Sony CEO Stringer: You can't afford our best TV

Walt Mossberg (left) interviews Sony CEO Howard Stringer (right) at the D: All Things Digital conference Wednesday.

(Credit: Dan Farber/CNET News.com)

CARLSBAD, Calif.--Sony CEO Howard Stringer says the culture of profitability has returned to his company. But, he says, it still has work to do.

In an interview with Stringer at the D6 technology and media conference, The Wall Street Journal's Walt Mossberg started by pointing out the failures of Sony's digital music player and interactive TV ventures. Stringer said that Sony is now running about 5 percent profit margins. Those margins need to get bigger to sustain the company, or, he says, "If we have any more success, we'll be bankrupt."

Speaking about the culture of the Japanese business he runs, he said it's difficult to adapt quickly--there's no laying off of white-collar workers or engineers. Hence, perhaps, his "get mad" rant last week. Stringer also delved into what's in Sony's future--from OLED TVs to game consoles and "craplets."

What's after LCD TVs?
LCD growth is beyond expectations, Stringer said, but OLED technology, while still too expensive, is the next thing. Or the current thing, if you want to spend $2,500 for an 11-inch screen. Its contrast ratio is a million to one, he said, a hundred times brighter than an LCD screen.

In a bit of D6 showmanship, Stringer showed a new version of the screen that's only 0.3 millimeters thick, and that could be formed in curves "wrapped around your arm," he said. A 27-inch version will be out soon. "It will be quite expensive. The only people who could buy them will be in this room."

The technology will eventually supplant LCD, Stringer believes, although at the moment he calls it "a perfect television companion."

It appears that Sony is pushing this technology in part because it's actually manufacturing these panels, unlike many Sony-branded LCDs, which it sources from other vendors.

Game consoles and Blu-ray
The expense of the PlayStation 3 at first led to a "mildly catastrophic" profitability curve, Stringer said, but the prices are coming down and the game titles are generating profits. He said the next game coming out, in June, will use the "full capacity" of the console and will be "spectacular."

The console is beginning to become a platform for more than just games--a hub for the PSP, for example. The PlayStation Network was key to Sony winning the Blu-ray/HD-DVD battle, Stringer said, since the PS3 was a great movie-playing platform.

In standard Blu-ray players, Sony did lose money on the players as the company had to chase the HD-DVD player market and its $99 retail prices. But the studios supported the Blu-ray format, which made the bigger difference.

Mossberg asks how many years of value Sony will be able to eke from that victory, especially as the move is to digital distribution. "There's a long lead time," Stringer said, "before you get the quality, you get on Blu-ray." He thinks the media format will last for 10 years or beyond, especially as people migrate to better and better television screens.

"Had I lost that war," Stringer said, "the headline would have been, not that HD-DVD won, but that it was Betamax 2. That would have been on my tombstone."

Movies and theaters
"It's a battle of pocketbooks and reality," Stringer said. "4K" digital projects are a better experience and will keep the theater experience unique. It's "transformational," he said. However, the economics of the movie experience, from cameras to projectors, will take time to rebuild.

Children drive the movie economy, especially in summer. "Whether the baby boomers will continue to go the theaters is a bigger issue," Stringer said.

Personal computers
"We had our best year ever last year. We had a 7 percent margin, our best ever." Mossberg asked about market share, though. It's because, "ours is the most expensive," Stringer replied.

"Our engineers like being on the cutting edge," he said. And "we have signs of life all over the place."

Mossberg gave Stringer a hard time about Sony PCs' pre-loaded software, or "craplets." Other vendors are removing the pre-loads, Mossberg said. "Are you willing to get rid of these craplets?"

Stringer: "No, I have to examine the joy of craplets. And you're not a typical consumer." But, he said, "I promise you a craplets review."

Re: iPod
"We've sold about 170 million music-enabled phones--about 75 million to 80 million are Walkman phones." Which is more than iPods, he said. Stringer said that Sony's Walkman phones revitalized the brand, and drove the success of the Sony-Ericsson phone lines.

And, Stringer said, we're doing more download relationships, like one we're announcing today with Usher.

The Sony music player, which had been overshadowed by the iPod, is "back in the game. We keep trying."

Mossberg asks: Will phones kill the dedicated portable media player? Stringer: "Steve [Jobs] keeps up, but there's room for two devices."

Click here for full coverage of the D: All Things Digital conference.

[aka_tripleB]

And that's why Sony has problems with profitbility, it sell crap that no one can afford.

[aka_tripleB]

And that's why Sony had problems with profitibility, it sells crap no one can afford.

[sjsobol]

Cutting-edge? Exactly what is cutting-edge about Sony PC's? Exactly what justifies the prices they charge?

Sony's problem is that they cost the most, but in many cases they don't have the innovation or features to justify their prices.

[Composer_1777]

Carbon fiber, finger print readers built in, santa rosa technology, the most advanced chipsets, the first to get the most powerful intel chips, the fastest hard drives and their PCs never have any major errors, even on vista i have had no major errors. ALL of their PCs justify the price, plus MADE in the USA if u order online and made in JAPAN if u buy a laptop in their store.

[sal-magnone]

Useful, very useful.

[punterjoe]

I really want to like Sony, but they make it impossible. Sony has made me regret every product of theirs that I have ever purchased. They remind me of the corporate version of the "cool kid" in high school who had style, talent ....and an utterly abusive personality. Since I long ago shed my masochistic ways, I can't imagine the circumstances under which I'd ever give Sony another cent of my hard earned money.

[No Man]

Trust me, Stringer... there are millions of "typical consumers" who are begging you to get rid of the craplets. All of them.

[ralfthedog]

I like allot of what Sony does, however, OLED is just plain dumb. The O stands for Organic. These devices will have the same problems that CRT and Plasma displays have, Rasterburn.

.

I can see using OLED in disposable devices and devices that are not dependent on video quality (Non media cell phones). They should not be used on a TV. You will get black bars burned in.

Sony wants to be a high end company, that is cool. They will need to focus on quality to succeed. (I like the idea of a Sony spinnoff brand that is ultra high end.)

[curmudgeon22]

check ur facts. latest OLEDs are at the same 60,000-hr-life and similar burn susceptibility (aging) as current PDPs and LCDs. Plus, OLED comes much closer to film in terms of color gamut coverage, contrast, & view angle than any other panel tech. ie: better quality, more accurate images.

[fdunn3]

Punterjoe, I couldn't have said it better. If it was the only thing that would keep me alive and had the Sony name on it, I'd have to pass. Been burned too many times by their "throw-away" culture of products. You throw them away when they break a week or two after they are out of warranty because if you can get the parts they are just as or nearly as expensive as just getting a non Sony equivalent product. NEVER EVER AGAIN!

[paulej]

Sony is innovative, but greed is hurting them. I simply stopped buying their products, because they are too greedy. If left to Sony, memory would cost four times as much as it does today. With nearly every innovation they bring to market, they try to dominate the market with it through price control and royalty-bearing licensing schemes, and expect people to pay a premium. The Sony memory stick is perhaps the best example of this. When it was introduced, it was really expensive. Even today the memory stick costs way more than a comparable SD card ($35.72 for 2GB Memory Stick versus $11.88 for an SD card on Amazon). The TVs they offer are similar to other manufacturers, but cost much more. I am even more surprised after reading in this article that the products are just re-branded products from other manufacturers. What Sony needs to do is innovate, but then focus on volume sales at reasonable margins. Perhaps a 5% margin is OK, but I wonder why it is so low since the prices of all Sony products are more than 5% higher than comparable brands. Who is making the other 20% to 300%?

[RompStar_420]

Hmmmm, I own a PS3 and I love that machine. No other manufacturer allows you to install an OS like Linux and have it for other uses, (even 'tho no Flash is yet supported), but it's still cool. The games are of amazing quality and so is Blue Ray. I owned 2 Sony TV's and I preyed for them to break so that I could get a new one, finally I gave them away for free so that I could get a flat screen HDTV. I remember a long time ago I had a cassette player that broke, but that's about it. I never had anything break for me other than that.

[ewelch]

The man is deluded. Sure the PS3 is a great game console, and will help them. And they make the best TVs. But beyond that they are at a complete loss. Walkman phones are crap compared to iPhones. Their players are crap compared to iPhones. And their "most expensive" PCs are made of cheap plastic last time I looked. And their monitors are more expensive than Apples, and they accept the LCDs that Apple rejects.

How is that leading the market in those areas?

[Composer_1777]

Really, then why is my vaio carbon fiber. I pod and i phone music quality is garbage compared to sony music players, sony also has the best sounding headphones and speakers.

[randomthot]

punterjoe & fdunn3,
i agree, but there is also another factor. most of the best sony products don't even make it to the U.S. anymore. Mainstream U.S. stores receive middle-line and low-line products. If you want good stuff, you have to go online and search Sony's site, and hunt down the product online. As far as their PC's, I think they're the next "Apple---" overpriced PCs.
If Apple drops iPhone into a lower line, it'll eat Sony's lunch on Walkman cellphones.

paulej, i also agree...sony's uber-proprietary attitude is getting old.

[Composer_1777]

Sony is always the first to use cutting edge technology and materials. My laptop right now is a vaio it is a year old and it is Carbon fiber.... Is your PC carbon fiber with built in finger print reader, i think not. Sony is not for average Consumers whom are too poor and cheap to buy the most advanced products. Sony is the first always, just like with OLED.

Sony vaios that are custom made ARE MADE IN THE USA , Trump made in the USA with cheap chinese products, you can't.

[Composer_1777]

Apple macs are crap because they are always the last to get new technology, it took them forever just to get the newest Intel chips.

[drunknsm1ke]

A lot of people forget that Sony is one of the most innovative companies in electronics. Sony offers the best LCDs, pioneered the Blu-Ray technology, and is the first to release the OLED tv. Why wouldn't you pay more for a quality product like Sony? Arguments of XBox360 vs. PS3 are done, the PS3 is clearly the better unit and although more expensive, it turned out to be the better buy. $659 cdn for a Blu-Ray player and gaming capability, not to mention a free online network? Even then it was still the better unit, the only thing it is lacking are games. OLED tv's, yes they retail for a rediculous amount of money, but nobody else is marketing it right now. Obviously when another company markets the OLED technology, Sony's prices will drop to compete. And there is no way you can compare a consumer Sony Ericcson phone with an iPhone, they're in different categories, not to mention price brackets. Sony's E-Book Reader is also a very popular and quite a practical thing to have, it beats carrying around a bunch of books in your backpack. The Sony Rolly, a dancing mp3 player, is a big kid's toy in that it serves no purpose other than amusement, yet it is still the only dancing portable mp3 player. Having said all of this, yes I am a canadian Sony sales rep, so I feel obliged to defend the company I work for.

[drunknsm1ke]

Btw, Composer_1777, VGNSZ650 eh. Nice to see someone who values a quality laptop.

[wrs388]

I like Sony, but I don't buy their TV's, laptops, or any of their other electronic devices, other then the PS3.

[Syrione]

Well I have a PS2 for 6 years replaced the lens once, and it still works even if I do play it for 8-10 hrs per day and about 4-7 days a wk . But it is an ASIAN model PS2. So quality wise I don't have a problem with Sony. Mainly because there one of the companies (only gaming console company actually) who considers the Philippines and other "small world" countries as worthwhile customers to service. BTW parts are not as expensive as other sources too.

But on the other hand the PS3s initial generation of BLU-RAY lenses were actually crappy. But the current generation is said to be stabilizing. New technology is like that . NEVER buy the initial release as bugs/defects tend to still exist. BTW at least it doesn't have a 43-65%(not made up this was given by the insurer of that handles the 360) rate of occurence like the X360 (red ring of death).

Note I'm not related in anyway to Sony but they don't deserve the negativity they get on the net.

[benjaminstraight]

Well maybe it is true.