Sony sees flat TVs bankrolling slow Blu-ray growth
Sony COO says "it's going to take time to make money on new products."
NEW YORK (Reuters) - Sony Electronics is counting on profitable devices like flat screen TVs and Vaio computers to help bankroll the slow, pricey development of growth gadgets like the Blu-ray next-generation DVD player, its president said Wednesday.
Stan Glasgow, president and chief operating officer of Sony Corp.'s $11 billion electronics arm, said his optimism about established products is tempered by concerns about a tightening supply of electronic components across the industry, and a looming format war with the rival HD DVD movie player.
"It's going to take a little time to make the money back (on new products)," he said during a briefing with reporters. "We are looking for profitability in our television business, our camera business, our Vaio business -- they will fund those investments."
Sony's most crucial new frontier is Blu-ray, an advanced high-resolution movie playing technology to be found in stand-alone DVD players, as well as Sony's Vaio computers and PlayStation 3 game consoles. Its acceptance by consumers could also be a boon for Sony's movie studio arm.
But Blu-ray competes with the HD DVD format as the next standard in the $24 billion-a-year home video market. Toshiba Corp. started rolling out its HD DVD format players in Japan over a month ago, becoming the first company to offer next-generation optical disc players worldwide.
Glasgow said the genesis of Blu-ray devices would be slow, with prices high initially, and Sony (Research) would not have enough inventory this year to supply demand in the United States. Sony aims to offer Blu-ray-based players in the U.S. for around $1,000 in July.
"It's going to be expensive initially," he said. "It will take time to get component prices down."
Glasgow's comments come amid a brewing industry war over the technology behind the next line of DVD players. Both formats deliver movies in sharp high-definition and store more data than traditional DVDs, enabling them to offer interactive features such as games.
Glasgow said he believes the battle over formats could be resolved within 12 to 24 months -- with Blu-ray the eventual winner -- but he did not rule out the possibility of creating a player that combined both technologies.
Companies on both sides of the format war had once discussed the idea, but they never came to an agreement.
The notion of two different formats, experts say, is sure to confuse consumers, who may shy away from buying either. At the Consumer Electronics Show in Las Vegas in January, top U.S. electronics retailers called the issue "nightmarishly unfriendly" and "stupid," since some day one version could be obsolete, drawing the ire of their customers.
Glasgow admitted that "there is confusion," and that retail sales will decide which format survives.
"A lot has been invested" in such advanced DVD players, he said. "It's expensive having two different types of high- definition technologies. If we can sell more Blu-ray product, we win."
Glasgow added that overall component supply is tightening as demand for all sorts of electronics gadgets swells, but he believes companies will keep prices from rising in order to keep buyers in stores.