Sony Opens First Major E-Commerce Site

TOKYO (02/01/2000) - Sony Corp. today said it has formed a new subsidiary to market the company's consumer electronics products online.

Called Sony Style.com Japan Inc., the new company is Sony's biggest push yet into the electronic-commerce arena in Japan.

The company will focus on Sony's products for the digital network market, Sony said in a statement. These currently include its personal computers, digital audio players, camcorders and other products which can be networked together.

The Sony Style.com Web site is divided into four "style" zones, each pushing the company's products. These zones include VAIO, music, visual network and home network style.

Sony Style.com Japan is a joint venture between Sony Corp. and Sony Marketing Japan Inc., each of which own a 50 percent share in the company.

Sony, like many retailers in Japan, has been cautious about going to the Web to sell its products directly to consumers.

"Those vendors that hit the consumer space have to be careful about stomping on their distributor's toes," said Kevin Williams, an e-business market analyst at market research firm International Data Corp. Japan.

The relationship between Japanese companies and their sales affiliates is generally very close. Both Sony and Matsushita Electric Industrial Co. Ltd., which is better known by its Panasonic brand name, have vast affiliate networks of mom-and-pop operated shops that often sell nothing but products from the company.

The fact that Sony is making the first big moves in the sector shouldn't come as no surprise, Williams said. "Sony has also been a renegade company in respect to trying different distribution channels."

Even with the new service, Sony is not cutting its consumer electronics distributors completely out of the loop. Sony is throwing them a bone in the shape of "bit-Select." This area of the Web site will allow Sony stores to promote themselves online but, like much of the site, the precise details of the service are not yet clear.

"Rather than seeing it as a problem for the distributors, we see it as an opportunity for distributors so they can link to the site and open their own e-sites," said Sony spokesman Gerald Cavanagh.

The company is also making moves in another direction -- that of content distribution. Change in the way music is distributed is central to Sony's view of a future networked society through which customers access music, and eventually video, through networkable consumer electronics devices.

The company is already operating an online music download service for users of its portable digital audio players and studying new services through which it will offer music via the Internet and cellular telephone networks. Its new PlayStation2 console, due to be launched in Japan in little over one month, will also feature the ability to be connected to a broadband network through which the company could offer audio or video services.

IDC's Williams sees more to the move.

"It appears they are trying to go for the home office/small office market and they are going though the back door," he said. Sony doesn't have the ability to compete head-on with the likes of Dell Computer Corp., IBM Corp. Fujitsu in the corporate computer market because it doesn't have the infrastructure in place, Williams said, but once an online channel is developed, the company will be able to use that.

"Once the infrastructure is up, they can handle larger entities," said Williams. "There's more profit in the middle to large business space but they can't take it overnight because of too many strong players."

The launch of the new service comes less than a day after the National Association of Recording Merchandisers (NARM), a group representing music retailers in the U.S., announced plans to sue Sony Music Entertainment Inc. and Sony Corporation of America because its members are unhappy about having to sell CDs that include multimedia and links that direct consumers towards Sony's own sites.

Sony Style.com can be reached at http://www.jp.sonystyle.com/. Sony Corp., in Tokyo, can be found online at http://www.sony.co.jp/.