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Sony invests US$8.5b in R&D
( 2003-09-03 09:37) (eastday.com.cn)

Shigeru Enomoto, an engineer at Sony Computer Entertainment Inc, sweeps his arm across a flat screen and 20 small balls of light collect into the image of a pocket at the display's perimeter. The technology, called "SmartSkin," works by using movement sensors.

"We'll be able to create a new type of amusement machine," says Enomoto, a member of the Sony Computer Science Laboratory Inc team in Tokyo developing SmartSkin. "The trick is to hide such gimmicks from a user's eyes."

Two decades ago, Sony Corp's signature Walkman gave it a head start in a home-electronics market that now accounts for 70 per cent of its sales. Today, after a 98 percent decline in net income in the second quarter, the world's No 2 consumer-electronics maker is investing 1 trillion yen (US$8.5 billion) over three years in research and development labs.

New gadgets, Sony reasons, will distinguish it from Chinese and South Korean manufacturers, whose lower costs are forcing Sony and others to cut retail prices even as operating profit margins shrink worldwide. A Sony DVD player, which sold for 18,200 yen upon release in mid-May, now costs as little as 15,180 yen. A DVD made by China's Guangdong Nintaus Electronics Co retails for just 10,000 yen.

Declines in prices of old-fashioned analog products - in particular audio equipment, as well as televisions and personal computers - are mostly to blame for thinning margins, Takao Yuhara, Sony's chief financial officer, says.

The release of new products, if successful, gives the company control over pricing until rivals catch up.

The risks include the fact that investors and analysts don't count embryo technologies when calcula-ting corporate value. No one knows what kind of technology will be applied to which products, or when.

Most of the cut-price competition comes from China. Sichuan Changhong Electric Co, for instance, has tripled production to 17 million televisions since 2001 to become the world's biggest TV maker.

Chinese manufacturers exported home appliances worth US$860 million to the United States in the first three months of the year, up 37 percent from 2002, statistics from the China Household Electrical Appliances Association show.

Retail sales of consumer electronics in the United States this year declined 3.1 percent in value to June 30, according to NPD Group Inc, a US research house.

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