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Sony switches channels in big picture

The company's online strategy will increase Net games and make it easier to buy products, analysts and executives say.

Often viewed as a sleeping giant on the Internet, Sony is forging ahead with plans to expand online, including an increase in Net games and plans to make it easier to buy music, PCs, and other merchandise on the Web, according to analysts and executives.

Although publicized little, Sony also runs a regional Internet service provider in San Diego called Hobonet, which offers 56-kbps dial-up service for $18 a month. Sony has no plans to become a national ISP like America Online, but it sees valuable experience in running the local service.

Sony's activities underscore Is Time Warner next in merger mania? the electronic giant's potential to become a Web powerhouse, though it still has a long way to go. For example, Sony has yet to sell any consumer electronics directly on the Web, with the exception of its own line of PCs.

Sony's Web plans are coming under closer scrutiny as media giants such as Disney, Time Warner, and--just last week--Barry Diller's USA Networks expand onto the Internet. The Web presents new moneymaking opportunities for all of them but poses challenges at the same time.

Sony not only offers entertainment content, but also consumer electronics and set-top boxes, providing the basis for a robust Web strategy. But it has yet to come close to realizing its full potential.

Recently, the company's online strategy has shown signs of renewed life. The company has been playing the domain-registration game, signing up names See special report: 
When worlds collide such as "SonyAvenue.com" and "MediaAvenue.com" and fueling speculation about deeper forays into e-commerce. Messages on SonyAvenue.com and MediaAvenue.com read "under construction," although the Web site administrator insists that no launches are planned any time soon. Sony is using another curious domain name, "funtv.com," for its Hobonet ISP.

The company also has been quietly redesigning its Web site, making it easier to navigate. The efforts are not going unnoticed, either.

Sony recently complained that an online greeting-card site, "www.123card4u.com," had mimicked its design. The company has agreed to modify the page by next week. Other sites also have used its design, according to Julia Duden, an associate marketing manager for Sony in New York.

"Sony has been remarkably decentralized, but they're making efforts to change that," Seema Williams, an analyst with Forrester Research, said of the company's Web plans. Sony also is expanding the entertainment and e-commerce features of its online site, including the direct sale of its own VAIO line of PCs.

Some areas of expansion:

• Entertainment. The Station@sony.com plans to launch new online games in coming months, including SportsJeopardy; Chain Reaction, a word game; and EverQuest, an online role playing game. Sony also has registered the domain names "RockandRollJeopardy.com" and "EntertainmentJeopardy.com," suggesting further expansion of its popular Jeopardy online game.

• E-commerce. The Sony Web site shows an icon that lets users buy television and movie merchandise, computers, and music online. Plans are expected to include better integrating the "back-end" network for these online purchases, making the shopping experience more seamless and user friendly, analysts said.

• Connectivity. Hobonet, roughly a two-year-old operation, has some 3,000 members and hopes to reach a total of 5,000, said Carol Legg, Web site administrator. Sony set up the ISP because it already was installing the network for an Internet research and development facility in San Diego. It also can learn from the experience, Legg added. Hobonet's $18 monthly charge is lower than most other ISPs for dial-up access using a 56-kbps modem.

Sony also is expected to add more cross-navigation and cross-promotion on its Web site. Sony.com now lists five chief areas: music, movies and TV shows, electronics, the Playstation console, and online games. One of the company's goals is improving navigation. Time Warner is considering a similar strategy to bring more of its properties under a more unified grouping, as well as bolstering e-commerce.

Sony faces numerous challenges as it expands on the Web. The first is financial: Sony said in October that it expected to post its first loss in five years for the business year ending in March. It blamed the global economic downturn and highly competitive pricing.

In addition, Sony, like others, worries that pushing e-commerce will cannibalize its well-established retail channel.

Howard Stringer, chief executive of Sony Corporation of America, summed up the push behind the company's recent moves in a speech at the Comdex industry convention: "Every division of Sony, whether electronics, music, or movies, has expressed concern that leaping Amazon-like into the Internet will threaten our relationship with retailers. And yet, watching the performance of Amazon.com, we all worry that on the Internet, he who hesitates is lost."