The Stock of the 21st Century

About SonyAbout Sony

� Sony Corporation of America, based in New York City, is a subsidiary of Sony

Corporation headquartered in Tokyo. Sony Corporation is a leading manufacturer of

audio, video, communications and information technology products for the consumer

and professional markets. Its music, motion pictures, television production, computer

entertainment operations and online businesses make Sony one of the most

comprehensive entertainment companies in the world. comprehensive entertainment companies in the world.

� Annual Sales / Sony Corporation consolidated: $56.6 billion, $18.0 billion in the U.S.

o Workforce: 177,000 employees worldwide

Why Buy Sony?Why Buy Sony?

1. The Electronic Age

2. Brand Name

3. Playstation 23. Playstation 2

4. Solid Leadership

1. The Electronic Age1. The Electronic Age

� Entertainment is becoming more and more technology-centered – today’s kids play computer games, not board games, adults will begin to watch DVD’s rather than go to a play or theaterwatch DVD’s rather than go to a play or theater

� Sony is the complete electronic company – they co-developed the CD and DVD; they invented a wide range of audio-visual products such as the Walkman, 3.5 inch floppy disks, the MiniDisc system, Aibo the robotic dog (sold 3,000 in 20 minutes) and much more

Sony Has Everything CoveredSony Has Everything Covered

Sony VaioSony Vaio

� The PCV-L630 VAIO Slimtop LCD Computer delivers a unique non-conventional design combined with a high combined with a high quality digital LCD display, slim-design CPU case, DVD-ROM drive and i.LINK® interface that define a new generation of Internet and digital video ready computers ( thanks to

www.sony.com)

2. Brand Name Recognition2. Brand Name Recognition

� Teens consider Sony the third coolest global

brand (behind Nike and Tommy Hilfiger)

� Sony is known for quality and � Sony is known for quality and

innovativeness

3. Playstation 23. Playstation 2

Presenting . . . . . .

PS1 PS1 –– Not a Bad StartNot a Bad Start

� 1 out of 4 U.S. Households own one

� 70 million sold

� 40% of Sony’s 1998 profits� 40% of Sony’s 1998 profits

PS2: The complete PS2: The complete

entertainment systementertainment system� Runs PS1 titles also, but the new PS2 games make the old

ones look like Pong (you can see teardrops, double-helix smoke trails from missiles, individual splatters of blood, etc.) – there will be a ton of PS2 games launched this fall -Electronic Arts is making 10, including Madden NFL 2001

� Can play CD’s and DVD’s right out of the box

� In 2001, Sony adds Net connectivity and the ability to store and replay digital music and video from the web

� Emotion Engine – fast, high-powered chip that puts out 20 million polygons a second (polygons are the building blocks of 3D graphics), compared to PS1’s 360,000 polygons/second

Videogames: the right industryVideogames: the right industry

� $7 Billion-Dollar Industry in U.S. alone

� Videogame revenue in 2000 is expected to

surpass movie theater ticket salessurpass movie theater ticket sales

PS2 PS2 –– Will it be popular?Will it be popular?

� 1 million sold in Japan in one weekend

� 100 million to be produced

� Tecmo's Tomonobu Itagaki: "I can create a more � Tecmo's Tomonobu Itagaki: "I can create a more

emotional world with more details and more

realistic facial expressions. The physics will be

more accurate. I'll be able to do smoke, fire and

water. With current technology, the thickness of

the fog is even throughout. With PlayStation 2,

one part can be thin and another thick."

PS2 CompetitorsPS2 Competitors

� Sega Dreamcast – sold 4 million units in

1999 (weak)

� Nintendo Dolphin – too little, too late � Nintendo Dolphin – too little, too late

� Microsoft X-Box – Microsoft is popular

with corporations, not teens; too expensive

– the chip alone for X-Box costs $425,

compared to $360 for the whole PS2

4. Solid Leadership4. Solid Leadership

� President: Nobuyuki Idei

� His brash style represents a break from the

firm autocracy that traditionally defined

Sony (he drives a Porsche 911)

� Is trying to make Sony more digital, less

industrial

� Goal: connect all Sony products to the Web

Possible ProblemsPossible Problems

� X-Box is more popular than expected

� Not enough good video game makers sign

on – PS2 games are very expensive and on – PS2 games are very expensive and

difficult to create (the video game makers

will adapt: recently, Electronic Arts bought

Dreamworks Interactive in order to boost its

own PS2 game development)

Babbages Best BuyBabbages Best Buy

What have you heard

about PS2?

It’s supposed to be

Sony’s biggest product

ever, by 2004 85% of US

households will have

one, Sony’s profits from

it will exceed their movie

profits

It’s a complete living

room entertainment

system, can stand either

horizontally or vertically

Do you think the X-Box X-Box is only real threat, Dreamcast didn’t sell Do you think the X-Box

or Dolphin or Dreamcast

will be better or more

popular?

X-Box is only real threat,

but it is slightly different

because it runs PC

games; Nintendo is

messing up with

distributors like it did

with N64, will probably

be a bust like N64, which

only had 5 or 6 good

games

Dreamcast didn’t sell

well because people were

saving their money for

PS2; die-hard Nintendo

fans will buy Dolphin;

X-Box is only serious

threat but PS2 should be

the best

Babbages Best BuyBabbages Best Buy

Will PS2 have good

games?

Yes, they will continue

to use 3rd-party

developing, which they

started; Capcom,

Konami, Diablo,

Civilization

Yes, awesome games,

especially fighting

games; plus the

hundreds of PS1 games

Will PS2 be more Definitely YesWill PS2 be more

popular than PS1?

Definitely Yes

How many PS2’s are

you ordering?

Don’t know, but demand

will definitely exceed

supply for a while

Comes out in late

summer; will be very

popular, lots of

rainchecks will be

issued

FinancialsFinancials