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Sony reaches out for help with TVs

Sony reaches out for help with TVs

By Hiroko Tabuchi, New York Times | Updated: 7 June 2012 17:20 IST

Highlights

Sony has been a champion of networked televisions for years. These are the TVs which link seamlessly with other Sony gadgets, link to the Web, and finally bridge the gap between PCs and the living room.

Sony has been a champion of networked televisions for years. These are the TVs which link seamlessly with other Sony gadgets, link to the Web, and finally bridge the gap between PCs and the living room.

The Japanese manufacturer was an early adopter of WebTV, the short-lived set-top box system introduced in 1996 by former Apple executives which connected TVs to the Internet. Sony also appeared miles ahead in 2000 with its AirBoard, a "personal IT TV" tablet that let users surf the Web, watch TV and videos, view photos and even wirelessly control other gadgets.

But Sony has consistently failed to convince users that TV-based Web surfing is the way forward. Now, after years of trial and error, Sony's TV dreams have taken another unexpected turn: a partnership with Google, the Mountain View, Calif.-based Internet giant.

"We realized that we'd be left behind if we didn't try something entirely different," Yoshihisa Ishida, president of Sony's home-entertainment business group, said at a roundtable meeting with reporters last week in Tokyo, where he spoke at length about the company's TV strategy. "Then we met Google."

That union yielded the first-ever models of the "Google TV," which went on sale earlier this month in the United States. On top of regular TV programming, users of Sony's Google TVs can do virtually everything online that they can on a computer -- post messages on Twitter, stream movies from Netflix, read the news and search the Web. Using the Google TV platform, Sony hopes to draw on its vast library of films and music to generate new revenue from services like video and music streaming.

"We don't just want to sell hardware. We want to build a new business model where we continue to generate revenue after the sale," Mr. Ishida said.

Analysts remain split on whether Google and Sony can at last sell consumers on the idea of surfing the Internet on their TV sets. Still, Sony's alliance with Google - and the Japanese company's eagerness to use Google TV, an open platform, instead of a closed, Sony-only interface -- marks a striking shift at Sony and could point to wider changes at the Tokyo-based company.

Sony executives like Mr. Ishida now readily admit that it needs help to keep abreast of changes in the Internet. Sony has long bungled its online strategy, losing out to rivals like Apple in digital music players, for example - and not necessarily over hardware, but over Sony's failure to match successful online services like iTunes.

"The Web is evolving at an incredible speed," Mr. Ishida said. "We used to design TVs that predicted and carried features that we hoped would stay relevant a year or two years from now," he said. "But the truth is, the future of the Web is impossible to predict."

There also appears to be a more acute awareness at Sony of the importance of software over hardware in the new Internet order. So Sony has become more serious about earning new revenue through online services to complement the thin profit margins involved in selling hardware.

For Sony, the marrying of content and hardware has been a longstanding vision, from when the company bought CBS Music and Columbia Pictures in the late 1980s. Earlier this year, Sony launched Qriosity, an on-demand video-streaming service which the company intends to expand to music downloads by the end of the year.

Moreover, Sony's Google TV could foreshadow a growing partnership between Sony and Google. The latest smart phones from Sony's joint mobile venture, Sony Ericsson, already run Google's Android operating platform. Mr. Ishida said Sony was also considering adopting Google's operating system on Sony's Vaio laptops, though he declined to discuss specifics.

Those changes could not come more quickly. Once the world's leading TV maker, Sony has fallen behind its South Korean rivals, Samsung Electronics and LG, and its TV business is in the red. Overall, Sony eked out a profit of 25.7 billion yen in the most recent quarter, following a loss last year in the wake of the global economic crisis.

Sony is now gearing up for a brutal holiday season in its biggest market, the United States, as prices slump amid weak consumer demand.

With prices of even Sony's newest 3-D TVs starting to fall, the buzz over its Google TVs will be a welcome respite.

But there are challenges, especially in the form of powerful rivals.

Apple, Logitech, Roku and Boxee all offer technology to link television to the Internet. Moreover, because Google TV is an open platform, other manufacturers are also able to make their own models.

Sony's Web-ready TV sets could also detract from its 3-D display TV sets, its other great push in television, confusing consumers over which technology to buy into. (Mr. Ishida hinted at the possibility of a TV that would let users surf the Web in 3-D, but was short on specifics.)

And for all the hype, surveys show that TV viewers remain unimpressed with Internet-connected televisions.

Just 3 percent of people own or intend to buy one, and almost two-thirds have not heard of them, according to the technology research firm, Forrester. Sony's Bravia TVs already come with some Internet connectivity, but only about 10to 20 percent of owners actually link them to the Web, Sony said.

Still, experts say that for a range of reasons, Internet-connected sets could finally be poised to take off. Widely-available Broadband access is enabling high-definition video streaming and downloads, and consumers have become more accustomed to browsing the Web on a variety of devices.

Wireless technology and advances in processors have made hardware more powerful, yet cheaper and easier to set up. Forrester expects to be in 43 million United States homes by 2015, up from two million this year.

"This is the future of TVs," said Atul Goyal, a technology analyst with the C.L.S.A. Asia Pacific Markets brokerage in Hong Kong. "This is the best a hardware maker could do. The other alternative is to develop proprietary operating systems that are incompatible with everything else," he said.

"The faster Sony moves, the bigger its advantage will become."

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