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Sony sees bright spot with flat-panel TVs

They will be a hot holiday item even in a down economy, says its U.S. division president.

September 01, 2008|Alex Pham | Times Staff Writer

Stan Glasgow is in charge of a business with sales dwarfing the gross domestic product of some countries.

As president of Sony Electronics Inc. in the U.S. and Mexico, he is responsible for $16 billion in revenue, or about one-quarter of the Japanese giant's global electronics sales. That's larger than the GDP of Jordan, Nepal or Bolivia. He also commands a vast network of 15,000 employees who make, market and sell Sony televisions, cameras, laptops and music players, along with dozens of other devices.

Although consumers are throttling back on many purchases, Glasgow sees a silver lining in electronics. He expects flat-panel TVs to be a particularly bright spot this holiday shopping season as U.S. consumers snap up high-definition sets ahead of the country's transition in February to all-digital broadcasts.

His optimism is shared by industry analyst Stephen Baker of NPD Group, who said he expected consumer electronics sales to grow as much as 3% this holiday, with categories such as TVs, laptops and GPS devices growing much faster.

Glasgow, a 57-year-old native of Queens, N.Y., with a wicked accent to prove it, recently sat down with The Times in his San Diego office to discuss trends in consumer electronics and Sony's place within a market that is increasingly price-conscious. Here is an edited transcript of the conversation.

Has the weakened economy affected consumer electronics sales?

We know the economy is not great. Consumers are definitely holding back. They're not eating out as much. They're not buying as much. But they're still purchasing consumer electronics. Sony is very lucky. In our April, May and June quarter, we had double-digit sales growth. I expect we will see a strong holiday season in the U.S. this year.

How is this holiday going to be different for Sony?

You will see more Sony products at more mass merchants than before. We recognize that about 60% of households still need to upgrade to high-definition TV. People buy multiple TVs for a single household. There's a huge addressable market for Sony. We've invested in higher-end products, but we've also extended the line to accommodate a broader market audience.

With competition so fierce, how will Sony differentiate itself?

We've created the Bravia Internet Video Link as a module to plug into the back of our TVs. We give consumers the option to deliver content in addition to their existing cable source or satellite or over the air. The module costs $299, but all of the content is free. We have thousands of pieces of free content, and we will continue to add more. We do this to add value to our TVs to distinguish them from others.

This fall, we'll also stream "Hancock" to Bravia owners with the Internet Video Link prior to the actual DVD release. That'll be a first. The movie is going directly from our studio to the consumer.

What about Wal-Mart, where the focus is on rock-bottom prices? Has that become a challenge for Sony?

It's a little more of a challenge at Wal-Mart. We know that Wal-Mart is low-price every day. We know Sony is premium price. But there is some intersection there. Wal-Mart shoppers are willing to pay a certain premium. And we have designed products for that consumer.

Have rising fuel prices affected your business?

It's made everything more expensive. Plastic resin is more expensive. Steel is more expensive. Overall shipping costs, travel costs, are more expensive. The effects are across the whole range.

We've recognized we need to be more efficient in shipping products. You want to pack your products as fully and densely as possible. And you want the shipping material to be recyclable. In our Pittsburgh factory, as we ship in the panels that come from Korea, we break down the foam and plastic packaging material and we recycle and reuse it to make the back covers of TVs.

How will Blu-ray, the new format for high-definition DVDs, fit into the picture?

Packaged media like Blu-ray will continue to do well. People like collecting their movies. They like owning them. While some people are comfortable downloading content, there are a lot more people who are comfortable with prepackaged media. I don't personally see packaged content disappearing.


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