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Sony sees 'internet of things' as fertile ground www.asia.nikkei.com
BERLIN -- As Sony sees it, selling individual electronics will no longer keep the company competitive. The future is in services that generate recurring revenues, and the "internet of things" will form a big part of that strategy.
The Japanese electronics company's new business model is on display at the ongoing IFA Berlin trade show, one of the world's biggest for consumer electronics and home appliances.
One example is the Xperia Ear, which will hit the market in November. More than just an earpiece for listening to a smartphone, the device serves as something of a "personal assistant" that processes voice commands for controlling smartphones.
Equipped with a microphone and Bluetooth for wireless communication, the Xperia Ear lets users not only make calls and listen to messages while the smartphone is tucked away in a pocket, but also launch smartphone apps with voice commands and tilts of the head. A smartphone incorporating artificial intelligence could recognize words and even mannerisms, providing the means for bidirectional communication between users and their phones, explained Sony Executive Vice President Hideyuki Furumi, speaking at a press conference at IFA Berlin on Thursday.
Devices geared toward internet of things dominate Sony's exhibit at the Berlin trade show. It touts a dedicated device that lets users direct smartphones and other gadgets and appliances with their voices, and a projector that presents a display on the wall that users can touch to operate their smartphones.
Why is Sony putting so much emphasis on the internet of things? Because there is a limit to the revenue that can be generated through the one-time sale of products that must compete with rival offerings based on features alone. Sony's new focus is on the recurring revenue streams that come with subscription services, and it sees the internet of things as a rich platform for offering such services.
Sony learned a hard lesson last decade when its pioneering online music delivery service was overshadowed when Apple's iPod hit the scene with a vast selection of music titles. Taking that defeat to heart, it now offers a wealth of music and movies accessible via its PlayStation game consoles. Its game and network services segment is flourishing. For the year ended in March, operating profit in this business surged 84% to 88.7 billion yen ($859 million).
The success of a recurring-revenue business hinges on building a large subscriber base. The devices that Sony is introducing at IFA Berlin have the potential to link with appliances and other equipment in the home, and not just with Sony products but with products of other manufacturers as well.
Sony is shifting to the kind of "open" strategy that can expand the base of customers for its services. It is considering a partnership in the smart home business with a subsidiary of Tokyo Electric Power Co. Holdings, and plans to launch a service to confirm the well-being of the elderly with Nestle Japan using networked coffee machines. In addition, it is considering using a Yahoo app to control appliances via smartphone.
Rivals like Japan's Panasonic and South Korea's Samsung Electronics are also pouring money into the internet of things, so Sony knows it must aggressively incorporate new ideas. "What's happening now resembles what took place when the internet first debuted. Given the mountain of services for the internet of things, there is bound to be a shakeout," noted one Sony executive.
Published Date:2016-09-02
