Sony CEO Howard Stringer: Look At Our Awesome, Expensive, Money-Losing TVs!

Sony (SNE) CEO Howard Stringer uses his D6 stage time to show off his tiny, expensive OLED screens. We’re told they’re amazing, but that’s hard to tell from a distance. We do know they’re expensive: The model that’s for sale is $2,500, and Howard won’t venture a price for the new card-thin model. But unless you live in a very very fancy neighbourhood, your neighbour won’t have one anytime soon.

Photo: Asa Mathat, AllThingsD


Transcript follows:

A couple of years ago Howard Stringer had high hopes for his e-reader. But Jeff Bezos Kindle has stolen that thunder, and we assume we might hear about that when Walt Mossberg chats with him. We definitely know we’re about to see a very, very thin TV.

Howard comes out to “Turning Japanese” (do the D6 folks know what that song is supposedly about?).

So Sir Howard, how are things going? “We’re coming on, I think… culturally the word “profit” is not high on anybody’s agenda in Japan. We’re turning that around… there’s a sort of sense that we’re climbing the mountain. We’re nowhere near the top, we’re about halfway up.”

But TVs are doing well, right? Yeah, but we’re not making any money: “If we have any more success we’ll be bankrupt”. Why can’t you make money? It’s a commoditzed business. Lots of overhead from old biz we’ve exited, and race for market share puts pressure on prices.

What’s next, beyond the LCD? LCD has had a good run, has plenty of life in it. But now getting excited about OLED. Very expensive at the moment, but is in the market. $2,500 for an 11″ screen. DreamWorks guys like it a lot. I have one on my desk. It’s really, really bright. Time to see the demo:

As we worried, it’s really really hard to get a sense of what an OLED screen looks like when you’re looking at on stage. But, as predicted, here comes the 0.3 mm thick OLED, thickness of a playing card. Will come out in 27-inch version fairly soon. Not at mass market quantity, and it will be “quite expensive… the only people who can buy one are in this room.”

Do you believe that this will supplant LCD? “I’m biased. I have mine on my desk, and I haven’t turned on the wall screen since I’ve had it. It’s a perfect television companion.”

Making these panels yourself? Yes. Very technolgically sophisticated. Can’t outsource.

PS3: Profitable business yet (no, it’s not). Downward slope of PS3 curved was “mildly catastrophic” for a while… “was on life support” but is booming now. “We’re very pleased”. Becomes a server, movies, Playstation network has 5 million people, and we’ll demo new one coming. The next game out, in June, will use full capacity of game machine, which no one really has done yet.

Are people really using it as a movie machine/entertainment hub? They’re starting to. And we’re connecting it to PSP, other machines, etc. It’s the beginning of a sequence of a train of events that will ulimately be fairly thrilling – MSFT and AAPL trying to do same, of course. We won DVD format battle because of Blu-ray player in PS3.

Walt: I thought you won the battle because you paid off the studios? Howard: No, we didn’t pay as much as the other guys. It cost us because we had to cut Blu-ray player price way down, but we weren’t in the check-writing competition. We have great suport from the studios.

OK, so you won the next-gen DVD format war. What’s the real value in that, as things are moving to digital downloads? “We live in the Silicon corridor up here, and we think that the things that are happening to us are happening to everybody…but it’s going to be a long time, I think, before you can get the quality you can get on Blu-ray… I agree, it was a lot of wasted money on this battle… but we wanted [the format] to last for 10 years and beyond” But a bit of candor from Howard here: Had we lost the war, “the headline would have been ‘BetaMax 2’. And that would have been on my tombstone.”

Walt disagrees about “Silicon Corridor” idea. Lots of people have digital music players. So the idea isn’t new. Howard: Billion new movie customers coming online in Asia. They agree to disagree, basically.

How about movies in general, what’s going with that business and what will become of it? Still sticking around. Shared experience important. People said rock concerts on way out, but they’re picking back up again (not completely true, really).

PC business? Best year ever last year. 7% margin. But marketshare is down, right? Why aren’t you #1 or #2 PC vendor? Because we’re very expensive. Is this a strategy? “Yes. The less profit the better.” Our engineers like trying to being on the cutting edge…compares his company to Apple (but Apple enjoys very nice margins on its hardware).

Walt taking Howard to task over “craplets” on his Sony computers (this is a big thing for Walt). Wants him to take anti-craplet pledge. Howard won’t bite. “You’re not a typical consumer.” Not true! says Walt. Everyone’s got my back on this! Howard: “I promise you a craplets review.”

Digital music players: We’ve sold about 170 million music-enabled phone. Way more than iPods. Sold that in the space of a year and half to two years. We started music phone trend! Were doing more and more downloading relationships. We’ve got one with Usher (who’s a Sony BMG act). The music player itself, overshadowed, is coming back a bit (we’ve heard this ourselves). “We’re a long way off. But we’re back in the game. We recognise our failings, and we keep trying.”

Are the days of stand-alone players numbered? Nah. There’s room for two devices, or three devices.

Q from audience: How do you keep innovating across wide range of products? It’s hard. You can see dilemma with Sony Reader and Kindle. People say we’re not innovating, but we’re innovating on all of our products. Plus, we’ve got the Rolly! But it’s tricky to find entrepreneuers in company, especially in Japan, who can create small-scale success with new products. There isn’t that tradition in Japan. Trying to find way to mimick it, so we can have some excitement. Making Sony a home for entrepreneuers is the next big challenge. “Did I answer your question?” “That was brilliant” “Really? Are you looking for a job?”

What’s going on with telco v. cable faceoff? Talking about non-settop TV deal announced yesterday. We’ve been pushing for it for a long time. It’s a “singular achievement for us”, done mainly with Comcast leading the charge. “There are gatekeepers everywhere, guarding their turf. Sometimes I’m sympathetic, but not often… on the other hand, I’m open to the Tim-Berners Lee approach, which is to make it open.”

Can you ever get software that works as well as your hardware? Maybe. Look for our home game network. We’ve hired an excellent software guy but I’m not going to point him out because you’ll all chase after him. But this is also an organisation challenge. Software has to work across multiple platforms. Don’t laugh but we’re now thinking about software at beginning of process instead of the end.

Steve “Insanely Great” Levy: Wants to know what Howard thinks about iTunes, basically:

“I have my own hositlites to the iTunes experience.” I know it’s unpopular in this room, but AC/DC, for instance, never released their music on iTunes. They think their body of work should stand on its own. They don’t want to sell singles, and iTunes insists on it. I think competitior to iPod very healthy.

Music labels “have learned our lesson” and are working with artist, trying to find new ways to express themselves. “The vanishing album is problem that I’m concerned about. Maybe I’m just old.”

Event ends – Howard tells Walt “This wasn’t as funny as last time”

See Also: Sneak Peek: Sony’s Super-Thin TV

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