Can Sony reinvent itself as cool?

Howard Stringer's been trying to tame Sony's famously fractious bureaucracy since arriving on the scene in 1997. And change is in the air, he says.

Tech Culture
Once a content guy, always a content guy.

In 1997, veteran broadcast industry executive Howard Stringer capped a 30-year career by taking on the challenge of a lifetime and moving to Sony. His job was to persuade Sony's famously fractious U.S. entertainment and electronics businesses to put aside the internal politics and do a better job of cooperating.

Sony wanted to make the most of its unique position as both a content and hardware company, but corporate rivalries had slowed down its ambitions.

On paper, the task seemed easy enough. Besides, Stringer was given the official authority to make things happen when he was later appointed CEO of Sony Corporation of America--head of all Sony's efforts in the United States, including movies, music and electronics.

(At Sony, there's) harmony of purpose...There's nobody saying, "We know what we're doing; you don't" anymore.

For the longest time, Stringer, who is also vice chairman of Tokyo-based Sony, found it difficult to playing peacemaker between warring factions. He had to carefully navigate the varying entrenched interests within Sony's notoriously byzantine empire.

But Stringer's labors are finally bearing fruit. He also received unexpected help from a rival's smashing success. When sales of Apple Computer's iPod music player took off, it provided a concrete demonstration to the troops of the advantages that accrue when the content and hardware parts of a business decide to cooperate.

The various businesses within Sony are working toward a common goal, according to Stringer. That shared vision couldn't come at a better time: The conglomerate has been struggling and losing ground to up-and-comers in all of its key businesses.

CNET News.com caught up with Stringer at this year's Consumer Electronics Show, where he shared his thoughts on how the iPod has affected Sony, his convergence strategy, video distribution and blogs.

Q: When you first got to Sony, your role was described as a diplomat between the various Sony businesses. How has the relationship between those businesses changed since you've been there?
A: When I got there, I was not in charge of the operating companies. I was given strategic responsibility for them, but they were all reporting directly to Tokyo. I was balancing and trying to maintain relationships with the operating companies to encourage and stimulate them to proceed in a particular direction and to be prepared for the digital future. Gradually, one by one, Tokyo gave me responsibility for the companies until four years ago, when they gave me the job of chief executive officer of three of them.

In the last year and a half, building a relationship between content and devices has taken on a new urgency as a part of Sony's convergence strategy.

Convergence (the idea that a single device will handle multiple tasks) seems to be something everyone is working on but no one is close to mastering. What's so tough about it?
Well, there are huge advantages and disadvantages to it. The disadvantage is that because of piracy, our content companies have been reluctant to embrace some aspects of the new technology.

Without content, most devices are junk.

The success of the iPod has lots to do with that. There is limited security with the iPod, and our content companies wanted greater security. The company has been very supportive in trying to create security on their next generation of Walkman that would be more efficient and effective. That took more time and may even be impossible. It's now been thwarted by iPod, which demonstrated that it could attract consumers.

The positive side is that when you have all this content in multiple catalogs, you are able to work more closely together with electronics companies. This is a recent phenomenon; we now have software engineers in pictures and music working together with Tokyo. They are designing this convergence strategy together. That was not something that happened overnight. It's taken a long, long time. The success of iPod certainly stimulated that transition more recently.

In what way?
We were concerned that creating the technology in Tokyo, where content isn't, would make it tough for the software engineer to develop a successful solution. It was successful with Steve (Jobs, chief executive of Apple) because he understood content as well. For us, it was done separately.

Connect is a service that cannot exist unless it crosses the silos within Sony to develop relationships with devices. I think everybody gets that.

With the success of iPod, there has been a real realization by software engineers in Tokyo that they need to understand content companies better. Similarly, we will bring our success in content and our growing strength in software engineering here to work together.

Sony Connect is a great example. In 12 months, we've really become a more integrated company, with American and Japanese executives working in harmony, side by side, and that's very promising for a video revolution because, while we may be behind the eight ball on delivery of music, on video, we have plenty of time to improve and grow faster.

So music has opened the door to video and your entire movie library?
And television library and games and so forth. The interesting thing is that technology companies and pure content companies sometimes have contradictory impulses. For us, the security of the content is still very, very important, and I think by working together now, we can protect content, because without content, most devices are junk. They may be very attractive, but a television, if you can't watch anything on it, is worthless.

I've had a hard time convincing people of that, and I've had a hard time convincing the consumer electronics group to not discard the idea of security or copyright protection as irrelevant, because if you're in China right now, it's very hard to build a content business. You can't do it.

But we're working together in real harmony now, and we understand each other's problems, and we have a better chance of solving some of these issues.

Is it fair to say you're in real harmony at this point? The Connect service is pretty new.
Real harmony may be an exaggeration, but harmony of purpose, anyway. There's nobody saying, "We know what we're doing; you don't," anymore.

Now, together, we can fashion this out. We're working very closely with PlayStation, whereas we didn't two or three years ago, and we're very happy with that relationship. All in all, I think the company is realizing that there can only be advantages if we work together. If we don't work together, it's not going to fly.

We've seen what happens when you don't work together--music suffered, electronics suffered. So with music as a template, you have something that is set. I mean, does Connect have to be solely a music service?
Well, it's more; we're working with PlayStation. They've accepted Connect service. We're working on video players--so we're working across the company.

Within the company, how is Connect viewed? Do you view it as a distribution channel directly to the consumer?
It's an end-to-end bridge with devices and content. It manages the relationship between both in order to present something to the consumer that is easy to access and manage. Whatever failings we've had in music, we've got to move quickly to solve them in video. We've all agreed on that.

Connect is a service that cannot exist unless it crosses the silos within Sony to develop relationships with devices. I think everybody gets that. It has converts on both sides of the Pacific, and the interchange and interflow of technical and marketing discussions is now daily.

I think sometimes that if I retire, I'll become a blogger and finally say all the things I've always wanted to say.

Is video something that the market is ready for?
PSP will play movies. It's ready for it. The next generation will have hard disk drives or flash memory or whatever. But even now, you can take a Memory Stick, and take a movie off PSP and play it somewhere else. That's already revolutionary, and that is coming in March.

But is the market, meaning consumers--are they ready to accept video on portable devices?
Well, more than half a million PSPs were sold in 10 days in Japan. That's the driver. We haven't marketed movies yet, but it is self-evident that for particular age groups, once you have that device, its sole purpose is extremely valuable.

I never considered video on a portable device because I never thought the screen was worth anything. The screen on the PSP is really sharp. It's better than a movie screen, and God knows we all watch movies on airplanes--and that is a fairly hideous experience. This is a good experience.

You're a former journalist. What do you think about blogs and their impact on news media? Do you read blogs?
I do, and there's an astonishing amount of information coming at you--and from a lot of different directions. That, in a way, is an extraordinary way to check and balance. And that is a good thing. The difficulty is sorting it out. That is why God invented editors. I find it very stimulating. I think sometimes that if I retire, I'll become a blogger and finally say all the things I've always wanted to say.

Feel free!
I think there are a thousand secrets out there, and there's no particular reason why secrets shouldn't be found out by someone who isn't a full-time, paid journalist. A secret is a secret. I'm much more concerned by the impact of all the news channels than I am about blogs.

The reader or writer brings to a blog a level of skepticism as well as curiosity and even balance. I don't think you say, "This must be true." You do tend to look at news media with the attitude that this must be true. In some ways--which are more worrisome when there is so much news coming out of those news channels--that is confusing to the viewer and doesn't involve actual reporting. There is much less actual reporting on news channels than there used to be, let's say, on the network evening news.

God knows we all watch movies on airplanes--and that is a fairly hideous experience.

I'm concerned that with the costs of reporting and with profit margins on cable news shows, there is less reporting and more talk. So what makes talk great? Most talk is adversarial and combative, but it doesn't contain a lot of facts. What difference is that from much of the blogging that you get? Blogging is the pursuit of actual information, anyway. So the world has changed a lot, and I miss a lot of the first-rate reporting with the reporting brain that looks for facts and draws an informed conclusion from those facts. That is what the best of journalism is all about.

The idea of convergence--making content available on these devices--for Sony is unique because of its entertainment and electronics assets, and you had a bit of a head start. When Sony started talking about this idea, it was one of the first, but we come to CES in 2005, and everyone is talking about it. Do you still have that advantage, and is it as great as it was before?
Because we have our own technology experts and software engineers, we're further ahead in understanding each other than any other company. In many ways, PlayStation is a convergence device. Part of its success comes from understanding the needs of the customer to experience games on the device that they made in its own environment. We still have an advantage. Is it a big advantage? It is in a different way.

The ultimate protection that Sony has in entertainment is that in this country, we're perceived as an entertainment company more so than in other countries. Our brand is more powerful here than anywhere else in the world. We're cool here. We're not cool in Tokyo anymore. We're not cool in China. We're cool because of PlayStation, because of movies.  

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