On Thursday April 24, Sony announced a new round of reasonably priced products, all of which are capable of high-resolution audio playback. Sony's unequivocal embrace of high-resolution audiothe acronym HRA seems to have become the mutually accepted, industry-wide termwas the main order of business. Defining HRA as everything greater than Red Book CD (16/44.1k) Jeff Hiatt, the company's Director of Home Audio (above), began by stating, "We have sacrificed quality in order to get convenience. MP3 has been degrading the quality of music, and was a quantum leap backwards. The young generation doesn't even realize that they're not listening to music as the artist intended it be heard."
Reuters has reported that Sony Corporation is experiencing a 20% drop in profits this year, brought about by poor showings from audio and video product sales, slow markets, price wars, and a lack of hit records. The report also stated that the electronics sector, which normally generates the bulk of Sony sales, saw operating profits decline by more than half compared to the previous year.
The Walkman is 20 years old. As part of its celebration of one of the most successful audio products in history, Sony has introduced its first personal music player with the capability of downloading music from the Internet. The new Walkman employs Sony's "memory stick" technology to store audio files as large as 32 megabytes. The latest Walkman, which was unveiled last week in Japan and New York, is expected to retail at approximately $400 and should appear in stores in January.
The past several months haven't been kind to the electronics industry. Most manufacturers are suffering from slow sales and backlogged inventory. But one company is painting a slightly different, if confusing, picture. Unless you've drastically slashed margins while quadrupling sales volume, the phrase "record quarterly sales but decreased profits" appears self-contradictory. Yet Sony Corporation is claiming exactly that for the last quarter of 2001, the company's third fiscal quarter. (Most electronics manufacturers begin new fiscal years April 1.) On Friday, January 25, Sony announced a 14.4% decline in overall profits for the final three months of 2001, due to sagging demand for consumer electronics products. The company reported that sales of electronics decreased 2.8% to ¥1.55 trillion, with operating income for its electronics unit down a stunning 47% to ¥71 billion. The same announcement claimed an all-time quarterly sales record for Sony Corporation as a whole.
Sony announced last week that it has created a new brand product line intended to identify its highest end products: Qualia. Initially, the new line will launch only in Japan, and will include both audio and video products in addition to a small pocket camera. Sony President Kunitake Ando had previously suggested the line would launch by March 2003.
On July 25, New York State Attorney General Elliot Spitzer announced that Sony BMG Entertainment had agreed to "stop making payments and providing expensive gifts to radio stations and their employees in return for 'airplay' for the company's songs."
Billy Joel has decided to clean out his warehouse. Next month, the veteran rocker's almost-30-year-old collection of musical instruments, recording equipment, and stage gear will be put up for public auction by Sony Signatures, his merchandising company. A portion of the gross from the "Billy Joel Memorabilia Auction" will be donated to VH1's Save the Music Foundation, according to Dan Cooper, Senior Vice President of Sony Signatures' music division.
It was like old times. A major consumer electronics company was presenting a press conference in a high-rent venue to introduce its new audio products. These events used to be commonplace; now they are rare. But on September 4, in Manhattan's Jazz at Lincoln Center, to an audience that included record company executives from Universal, Warner, and Sony Music, HDTracks' Norman and David Chesky, Chad Kassem and Marc Sheforgen from Acoustic Sounds, whose new DSD download store was last week's big news, musician Herbie Hancock, and veteran mastering engineer Mark Wilder, Phil Molyneux, President and Chief Operating Officer of Sony Electronics since September 2010, announced that the company saw high-resolution audio as the future of recorded music playback.
While Apple's iTunes and RealNetworks Rhapsody are battling it out in the music download ring (see related story), and Microsoft is rumored to be eyeing a corner, Sony has now decided to join the fray with a new music service announced last week in Europe.
Where Sony goes, the electronics industry follows. And Sony is going on the Internet—not merely with product information and links to dealers, but with sales direct to consumers. The announcement was made late in January by Sony Electronics president Teruaki Aoki. "We cannot neglect the customers' viewpoint," Aoki said, acknowledging that serving consumers is a higher priority for the electronics giant than protecting dealers.
After posting a round-up of the news about Sony BMG's F4i's XCP digital rights management system (DRM), which hid itself inside consumers' computers' root-kit code, I spent a frantic week simply trying to keep up with all of the breaking news on the issue on my blog. During the week of November 7, I posted no fewer than 9 URLs outlining breaking news on the Sony story. However, by the end of the week, the company was reeling from the news that hackers had managed to install malware (malicious programs that dismantle a computer's firewall protection) on consumers' computers that masked its presence by using the hidden software placed there by Sony BMG's DRM system.
An old adage has it that "when Sony sneezes, the whole electronics industry catches cold." If that's so, there could be an epidemic brewing. Sony's profits plunged an astounding 98% in the first quarter of its current fiscal year. Thomson, Samsung, and some large retailers also reported big drops.
As we go into our fourth week of coverage of Sony BMG's digital rights management debacle, it's a good time to review what all the fuss has been about. On October 31, Mark Russinovich posted his discovery of a root kit—a cloaked file that had been inserted on to his computer's hard drive. Cloaked root kit files are popular tools used by malevolent hackers, so Russinovich was curious about how the files he detected had entered his computer. It came from Get Right With the Man, a Sony DRM-protected disc Russinovich had purchased and played on his computer. When he attempted to remove the hidden files, Russinovich lost the ability to use his CD drive.
With its new Walkman music player, Sony has broken with its tradition of promoting its own proprietary formats. The NW-HD3 will let users import and export tracks in the MP3 format, a concession to the format's near-universal popularity and an admission of the failed appeal of Atrac, Sony's own music-playing software. MP3 compatibility should give the player appeal to a wider audience than a Sony-only machine.