Special Report: The Sony Schism

Sun Mar 25, 2012 9:45pm EDT
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By Tim Kelly and Reiji Murai

TOKYO (Reuters) - The Bellagio casino-hotel in Las Vegas hosted a shotgun wedding in January. The bride and groom had met just a couple hours earlier; she wore a skimpy dress, he was in powder blue coattails.

The ceremony was actually a PR stunt. But the man who brokered it, incoming Sony Corp boss Kazuo Hirai, was dead serious.

The guests were mainly journalists assembled in Vegas for the annual Consumer Electronics Show. The couple were a pair of actors hired from a local talent agency. They were supposed to represent the Internet and Sony's Bravia television sets - their match symbolizing the consummation of the company's years-long, frustrated quest to marry hardware with content.

His ability to make that union a reality, says Hirai, will define his tenure at the troubled Japanese brand.

When Hirai becomes Sony's president and CEO on April 1, he takes charge of a company facing a crisis unlike anything it has experienced in its nearly 70-year history.

It's been years since Sony has produced a new mega-hit device. Its TV business is an albatross that has accumulated losses of $10 billion. The company is on course for a fourth straight annual net loss for the year ending March 31. Efforts to connect its vast entertainment and games content with its huge menu of gadgets began way back in the 1990s - but are still a work in progress.

What has flourished at Sony, after a bumpy start, is its PlayStation business, which Hirai ran for five years. His plan is to apply the PlayStation model companywide: extend its network to the rest of the Sony gadget family to create a unified content-delivery platform. Even if not by intent, it is a model close to Apple Inc and its iTunes.

The Sony Computer Entertainment model "is a bigger concept we can grow into a bigger space," Hirai, 51, said in a group interview at the company's Tokyo headquarters last month. "Hardware drives software and software drives hardware." and try and merge it with the battered TV businesses of Japan's other struggling set makers. Both Panasonic and Sharp are in trouble. It would be a marriage of convenience that a Japanese government anxious to safeguard jobs and spawn national champions could help forge, the executive added.   Continued...

Sony Corp's incoming CEO Kazuo Hirai speaks during a roundtable discussion with journalists at the company's headquarters in Tokyo February 9, 2012. REUTERS/Yuriko Nakao