Sony to tie internet into core business

Sony last week outlined its business plan for the coming financial year and vowed to continue corporate reform and push for ever tighter integration of the Internet and other network platforms with the company's core electronics businesses.

Sony President Nobuyuki Idei outlined the biggest plans, but it was Kunitake Ando, the company's newly appointed executive deputy president and chief operating officer, that probably best summed up the company's plans:

"We want the number one network electronics image. We want to create change, not keep up with it. We want to create new markets and be a challenger."

At the management level, Idei announced a number of changes in both personnel and structure.

Inside the group headquarters will be a new unit designed to meet the needs of the broadband era, with the title "eHQ." It will be charged with coordinating the company's entire business for the Internet era and may possibly become a holding company in the future.

Within this unit, an eManagement Committee will take charge of total group business and decide Sony's strategy for Internet business. Supporting this committee will be the eSony Development Group which is charged with formulating the Internet business strategy for the company.

Part of the work of these new units will be to push Sony into the mobile communications sector, an area where the company has traditionally been weak. Idei said Sony was adding mobile to the list of access platforms it considers key and will work on creating a stronger presence for Sony in this area.

The work is already under way. A day earlier, NTT Mobile Communications Network, Japan's leading cellular carrier, said it was taking a small stake in Sony's PlayStation.com (Japan) Inc. online commerce unit.

In the US, the company plans in April to create a new company, Sony Broadband Entertainment, which will include its music, entertainment and movie businesses in that country. Idei said the new division proves Sony has no plans to sell its content business in the U.S., despite a series of local media reports that said it is looking for a buyer, and might even take on partners.

"We would like to accept a strategic investment," he said, adding it might come, for example, from a broadband infrastructure company with aims similar to Sony's.

Back in Japan, the company's Sony Communication Network, which operates its So-net Internet service provider, will grow globally in the next year, said Idei, and introduce new value-added services that tie broadcasting and Internet contents. The company will also consider a possible initial public offering for the unit.

Idei also outlined several plans the company has outside the network arena.

It plans to make financial services a key business pillar of the company alongside electronics and entertainment. Sony already has several units in the field, Sony Finance International, Sony Life Insurance, Sony Assurance and a planned Internet bank, details of which were disclosed less than an hour before Idei spoke to reporters.

In addition, Idei said the company will continue to restructure its electronics business and consolidate manufacturing plants. It has succeeded in reducing from 70 to 64 the number of manufacturing plants it operates and is on target to further cut this to 55 by March 2002, he said. Alongside these efforts, a new Engineering Manufacturing and Customer Services (EMCS) system will be created to more directly link Sony to the market, the company said.

All of this work will carry a hefty price tag, said Teruhisa Tokunaka, executive deputy president, representative director and chief financial officer. He said the cashflow from operations may not be sufficient to cover the short-term costs of the expansion being planned by Sony, and as a result the company may look to the markets for more money.

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