Sony 2000 Annual Report Download - page 56

SONY CORPORATION ANNUAL REPORT 2000
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Reinforcement of Sony Group Headquarters
Accelerating Corporate Reform
As a model for group management in the broadband net-
work era, Sony aims to further promote the “unified dis-
persed” management model. This model combines the
function of Sony’s Group Headquarters, which decides the
basic group management policy and plans and carries out
overall strategy, with those of each business unit, which au-
tonomously operate under substantial delegation of author-
ity. The role of Sony Group Headquarters is to create new
businesses that utilize the network environment, to convert
the existing businesses and management processes to those
that correspond to a network context, and to aggressively
promote reform, aiming to adapt the Sony group to the new
era. In order to achieve these goals, Sony designated the
Group Headquarters as “eHQ” and will strive to clarify its
role as a promoter of reform and to strengthen its function.
Acceleration of Net Business as a New Growing Area
For a strategy of growth in the broadband network era, Sony
is positioning such terminals as digital TVs/set top boxes,
PCs, PlayStation 2, and cellular phones as network gateways.
Sony intends to establish new businesses by integrating these
terminals with various services. To achieve these aims, Sony
recognizes the importance of strengthening such areas as
major devices, content, telecommunications, and services as
a key way of differentiating itself from other companies, and
as necessary, Sony will seek to promote cooperation and
alliances with other companies. In line with this strategy,
Sony is actively proceeding with strategic investments in
venture companies, especially in the U.S. During the fiscal
year ended March 31, 2000, approximately 11.0 billion yen
of investments were made, both through Sony Corporation
initiatives and through digital media initiatives in the U.S.
(most investments were for companies principally in the U.S.).
During the fiscal year ending March 31, 2001, Sony is invest-
ing in a number of venture companies, including Transmeta
Corporation which is working on processor technologies for
mobile terminals.
In addition, to establish platforms to develop Internet
businesses strategically, Sony, as a group, is aggressively
promoting “So-net,” originally started for providing Internet
services, and “PlayStation.com,” which is working to realize
via the Internet direct sales and content distribution services
in the future over broadband networks. In addition,
“SonyStyle.com,” providing customers with access to Sony
products integrated with network services and such, has
begun operations. These Internet businesses will develop
new relationships with customers by responding to various
individual needs.
From July 2000, Sony intends to launch a corporate broad-
band Internet service in Japan using WLL, or wireless local
loop access system. In addition, during the fiscal year ended
March 31, 2000, Sony invested approximately 4.1 billion yen
in Crosswave Communications Inc. resulting in a total in-
vestment of 6.0 billion yen. Crosswave Communications Inc.
was established for developing a high-capacity and high-
speed network infrastructure and is currently developing next-
generation network services all over Japan.
In the entertainment area, which Sony believes will as-
sume greater importance in a networked society, in March
2000, Sony established Sony Broadband Entertainment Inc.
(“SBE”), a U.S. holding company of the Music and Pictures
businesses. To increase the value of its software assets, SBE
will pursue content creation and network distribution busi-
nesses including potential strategic alliances.
Strengthening the Electronics Business
As part of its strategy of building competitiveness in the ex-
isting Electronics business, Sony is proceeding with its reor-
ganization plans, including focusing on key businesses,
consolidation of manufacturing facilities, optimization of lo-
gistics operations, maintaining of proper employment levels,
and the introduction of the Six Sigma method for improving
management quality. At the same time, for a strategy of fu-
ture growth, Sony aims to develop platforms for providing
customers content and services via networks using Sony’s
technologies in the Electronics business.
With regard to focusing on key businesses, Sony sold its
business for the development, production, and support of
thin film deposition materials for semiconductors and de-
cided to consign its production of alkaline batteries to an-
other company and to sell its in-flight entertainment business.
Sony continues to review restructuring of its manufacturing
facilities and to seek to streamline its supply chains includ-
ing optimization of logistics operations, in order to counter-
act foreign exchange fluctuations, improve profitability, and