Individuals grow stronger

Q: If Sony is in the application layer, doesn't the current situation present an opportunity?

A: In the network age, individuals accumulate strength very rapidly. Companies in the application layer are affected more and more as individuals grow stronger. To look at it from a different angle, we are in a very interesting position. In its process of proliferation, the network made hardware lower and lower in price. But today, capabilities of the network are starting to concentrate on terminals. The fact that terminals are growing stronger means that individuals are growing stronger. And as individuals grow stronger, not only the companies but also the individuals could be attacked on the network. In other words, individuals are growing stronger but so is their anxiety. Sony has faced various different entities in its history. When we were the champion of transistor radio, we faced the transistor. In the age of personal computers at their peak, we faced Microsoft. Now that we are in the network age, we will be facing the individuals. We have to think about how to face the individuals. Sony is a company that makes things that move people by using electronics and entertainment. If, for example, Sony was to work with Toyota, we have to be sure about what our strength is, because we could otherwise be swallowed by our partner. Sony's identity is becoming increasingly important.

It's a tragedy not to have intellectual property

Q: While you say that Sony is an application layer company, it seems that Sony is also intensifying its semiconductor business?

A: There are several reasons. The ways of a manufacturing business in the application layer are beginning to change from an industry based on components assembly to an industry based on high density processing such as microprocessor or systems LSI. If we continue to lag with the old business model of merely assembling components, we will start losing competition. We have to transform ourselves into a manufacturer based on semiconductors. I say so because there is know-how in LSI. Creating the know-how has a meaning. The production layer could be horizontal but the intelligence layer has to be vertical. If that portion is horizontal, that's the same as the PC industry and all profits will go to Microsoft and Intel. It is quite a tragedy to manufacture something without intellectual property. In the network age, combination of intellectual property and semiconductor will generate profit. Sony considers semiconductor as a technology that strengthens the final product. We want people who open our product to think that the looks could be imitated but not the inside. As our product base expands, and as networking spreads, such differentiation becomes important.

Q: So you are going to be engaged in the semiconductor business to support applications and not to become TSMC of Taiwan?

A: Definitely not. We have to have a variety of application engines. Take golf as an example. It's such a simple game but you use 14 engines (golf clubs). You need engines that meat the purpose. To date, Intel's microprocessor may have been enough. But once an application becomes information equipment, more diversified solutions will be needed. In order for the Japanese electronics industry to revive, semiconductors have to be stronger. Semiconductors have to be strong and the application layer has to be strong.