The business of Sony Professional10 April 2012
It has not been easy being Sony in the last year. How is the European Professional business faring now, and what are the drivers for the broadcast-related industry in 2012? Adrian Pennington talks to European Vice President Naomi Climer about how TV technologies, business customers and home consumers interconnect.
Incoming Sony Corporation CEO Kazuo Hirai faces some tough decisions if he’s to reverse the company’s $2.9 billion annual loss, but he can at least look for inspiration toward the profitable Professional Solutions business.
The business spans the AV sectors from security to healthcare as well as broadcast, cinema and sport, and made money last year despite being hit by the supply-side battering of the Japan tsunami and Thailand floods.
According to its European vice president Naomi Climer, profits would have been higher still were they not battling the strong yen which erodes overseas earnings (some 70%) when repatriated to Japan.
She says: “Sony Professional is profitable. We sold everything we’ve got and we could have sold more. I’m pretty proud of that but we are now under pressure to grow the business further.”
Climer is confident of achieving this target saying she expects a significant growth in the business chiefly driven by demand for its products in digital 35mm, 4K and OLED as well as in the solutions business which manages systems integration and networked production.
“We’re in the fortunate position of having some killer products so I do expect a pretty decent year ahead,” she says. “I don’t want to sound complacent, but given the doom-laden headlines it’s clear that from where I sit that there is growth in the market. When I talk to customers it’s equally clear that they are demanding absolute value for money. They are finding it harder to get credit and they are under more pressure from the CFO.
“I sense resources are being shifted from capex to opex and it feels like there’s more pressure for business modelling and ROI than before. That said, people are still buying. I wouldn’t say the industry is in massive explosive growth mode — but people are still buying.”
Without revealing any figures, Climer says the 35mm market for Sony “has exploded, it’s buoyant and doing very well” primarily it would seem on the orders stacked up for its F65 CineAlta which only began shipping in January.
Although the professional monitor market remains broadly flat Sony claims to have doubled its share on the introduction of OLED units. “OLED was a technology that began life as a consumer activity but it has been adopted more readily in professional, first in viewfinders then as Grade 1 displays, and now it is a really strong proposition,” says Climer.
She points out that Crystal LED, a prototype display technology that debuted at CES, emerged from the professional division’s R&D and that there are consumer and pro applications because larger displays can be manufactured with it than OLED. At CES Sony suggested that C-led might be a long term replacement for OLED but Climer cautions against this.
“C-led is a long way from being productised so it’s wrong to write OLED off. We are pursuing strategies with both and you could see some professional applications for C-led.”
The first tapeless workflow based on Sony’s asset management infrastructure Media Backbone has just gone live at RSI in Switzerland, helping to boost the solutions division’s growth by 20%. “I set a massive growth budget for our solutions business for the year ahead and we’ve already secured more than 50% of that,” she says. “So we’re very bullish.”
The user experience
4K has also shown “significant growth,” she says of a field in which Sony has product in high-end acquisition (F65), theatrical presentation (4K Digital Cinema Projector) and a new home cinema projector which “has far exceeded our expectations. It’s the only way to watch 4k in the home at the moment.”
Indeed few companies can match Sony’s breadth, ranging from TV and film production to presentation and most things in between. Outgoing CEO Sir Howard Stringer attempted to make the most of some obvious synergies under the ‘Sony United’ theme. Sony Pictures Entertainment, for example, is ensuring that flagship movies like this summer’s The Amazing Spider-Man and the next Bond film, Skyfall, are released in 4K.
Sony’s fourth straight year of losses stem from its giant consumer division, partly a result of globally flat TV sales that have also left Panasonic and Sharp facing dives into the red. Competition is intense too, notably from Samsung and Apple – who have to an extent stolen the lead in consumer product innovation from the Japanese.
“At CES I noticed that although we have all this fantastic hardware from games machines to smartphones (with Sony Ericsson fully acquired), the message was about the user experience and the seamless experience between the hardware,” says Climer. “It’s a very connected message. Rather than concerning one piece of technology, Sony’s mission is to connect things in ways that bring us together.”
Can Sony’s knowledge of how consumers work with connected devices be fed back to the professional broadcast side?
“There is a real strategic intent to connect all of Sony together,” she says. “Instead of just talking in isolated terms about the next camera we talk to all part of Sony about the business and where it might go. We continually talk to customers — and we talk to those who don’t buy from us as well — and when all this is in the mix we have a pretty good understanding of what they want and how we can respond.
“The economy is tough, so for suppliers it’s about finding the right business model for the customers and making the right argument from the CTO to the CFO.”
The 1+1 = 3 equation
Climer can take credit for making the internal business case for the acquisition during 2011 of analytics technology Hawkeye, whose engineers and IP were brought under Sony’s sports division. Aside from the famous ball tracking technology, what appears to have intrigued Sony Professional just as much is software that delivers realtime graphical representations of sports statistics, called Pulse.
Indeed, Climer is on the hunt for more purchase opportunities. “I’ve been given the green light and we’re talking to two companies,” she says. “We’re scanning the market for the right acquisition and it needs to be a strategic fit to help us to get to where we want to be. The equation has to be 1+1 = 3. We have to get more out of the business than just a company.”
As for 3D, which Sony more than any other company has stamped on every part of its product portfolio, there appears a bit of hiatus until the market builds itself naturally to an addressable mass.
“Our expectation is of a long game,” she says. “There are lots of examples of indie producers experimenting with it, a number of operators are wholeheartedly embracing it as a key differentiator while others are not thinking about it at all just now. We run training in professional 3D production in LA and Basingstoke and these courses are continually booked. 3D is growing steadily and will go mainstream when it becomes the de facto standard of new TVs.”
Climer joined Sony in 2004 having been controller of Technology for BBC News and director of Technical Operations at ITVdigital. She has long championed gender diversity in the workplace and is to become deputy president of the IET (beginning September) — the first time in the trade body’s 140-year history that a woman has filled the role.
“We must demystify the world of engineering, to demonstrate to bright young women that it’s not just about codecs and technology geeks,” she says. “At Sony, we’ve been working with schools to showcase the exciting career possibilities available in the technology sector. One aspect is to make the recruitment process more inviting to female candidates, for example by reconsidering the ways we describe and advertise new roles. We also need to ensure that work environments are designed to inspire and develop both sexes.
“Sony, like the rest of the industry, is very male dominated but they have taken gender diversity seriously in Tokyo,” Climer adds. “Indeed it has been named as one of their priorities because they realise it is an important business driver. I do think you get a degree of creativity and innovation if you have a diverse team. If we overlook the female perspective, we all risk being blindsided by our competition.”