By Richard Shim
Special to CNET News.com
July 17, 2001, 2:15 p.m. PT
Fujio Nishida has the unenviable task of trying to remake one of the most recognizable consumer-electronics brand names into a broadband networking company. And he has to do it while core businesses are hurting and broadband adoption is going slower than expected.
The 52-year-old Nishida is president and chief operating officer of Sony Electronics, which last year was the leading financial contributor to Sony Corp., with 31 percent of global electronics sales.
With product hits such as Sony's Trinitron Wega TVs, DVD players, digital cameras and Vaio notebooks, Sony Electronics had fiscal 2000 revenue of nearly $14 billion, up about 15 percent from fiscal 1999. However, prospects for this year are not nearly as rosy.
The sluggish economy and slowdown in tech spending have hit Sony Electronics hard. Sales from nearly every product category are down from last year, and relief from the second half of the year--and the ever-important holiday season--appears less likely than was anticipated. But Nishida, who has worked at Sony for 28 years, is locked to the big picture.
While committed to maintaining profitability for the year, Nishida also has his eyes set on offering hardware, software, content and services that can be used with broadband access to create an always-on, ubiquitous network tailored to each person's entertainment needs. He chatted about his plans in a recent interview.
Q: What's the overall strategy at Sony Electronics?
Today we are delivering on that strategy by developing products and services consistent with our plans. Of course, the rate of broadband deployment will determine how much we push our products to be broadband enabled.
So how has the slower-than-expected adoption of broadband affected your plans?
What would be an example of that? The eVilla? Internet appliances haven't been very popular. Look at the likes of Netpliance, 3Com's Audrey and Gateway.
There's also the Ethernet connection, which leaves the door open for broadband capability. We're not expecting a big splash or quick penetration, but I think the customers are there, and we just need to try to develop that business.
Despite some of the early controversy around eVilla, you plan on sticking with it?
Do you see this as a product that will take some time to generate success?
There's been a lot of talk surrounding the slowdown in sales of PCs in the United States, however many analysts have said that they expect consumer-electronics devices to continue to grow. This seems to play right into your strategy or at least into your portfolio of products. Has the PC market slowdown hurt or helped your business more?
What would you say are the promising product areas in the Sony Electronics portfolio?
The Vaio PC business is very constant and showing positive growth this year compared to last because of our differentiation strategy making Vaio PCs geared more towards entertainment instead of a business tool like our competitors. And the DVD market is still growing, close to 25 percent as compared to the 50 percent rate that we wanted for this year.
After disappointing results from the first-generation Clie handheld, we weren't deterred, and the reception of the second generation (Sony Clie PEG N710C) has been very positive. There were many firsts in the color Clie, including the built-in MP3 player and high-resolution color screen. Demand is actually more than we expected.
Is there any one type of product that you're really counting on in the second half of the year?
What about five years down the road? What do you anticipate will be some of your more popular products?
We call it the "location-free TV" concept. You have a base station connected to cable and Internet access, and using wireless technology you can actually move around and watch content with the Airboard--an LCD-based pad. So you can enjoy all this entertainment and information anywhere you want. And if you have broadband access, the connection is always on, and because it's wirelessly enabled, it can be ubiquitous: everywhere, anywhere, anytime.
This year has been a very tumultuous year in the tech industry. What's your perspective on what will happen in the second half?