Sir Howard Stringer: Why Sony Is About to Snap Back

On the eve of the Consumer Electronics Show in Las Vegas—the annual debutante ball for tech—I talked with Sir Howard Stringer, chairman and CEO of Sony (SNE), which because of cautious consumers and currency woes has been battered by the recession. But Sir Howard, who has sat atop Sony for almost five years, believes that the worst is behind him and that the products unveiled in Vegas—especially those involving 3D—will make quite a splash.

CHARLIE ROSEWhat will you say at CES about Sony's product lineup?

SIR HOWARD STRINGERThis year we're going to swamp the marketplace with innovation and new products, and we're going to particularly focus on 3D because we have so many assets compared with anybody else—from cameras to projectors to 3D video games to TVs to Blu-ray—everything can be 3D with us. Size finally matters again, so that is an advantage we intend to demonstrate at CES.

And how cost-effective will 3D be?

When you embark on anything involving technology, you have a hiatus between the vision and the experience. So the profitability will come in unpredictable ways. Obviously we're now making money on 3D in movies. We are equipping theaters with 3D projectors. We are making 3D cameras. Avatar was done with Sony cameras. But with creativity, you have to be there at the beginning. You have to plant a stake in the ground, and you have to be prepared to spend money to make money.

This is a big bet for Sony?

I think you would have said that a year ago. But already, half of it is paying off. So the next half is the extension of 3D into your computer, camera, video game, and so forth. And as it migrates from device to device, our basic investment is the same. We had no choice but to drive into 3D because, for one thing, piracy is such an enemy. It's the villain of content, and 3D is harder to pirate. And it's a bet we had to make because if you stand still with technology, you're crushed.

In November you announced cutbacks at Sony. What was the strategy?

Well, first of all [laughs], we wanted to be profitable.

And that would be a change.

Well, yes. But remember, two years ago we had record profits. Then we rolled into the recession. And I do have to remind people that we were hit harder in part because of the high yen. So we lost 10% or 15% of our profitability just on currency and foreign exchange alone. Then you have high labor costs in Japan. And if you add to that all the other aspects of recession, there's an easy explanation, but you get tired of saying it. Toyota was poised to become the biggest motorcar company in the world and then walked into the same problem. We've done a lot of really tough things that people hated but rallied around to do. We laid off 18,000 people.

So you ought to be poised in 2010 to have a profitable year?

Well, certainly that's the goal. We're trying to break even for 2009. That's what we've been trying to accomplish. I can't really talk about that at the moment, but I think the most difficult things are behind us, and I hope CES will demonstrate that all the cost-cutting we felt was necessary hasn't slowed the ability to create. We have three different e-readers, you know, including the wireless one.

You have acknowledged it was a mistake not to have wireless delivery as Amazon (AMZN) did with the Kindle.

Wasn't a mistake, we just didn't do it. O.K. It was a mistake because it helped the Kindle gain market share.

Yes. We were the first to put the E-reader back into the market, but there was hesitation in Japan because it had failed in Japan previously. So there was a tug-of-war between different parts of Sony. There isn't anymore.

Is having content and hardware a competitive advantage?

When people write the history books, they will say the victory of Blu-ray was won because we own a studio. Toshiba (TOSBF) offered a cheaper version, but we offered a more expensive version with greater capacity, which we said at the time would open the door to 3D, and it did. If we didn't own a content company, we wouldn't have been able to [prevail].

People who know the story of how Blu-ray prevailed will argue that it had, in part, to do with your personal relationships.

All businesses depend on relationships at some point. And, yes, I had enormous support from Bob Iger [at Walt Disney (DIS)] and Peter Chernin [at News Corp. (NWS)]. I remember having a conversation with Bob and saying: "It's going to cost us a lot of money to deliver Blu-ray." And Bob said: "I believe in it because I believe in superior technology, and I'm behind you 100%. You don't not have to worry about me." I almost choked up on that one.

Is it fair to say Sony was behind in the digital revolution when you arrived?

I thought Sony had been brilliant in vision and short on execution because the digital world is very different from the analog world. A digital future requires horizontal interrelationships. So we effectively had to rebuild the infrastructure.

You have said: "I want to turn around Sony. And when I accomplish that, I'll retire."

It's quite well put, but it's not how I put it. I think it's my role to set [Sony] on a road that everybody agrees is the right strategic direction for the company. Then I won't be needed.

Someone once wrote: "They expect a lot of Stringer, but he's not God."

I have never been someone who operated as a lonely leader. I'm a collaborator. And that means communication, a dash of inspiration from time to time, and a lot of motivation. And those, in combination, will carry the day if, indeed, the day is carried. I've never been put on a pedestal at Sony, and I've never attempted to climb on one.

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