Sony 2003 Annual Report Download - page 8

Sony Corporation Annual Report 20036
decreased to 52 from the 70 we had at the end of
March 1999. Better supply chain management has
yielded significant inventory reductions. And w ithdraw-
ing from unprofitable businesses, merging with Aiw a
Co., Ltd. and other initiatives have led to considerable
success in fixed cost reduction. Actions such as these
contributed to our ability to report increased profit in
the fiscal year ended March 31, 2003.
Nevertheless, we are concerned that the pace of
change in our markets is overtaking the speed of our
reforms. Thus, we have decided to accelerate the pace
of reform by positioning the fiscal year ending March
31, 2004 as the beginning of a three-year, second phase
of restructuring that builds on the success of the first
phase of restructuring undertaken from April 1999 to
March 2003.
There are several elements to this restructuring plan.
One is the concentration of resources in those busi-
nesses that have strategic importance. Another is the
optimization, from a global perspective, of our manu-
facturing infrastructure. Yet another is the reduction of
fixed costs primarily through an increase in productivity
of administrative functions, mainly in Japan. These and
other initiatives are expected to result in consolidated
costs of approximately 300 billion yen during the three-
year period ending March 31, 2006.
Of these expenses, approximately 280 billion yen is
earmarked for the Electronics segment. This second stage
of restructuring is not merely an extension of the restruc-
turing undertaken to date. It is an entirely new initiative.
We are committed to its implementation because it will
provide Sony with the basis for further growth.
Strategies to Bolster Our Products and Spur Grow th
In the Electronics segment, we are targeting further
growth by creating new, exceptional products and by
building a profit model that can consistently generate
earnings in each of four core categories. The first is audio
and visual (AV) products, where we plan to solidify our
number one position. Second is the creation of an
entirely new category through the combination of
Electronics and Game. Third is information technology
(IT) and communications, where we expect to heighten
our stature. And fourth is semiconductors, another field
where w e plan to grow even stronger. Semiconductors
are the key to creating truly distinctive hardware. That is
why we plan to invest approximately 500 billion yen in
these devices during the three years starting in the fiscal
year ending March 31, 2004. Other plans include an
investment of approximately 500 billion yen in mid- to
long-term technology development over the same three
years for, among other things, key devices that are
essential to making our products appealing.
Core Initiatives
Initiative 1: Solidify Sony’s number one position in
AV products
In our effort to reach our goals for the fiscal year ending
March 31, 2007, we will enhance even further the
profitability of AV products, products which are at the
center of the Sony Group’s core Electronics segment.
This is to be accomplished through three measures. One
is making careful choices as to which businesses to focus
on. Another is cutting fixed costs through the second
phase of restructuring. The third is creating a more
attractive product line-up in growing market sectors.
Regarding the third measure, we aim to solidify our
number one position in the AV market through the
introduction of captivating products in high-growth
markets. Examples of such high-growth markets include
plasma display panel (PDP), liquid crystal display (LCD)
and other flat-panel televisions, optical disc and hard
disk drive recorders, and digital imaging products such
as video cameras and digital still cameras. Another
theme will be expanding our line of high definition
products such as Blu-ray Disc recorders, high definition
Wega televisions and high definition camcorders.