Sony puts faith in Hong Kong

Kunitake Ando, the president and COO of Sony, is bullish that East Asia is becoming the global driver of economic growth.

During a speech in Hong Kong yesterday co-hosted by the Japan Society of Hong Kong and the Asia Society, Sony Corporation president and chief operating officer Kunitake Ando observed that European global dominance derived from its various states competing against each other. He sees a similar competition - laced with the appropriate cooperation - putting East Asia in the driver's seat of global economic power, based on its leading edge in broadband use. This would presumably make Sony the equivalent of a fifteenth-century Portuguese man'o'war rounding the Cape of Good Hope.

Ando was in town to celebrate two 40th anniversaries, both for Sony's Hong Kong office (its third international one) and for the Japan Society of Hong Kong. Over much of the company's history it was a maker of hardware, such as transistor radios or video cassette recorders. Just as the 1990s represented a 'lost decade' for Japan, so too was Sony struck by malaise.

But in 1995 it regained its footing with the elevation of Nobuyuki Idei to chief executive, which saw the company stop being just a hardware manufacturer and start taking advantage of digital and networking advances. Since then it has transformed itself into a global entertainment company, with strengths in audio/visual products, games, information technology, telecommunications and content.

Ando notes Sony competes with all kinds of companies, including the likes of Nokia, Nintendo, Microsoft, Samsung and Disney. "But we are the only company that is strong in all of these areas," he claims. That competition has only become more intense since the global economy soured last year.

What drives Sony is its goal of a 'ubiquitous value network', which is jargon for exploiting the vision of being able to connect to the internet anywhere, anytime. The practical result is the company is making all of its hardware products network-ready for the coming age of broadband. "We're not just waiting, but trying to make this big wave happen," Ando says.

He notes that in the early 1990s, the internet age was based on personal computers, but the broadband age involves all kinds of products, from TV sets to game consoles, from mobile phones to PDAs. Each year Sony alone sells over 100 million hardware products, not to mention over 20 million Playstations. Ando sees the day when all of these will have broadband connections to the internet.

"That creates an 'integrated business model', or an IBM - but I don't want you to confuse that with IBM, Big Blue," he said, drawing a laugh from the audience.

To reach this means focusing on Sony's three core businesses of electronics, games and content, which are supported by an array of internet applications and service companies, including the likes of Sony Life Insurance.

Ando sees this broadband age being led by East Asia. On a global level, broadband usage is growing rapidly, from 18 million users today to 25 million users by the end of 2003. Asia is at the forefront, with South Korea by far and away the most advanced, with 17% of its population enjoying broadband access. Hong Kong follows with 9%, then Taiwan with 5%, the United States with 4% and Singapore with 3%.

Ando foresees a collaboration between Japan and East Asia to create the world's economic growth engine. "We are far ahead of the US or Europe in broadband," he says. [It would have been interesting, of course, to see where Japan ranks in terms of broadband usage. It has always lagged other developed countries in terms of PCs, but leads the world in terms of mobile telephony.]

To that end, Ando sees Hong Kong playing a critical role. "Hong Kong can become one of the most exciting hubs of the broadband age, along with Japan and mainland China. We see so many advantages that Hong Kong has."

Among these are its advanced broadband infrastructure, its early adoption of new technologies, its use of the English language, its movie and music industries, its financial services role, its ability to be a business model for China and its fast-paced, entrepreneurial culture.

To many Hong Kongers, several of these ingredients seem to be in decline, but cosmopolitan outsiders such as Ando still get results here. Sony uses Hong Kong as a launch pad for a lot of its content, including films, internet service providers, electronics and entertainment content. The company is always searching for new ways to entertain and push broadband usage.

"We apply the Hong Kong model to Europe and the US for the broadband age," Ando says. He concluded with a pun: "In Hong Kong you always have to try to reach the Peak."

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