Sony to Boost Research Spending on Cloud Computing, Displays

Sony Corp. (6758), Japan’s biggest exporter of consumer electronics, plans to boost research-and-development spending on cloud computing and display panels as it tries to rebound from four straight losses spurred by slumping TV sales.

The company’s research efforts should focus more on customer needs and not be so inward-looking, Shoji Nemoto, an executive vice president in charge of technology strategy and corporate research and development, said in a group interview in Tokyo today. Sony also “won’t hesitate” to buy outside technologies, including those that could benefit mobile devices, Nemoto said.

The maker of Bravia TVs and Walkman music players has been struggling to deliver a breakthrough hit product to win back consumers flocking to Apple Inc. (AAPL)’s iPhones and iPads, even as it spent twice as much as Apple on development. Sony’s research spending totaled $5.5 billion last fiscal year, while Cupertino, California-based Apple spent $2.4 billion on its R&D operation, data compiled by Bloomberg show.

“One of the problems is that Sony’s R&D spending hasn’t really led to products, sales or profit,” said Kazuharu Miura, a Tokyo-based analyst at SMBC Nikko Securities Inc. “Any company would want to boost earnings from R&D, but it hasn’t really worked well for Japanese manufacturers.”

Apple, Samsung

The impact of the Clie personal digital assistant -- which lets users listen to music, play games and watch videos -- and the Airboard portable TV, designed to watch movies downloaded from the Internet, could have been greater if Sony were more customer-focused, Nemoto said.

Sony shares fell 1.7 percent to close at 903 yen on the Tokyo Stock Exchange, extending their loss this year to 35 percent.

Sony plans to spend 470 billion yen ($6 billion) in research and development in the year ending March 31, an increase of 8.4 percent from a year earlier, the company said Aug. 2. That’s down from its 2007 peak of 544 billion yen, according to data compiled by Bloomberg.

The budget includes costs for designing and making trial models, and those expenses need to be reduced given the severe environment Sony is facing, Nemoto said. The company should spend more money developing components and energy-related products, he said.

Toyota, Panasonic

The maker of PlayStation game consoles was Japan’s fourth- biggest R&D spender last fiscal year -- trailing Toyota Motor Corp., Panasonic Corp. (6752) and Honda Motor Co. -- and 21st among global listed companies, according to data compiled by Bloomberg.

South Korea’s Samsung Electronics Co. (005930)’s R&D spending totaled $9 billion last year, ranking seventh globally.

Sony started a research unit with about 100 workers trying to generate new businesses or a new “ecosystem,” Nemoto said. The unit, convened in Tokyo last month, will narrow down more than 100 ideas to five by year’s end, he said.

The team may expand overseas in the future, Nemoto said.

Sony’s imaging technologies, such as sensors, can be used to “create something interesting” in mobile gadgets, Nemoto said. The technologies can also be used to expand in security cameras and medical devices, he said.

The 4K display technology, which can deliver more than four times the resolution of full high-definition displays, will be among Sony’s areas of focus, Nemoto said.

Image Sensors

In April, Chief Executive Officer Kazuo Hirai listed three areas of Sony’s electronics business that the company will focus on: mobile devices, games and digital imaging. TVs weren’t on his list.

The emphasis on three “core businesses” comes after Sony lost 714 billion yen on TVs in the past eight years as demand for its models slumped. Hirai is cutting 10,000 jobs this fiscal year to turn around Japan’s biggest exporter of consumer electronics after four consecutive years of losses.

Sony will accelerate a move into health equipment by using the edge its image sensors have over rivals, Hirai said at the time.

The maker of Cyber-shot cameras is introducing new image sensors in October known as complementary metal-oxide semiconductors, or CMOS, that are smaller than its previous models and will target orders from smartphone makers.

Nemoto, 56, was appointed head of technology strategy and the digital imaging and solution units in March as part of management changes.

To contact the reporters on this story: Mariko Yasu in Tokyo at myasu@bloomberg.net; Shunichi Ozasa in Tokyo at sozasa@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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