Abstract

Besides High Definition, Software Design Also Crucial in AV Electronics Product Development

Sony has always prioritized the development, production and sales of AV entertainment products. Product development revolves around central themes, such as cassettes and headphones together with walkman products, or discs and stereo equipment alongside CD and DVD players.

For increased returns on hardware products, Sony not only provides the actual hardware product; it also launches relevant entertainment content. Music CDs, games, and films are examples of content that add to overall revenue.

High-definition video and high-quality audio are innovative new trends of AV products, meeting popular demand for realistic visual and audio effects. Furthermore, in the digital and internet age people want more out of AV products, pursuing better audio and visual quality. Becoming ever more apparent is the value of convenience.

Everyone hopes that a single form of content can be conveniently shared between many digital products, or to conveniently store and access content on portable devices. In order to share content across devices and domains, hardware producers not only have to provide content; they must also have the software design capabilities for a user-friendly interface and a format with high compatibility to meet consumer expectations.

Sony Making Efforts to Be More Open in Designing in New Products

Due to its superior R&D capabilities and brand image, Sony enjoyed a dazzling aura in the past. However, its performance has slowed in recent years, reasons for which include impediments to developing new products created by its past success.

In the 1990s, Sony was a dominant force in the television market, but only in 2003 entered the LCD TV market. The reason for this was to protect its original TV business as well as the overemphasis placed on FED (Field Emission Display) and organic EL (Electro Luminescence) technologies. During this period of time-consuming R&D, the LCD and PDP (Plasma Display Panel) television markets were taking shape. In comparison, Samsung viewed digital TV as a new opportunity.

Also, Sony owned all the important elements behind the production of an iPod-like product (hardware, technology, and content), but failed to follow through with such a product. In portable music players, Sony originally held the lead position in the market and regarded it as a source of profit. However, Sony overprotected these products and traditional CD sales, ignoring the MP3 threat. Its lead position was replaced by the iPod.

Given its experience with LCD TVs and MP3 players, Sony is attempting to take a more open attitude in designing new products. An example is how the company for the storage format on PS3 memory cards no longer insists on using its own Memory Stick. It also supports SD (Secure Digital) and CF (Compact Flash) cards. In mid-2007, Sony announced it would be stopping the development of its own ATRAC (Adaptive Transform Acoustic Coding) format. The new Walkman music player would only support WMA (Windows Media Audio), MP3, AAC (Advanced Audio Coding), and so on.

Having abandoned its own format, Sony is giving consumers much more convenience and independence when choosing products they purchase. However, a Sony without its own proprietary assets must figure out something how to create product differentiation and reap the benefits other peripheral products can bring when developing future Sony products.

China a New R&D Base for Japanese Companies

As the Chinese market rises, Japanese manufacturers are moving to China to set up R&D centers. According to a study conducted by Japan's Ministry of Economy, Trade and Industry, the percentage of Japanese companies establishing R&D facilities in China rose rapidly from 0.9% to 11.5% in the period 1994-2004. Although this percentage is smaller than North America (18.4%), it is not far off from the share of Japanese companies setting up R&D centers in Europe (12.4%).

Sony and other Japanese home electronics companies are facing the gradual convergence of the IT and digital home electronics industries. Topped by the rising competitiveness of China, Taiwan, and Korea, as well as a sharp decrease in the time it takes to develop new products, it has become necessary to commercialize a product within a very short period of time. The time products can survive in the marketplace also continues to tick down. Responding to market demand, the development strategy of Japanese companies in China has shifted from the production and manufacturing of the past. Now, these companies are engaged in the R&D of products that conform to local market demand, and are planning to expand product design applications into the wider Eastern Asian region.

However, local Chinese electronics manufacturers such as Haier, TCL, and Changhong continue to grow. In 2008, the Chinese government also plans to amend preferential tax policies aimed at foreign enterprises. The minimum wage and rents on lands for industrial use in China continue to rise. This is making it increasingly difficult for foreign companies that want to make profits in the Chinese market.

Appendix

List of Companies