The project, code-named Altair, is one of the company's latest efforts to make digital content more accessible on its consumer-electronics devices, and it reinforces Sony's vision of the television as the centerpiece of its strategy for networked digital media. The new Sony TV will include a built-in Internet connection and tuners for receiving broadcasts from cable, satellite and over-the-air transmissions, according to sources.
The TV is expected to include a Web browser but is not envisioned as a run at Web TV. The device will be manipulated by a remote control rather than a keyboard and will use the Internet primarily as an alternative way to deliver video to the TV screen. Sony has formed partnerships with several streaming-media companies, including chipmaker Equator, On2 Technologies, RealNetworks and Secure Media, to help deliver that video.
"They're really sticking their necks out and betting that streaming to TV is going to be really big," said one source familiar with the project, who spoke on condition of anonymity.
The Tokyo-based entertainment and consumer-electronics giant has been working on the project for the last six to eight months, and a device is nearly complete, according to sources.
Although the sources said Sony is committed to the project, its plans could change. Before its release, the device under development could evolve beyond its current focus to add features or drop existing ones. In addition, the company could determine that such a project is not commercially feasible because of high production cost or low consumer demand.
Although it is considered a manufacturing juggernaut, Sony has placed bad bets in the past. It built anin 2001 to capitalize on the Web craze, but pulled the $499 device just weeks after it reached the market.
Plans were set to debut an Altair product in Tokyo in June, but that schedule has been pushed back because of technical obstacles. An introduction in the United States would follow if the product sells well in Japan.
Earlier this week,--Hitachi, Matsushita Electronics Industrial, Sharp, Toshiba, Sanyo Electric, Victor of Japan, Pioneer and Mitsubishi Electronics--to develop technical specifications for digital televisions so they can connect to the Internet. Those specifications will be finalized in October and will likely be used in a product based on work from the Altair project, suggesting its launch will come later this year or early next year.
The name of the project recalls a key product in computing history. Altair also is the name of a home computer introduced in 1975 that was the first to sell in significant quantities and the first to run Microsoft software.
Center of attention
The project comes as rivals are intensifying efforts to make the PC into the central device for the home digital-entertainment hub. Microsoft last year released a specialized version of its flagship operating system, , and a new version of the software is already expected later this year. The new operating system gives the PC some TV-like qualities--for example, it lets users access multimedia on a computer using a remote control.
Although PCs hold advantages over television systems when it comes to creating and organizing content such as home videos, they fall far behind when it comes to viewing it. Sony is betting that gap will keep viewers glued to new generations of TV sets that produce much larger images than typical PC screens.
A Sony representative declined to discuss the project, but reiterated the company's broader plans regarding television. "Sony is thinking
For the Sony president, devices in the
coming broadband nirvana will bear
little resemblance to today's PC.
So-called media convergence has meant different things to different companies, but for Sony it has always meant a chance to deliver its broad content offerings to consumers through new digital consumer-electronics devices. Sony owns film studios, music labels and a games unit in addition to its huge electronics division, giving it all of the pieces to connect the digital entertainment universe. That makes Sony a unique player in both the media and consumer-electronics industries, offering it enormous advantages if it can pull the parts together successfully.
However, infighting between the entertainment and electronics divisions over fears of piracy and the need to distinguish products have slowed collaboration efforts to date.
There are signs that Sony is getting more serious about pushing its considerable content through new digital channels. Notably, the company has recently begun to beef up its content-protection technology, allying with Philips Electronics to purchase digital rights management developer Intertrust Technologies last year.
Well-recognized branding has helped Sony establish and maintain higher margins than its competitors in the electronics business have, but unlocking access to its entertainment content could make possible even higher margins and new product categories, according to Richard Doherty, a director at research firm The Envisioneering Group.
"This project would not just fit into Sony's vision, it would help to bring parity to its parts," said Doherty.
The device would be yet another from Sony that gives people access to content over a network or the Internet. The company's home networking device, called , is already available in the United States, and its digital video recording device, , will come later this year, depending on when Sony can establish a DVR (digital video recorder) service.
The Altair project builds on a strategy presented by .
"The first 50 years of color television was just the infancy stage," Ando said during a keynote address in early January. "The PC has been a champion in the industry. But now the television is about to be reborn."
At the time, Ando said future televisions would be the center of home entertainment networks and would let consumers access data and services found on other devices connected to the network.
One obstacle to the realization of this networked vision has been the slower-than-expected adoption of broadband access, which is essentially the pipeline to the outside world for connected devices. However, withand with the arrival of easier accessibility to networks through Wi-Fi technology, the company's vision may be getting a boost.
"The electronics division has fully embraced that the dominant delivery mechanism this decade will be broadband," said Doherty.
Still, Ando commented in January that Sony would also work to use open standards in future products, to make it easier for consumers to access content on devices. He urged other companies to help to establish these standards to help the industry progress.
Putting the pieces together
In 2000, Sony released in Japan a similar networked portable TV device called the , but sales have not met expectations. Sony's plasma television project is not portable and the screen is much larger than the liquid-crystal display (LCD) that was built-in to the Airboard.
Although there is a bright future for flat-screen TVs using LCD technology, prices for plasma screens have been falling dramatically as display makers have improved the manufacturing process, according to Riddhi Patel, an analyst with research firm iSuppli/Stanford Resources. The result has been that plasma screens are less expensive in larger sizes and come with bigger dimensions than LCDs.
Televisions from the Altair project will be powered by Equator's system-on-a-chip processor for video streaming and image processing, and will be used to move the central functions of digital imaging, communications and media applications into software. On2 Technologies will provide the video compression and decompression technology for the television. In addition, Sony will employ a decoder to play files encoded in MPEG-4, the industry standard for video and audio compression.
RealPlayer, the media player from RealNetworks, is also being used in the project to allow playback of digital media files.
Equator, On2, RealNetworks and Secure Media declined to comment for this story.
RealNetworks and Sony have a longstanding relationship, with Sony owning a 1 percent stake in the digital media company. Last year, the two companies announced a strategic partnership in which they would collaborate on the distribution of digital media on upcoming and existing consumer-electronics devices. The RealOne Player is already available on Sony's Net MD Walkman and on more than 20 Sony Music devices.
Sony is also an investor in Secure Media.