Sony's (SNE) CEO Howard Stringer is running out of time and options to turn his company around. The PS3 franchise has faced strong competition from the Nintendo Wii and Microsoft (MSFT) Xbox 360. Sony's TV screen and digital camera businesses have been hurt by price competition that has driven down margins. And it's also facing a problem it can't solve by better management or better products: A weak dollars is eroding its chance to return to profitability.
So, Stinger has come up with yet another plan to reinvent his company. He is setting up a service to move his movie and music content to his game consoles and portable electronics devices like the Walkman.
The News York Times says that in a meeting with reporters, Stringer said the new Sony Online Services "would give a lift to the company's products across the board. The service builds on Sony's PlayStation Network, which lets users download games, TV shows and movies onto their PlayStation game consoles, the company's most successful platform so far, with 33 million registered users and expected revenue of $500 million this year."
Sony Online Services, however, isn't a surefire bet, for two reasons. The first is that while 33 million users is a large pool of potential consumers, there's no guarantee that even a fraction of them will want to use Sony Online Services. It might have a greater chance for success if its major target were PCs, which have much wider distribution than the PS3. Sony might benefit from promoting its proprietary service through the world's largest PC manufacturers the way browsers are marketed.
Sony also faces the problem that it doesn't have access to content from other major studios and music publishers. That greatly limits what it can offer customers and makes the content service incomplete.
Other than these important drawbacks, the service should do just fine.
Douglas A. McIntyre is an editor at 24/7 Wall St.