An Open Letter To Sir Howard Stringer

april 3, 2005

Dear Sir Howard Stringer, Sony has long since lost the battle of the MP3 players to Apple and their behemoth iPod. Sony will never regain that lead, and it should not try. Sony needs to look forward to the future and examine what they have that will provide more than the functionality of a plain MP3 player. As you step into command at Sony with your content background, let me make a suggestion for you: Promote the Playstation Portable, expand on its already built-in functionality, and make it a device that people will desire for years to come. On March 24, 2005, Sony released a million PSPs into the American market. By some estimates, 500,000 of these units have already sold through. Yes, most of the people buying the PSP are buying it for the game experience, but Sony has seemingly planned ahead with the PSP by adding music and video playback functionality. You have wet the PSP buying public's appetite for content to put on the PSP along with the games. As they say, strike while the iron is hot. Coming from a content background, you have the contacts with the industry to get things moving. With a single device and good execution, you will be able to not only take back the reigns of the digital music player from Apple, but also take away digital music downloads from Apple and Napster. But, on top of that, you can also encroach on the video territory that Yahoo! is aiming to enter. And if that is not enough, you have a good shot at taking away some business from online movie rental businesses like Netflix and Blockbuster. All with a single device and the correct timely execution. Here are my suggestions to you, Sir Howard Stringer. Update the Connect service and PSP to work together without the need of a PC. The biggest deterrent for people trying to use the Connect service is the need to use the horrible piece of software named Sonic Stage. Remove that barrier and things will get easier -- and people will come. Make the PSP a device that can connect directly to the Connect service and download content without the need of a PC. This will not work unless you give people an unlimited download subscription service like Napster’s. Why? Because if people have to live with a 512MB or 1GB MemoryStick Pro Duo storage card, they will not want to buy music and have it permanently eat up space on their card. Undercut Napster and start Connect Music Unlimited, an unlimited download subscription service that is accessed directly on the PSP using its WiFi radio. Let the user select songs they would like to download to their PSP for listening, as many as they want until they stop subscribing. Every month or so, have the PSP check in through its WiFi radio to a main server to see if the subscription is active. Do this for $9.99 a month to undercut Napster. Give away a 512MB MemoryStick Pro Duo memory card with every one year subscription. Make the deal irresistible to those who crave music content on their PSPs. That is only the tip of the iceberg though. There is no video content provider currently which can provide decent video for people on the go. Most services require a PC to sit in the middle. Yes, people can take a laptop with them to watch the rental movie, but that is not as convenient as having a small device like the PSP with them. Steve Jobs has already stated that he thinks the iPod is not going to have video playback functionality for the near future because he does not see any means for people to get video content legally. With Apple in the waiting and Sony with a device that can handle video, my suggestion on this front is to continue on the same line of thought as the Connect Music Unlimited service. Sony has enough video content from its movie studios to provide unlimited download subscriptions. On top of that, Sony also has good television content to offer also. With your contacts at CBS and in the television community, I do not think it would hard for you to convince other broadcast companies to start offering their content for download. The dream of distributing video via UMD is a dead dream, it will never take off because the prices are too high and the content value is too low when compared to DVDs. So, for $19.99 a month, offer Connect Video Unlimited as a service, which functions just like the Connect Music Unlimited, but focuses directly on video distribution. Give away a 512MB MemoryStick Pro Duo card free for all one year subscriptions and a 1GB MemoryStick Pro Duo card free for all two year subscriptions. On top of all of that, create a Connect Unlimited service for distribution of both music and video content for $24.99 a month (with a free 512MB MemoryStick Pro Duo card with one year subscription). The future is not in physical distribution of content -- via UMD, DVD, or BluRay -- the future distribution channel for content is via the Internet. The PSP represents one of the best opportunities for Sony to regain hold of the electronics sector that it has in the last decade. Sony has lost one battle to smaller, more nimble companies like Apple. It does not have to lose another battle as we step into the future of content distribution. The PSP (and PS3) will be the Trojan horse to bringing content to the masses -- but, only if Sony can strike while the public is still wanting for this content, and while the competitors are still at bay. Sony is at a crossroads right now, they can sit and be content with the PSP and its games -- which in itself is not a bad thing -- or Sony can strive to achieve even more. Sony can finally take its content division and electronics division and meld them into a single entity ready to take on the future. One road leads the company to more of the same, while the other road leads Sony to a bright future and recovery from its current downturn. If Sony plays its cards right, and I hope they do, then the PSP and PS3 will be the devices that opens the door to future electronic distribution means to the masses -- TVs with built-in networking that are ready to download content from the Connect service; home receivers with built-in networking that can do the same. The ideas are limitless if Sony can get into the minds, hearts, living-rooms and backpacks of the public. Here is your chance Sony, are you ready to take the chance or will you sit back and continue on as usual? I ask, how will you change Sony, Sir Howard Stringer? Sincerely, Steve Kong

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