in its music division and also to remain competitive with the growing list of rivals, such as Apple Computer, Dell, Microsoft, Wal-Mart Stores and most recently RealNetworks, which are increasingly encroaching into Sony's key electronics and content markets.

The service is also part of a larger conglomerate-wide strategy of making its hardware--from computers to digital music players--the centerpieces of digitally networked homes. Sony aims to provide entertainment content directly to consumers and bets that it will drive demand for the company's hardware.

But Sony has been in a uniquely uncomfortable position that straddles the entertainment and consumer electronics world. Hamstrung in part by its movie and music divisions' fears of digital piracy, it has seen independent companies jump ahead in development and sales of digital music players, while its own copy protection-enabled devices have had only lukewarm appeal.

The different divisions within Sony, including Sony Music, Sony Pictures, Sony Electronics and Sony Corporation of America, have been working to develop new services, and Connect is part of those efforts.

"Music is just the start of many more services to come," said Kunitake Ando, chief operating officer of Sony.

The electronics division also announced several new products that build on new trends in the consumer market, in an effort to reverse disappointing results from last year.

Among its parent company's divisions, the consumer electronics business took the hardest fall last year when Tokyo-based Sony posted such disappointing results that financial analysts referred to the report as "Sony shock."

The electronics business, which is the largest revenue contributor among Sony's divisions, cited a sales decline last year for Vaio PCs and for CRT televisions as reasons for its poor results.

The electronics business has turned a corner, Sony Electronics President Hideki Komiyama said.

"As the holidays approached, Sony Electronics achieved record-setting, double-digit growth, which we saw in virtually every consumer product category," Komiyama said in a statement.

Sony Electronics is looking to ride its momentum into this year with a new, higher-capacity MiniDisc format called HiMD. An HiMD disc can hold up to 1GB of content and will cost about $7. The division will also release four HiMD players, two NetMD players, a flash-based player and eight ATRAC CD players.

The company also introduced a 42-inch liquid-crystal display television, 61-inch Wega plasma television and a 12-inch portable broadband LCD television, which allows a consumer to wirelessly watch TV shows or browse the Internet.

Sony demonstrated a Blu-Ray Disk ROM player, a new Handycam camcorder, dual-layer DVD recording technology and new home DVD Dream Theater systems.

The company will also add a new version of its Vaio 505 series, the X505, to its notebook line. The unit is already available in Japan.

 

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