Sony 2015 Annual Report Download - page 34

Sources of Supply
Sony pursues procurement of raw materials, parts and components to be used in the production of its
products on a global basis on the most favorable terms that it can achieve. These items are purchased from
various suppliers around the world. Sony has a general policy of maintaining multiple suppliers for important
parts and components and, in the fiscal year ended March 31, 2016, Sony continued activities to optimize the
number of its suppliers by category to achieve efficiencies and to minimize procurement risk when possible.
When raw materials, parts and components become scarce, the cost of production rises. For example, LCD
panels and memory devices, which are used in multiple applications, can influence Sony’s performance when the
cost of such parts and components fluctuates substantially. With regard to raw materials, the market price of
copper has the potential to proportionately affect the cost of parts that utilize copper, such as printed circuit
boards and power cables. The price of gold, which is used in applications involving a range of semiconductor
products, may also fluctuate and impact the cost of those items. In addition, the price of rare earth elements, such
as neodymium, may impact the cost of magnetic parts to be used for products such as camera modules and disc
drives, and the price of tantalum may have a similar impact on the cost of capacitors used in a wide range of
consumer electronics products.
After-Sales Service
Sony provides repair and servicing functions in the areas where its electronics products are sold. Sony
provides these services through its own call centers, service centers, factories, authorized independent service
centers, authorized servicing dealers and subsidiaries.
In line with industry practices of the electronics businesses, almost all of Sony’s consumer-use products that
are sold in Japan carry a warranty, generally for a period of one year from the date of purchase, covering repairs,
free of charge, in the case of a malfunction in the course of ordinary use of the product. Warranties outside of
Japan generally provide coverage for various periods of time depending on the product and the area in which it is
marketed. In the case of broadcast- and professional-use products, Sony maintains support contracts with
customers in addition to warranties.
To further help ensure customer satisfaction, Sony maintains customer information centers in its principal
markets.
Patents and Licenses
Sony has a number of Japanese and foreign patents relating to its products. Sony is licensed to use a number
of patents owned by others, covering a wide range of products. Certain of these licenses are important to Sony’s
business, such as those for optical disc-related and smartphone products. Sony products that employ DVD player
functions, including PS4 and PS3 hardware, are substantially dependent upon patents that relate to technologies
specified in the DVD specifications and are licensed from Dolby Laboratories Licensing Corporation. Sony
products that employ Blu-ray Disc™ player functions that also employ DVD player functions, including PS4 and
PS3 hardware, are substantially dependent upon patents that relate to technologies specified in Blu-ray Disc™
specifications and are licensed by MPEG LA LLC and One-Blue, LLC, in addition to the patents that relate to
technologies specified in DVD specifications, as described above. Sony’s smartphone products are substantially
dependent upon patents that relate to technologies specified in certain codec standards and are licensed by MPEG
LA LLC and Via Licensing Corporation, as well as patents that relate to CDMA technologies specified by the
standard-setting bodies within the telecommunications industry and are licensed by Qualcomm Incorporated and
NTT DOCOMO, INC. Sony considers its overall license position beneficial to its operations.
Competition
In each of its principal product lines and services, Sony encounters intense competition throughout the
world. Sony believes, however, that in the aggregate it competes successfully and has a major position in all of
the principal product lines and services in which it is engaged, although the strength of its position varies with
products and markets. Refer to “Risk Factors” in “Item 3. Key Information.”
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