Corporate Strategy Meeting

Sony Corporation
April 12, 2012

 Sony will change.

Sony Corporation

Kazuo Hirai, President & CEO

Entertainment

Electronics

Financial Services

Sony Corporation

Electronics Corporate Strategy

1. Current Issues 2. Key Initiatives to Transform Electronics Business 3. Management Structure to Execute Key Initiatives

Sony Corporation

Electronics Corporate Strategy

1. Current Issues 2. Key Initiatives to Transform Electronics Business 3. Management Structure to Execute Key Initiatives

Sony Corporation

Electronics: Issues to be Addressed

Business management speed Investment focus/selection based on long-term strategies Innovative products, services and technology TV business loss-making for 8 consecutive years

Sony Corporation

Sonys Strengths

Global reach and brand recognition Technology development in digital imaging, game etc. Content & business know-how in film, music & game

Sony DNA The will & drive to generate new value

Sony Corporation

Electronics Corporate Strategy

1. Current Issues 2. Key Initiatives to Transform Electronics Business 3. Management Structure to Execute Key Initiatives

Sony Corporation

Key Initiatives Strengthening core businesses

Digital Imaging / Game / Mobile

Turning around the television business Expanding business in emerging markets Creating new businesses & accelerating innovation Realigning the business portfolio and optimizing resources
Sony Corporation 8

Key Initiatives Strengthening core businesses

Digital Imaging / Game / Mobile

Turning around the television business Expanding business in emerging markets Creating new businesses & accelerating innovation Realigning the business portfolio and optimizing resources
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Electronics: Core Businesses

Concentrate investment & technology development in 3 focus areas
Digital Imaging / Game / Mobile
Within Electronics, 3 focus areas to generate 70% of Sales and 85% of operating income in FY14 (target)
Digital Imaging / Game / Mobile

Sales

Operating Income

% of Sales

60%
FY11

70%
FY14

% of Operating Income

85%
FY14
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Core Businesses: 1. Digital Imaging

Sales (bln yen) 1,600 Operating Income Sales Operating Income (bln yen) 400

Digital Imaging
- Consumer Products
(Digital still cameras / Digital video cameras / Interchangeable lens digital cameras, etc)

1,200

300

- Broadcast and Professional Products

(Professional-use cameras, etc.)
800 200

- Image Sensors
(Semiconductors)

400

100

FY14 Targets
Sales:

1.5 trillion yen double-digit

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FY11

FY14

FY11

FY14

Operating Income: Target operating income margin

Core Businesses: 1. Digital Imaging

Consumer-use
(Digital still cameras / Digital video cameras / Interchangeable lens digital cameras, etc)

Broadcast and Professional-use

(Professional-use cameras, etc.)

NEX-7 77

F65 Signal processing technology

Sony-only technology

Image sensors Lens

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Core Businesses: 2. Game

Operating Income (bln yen) 300

Sales (bln yen) 1,200

Game
- Hardware - Software

Sales Operating Income

1,000

250

800

200

- PlayStationNetwork etc.

600

150

400

100

FY14 Targets
Sales:

200

50

1 trillion yen 8% operating income margin

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Operating Income :
0 0

FY11

FY14

FY11

FY14

Target

Core Businesses: 2. Game

PS3/PS Vita and peripheral businesses generating steady profit

Strengthen & expand network services business

PlayStationNetwork: PlayStationPlus: PlayStationSuite: Grow full-title game downloads Enhance subscription service Increase casual game content & compatible devices

Sony Corporation

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Core Businesses: 3. Mobile

Operating Income (bln yen) Sales 1,600 Operating Income (loss) 200

Sales (bln yen)

Mobile
Smartphone / Tablet / PC, etc.
150

1,200

FY14 Targets
800 100

Sales:
400 50

1.8 trillion yen

Operating Income: Significant improvement

FY11

FY14

FY11

FY14

FY11 Sales and operating income do not include Sony Mobile Communications However, the dotted lines show sales from Sony Ericsson Mobile Communications as an equity affiliate of Sony Corp. for Sony Corporation the purposes of comparison with FY14 .

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Core Businesses: 3. Mobile

Sony Convergence

Sony-only Technology

Digital Imaging & Game Technology & Know-How

Entertainment Assets

Sony Corporation

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Key Initiatives Strengthening core businesses

Digital Imaging / Game / Mobile

Turning around the television business Expanding business in emerging markets Creating new businesses & accelerating innovation Realigning the business portfolio and optimizing resources
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Turning around the television business

Target: Profitability in FY13

Solid execution of turnaround plan

1. Fixed business cost reductions 2. Operating cost reductions 3. Enhancing product competitiveness
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Turning around the television business: Solid execution of turnaround plan

Fixed business costs

1. Fixed business cost reduction target: 60%

Panel JV-related Other

(Reduction from FY11 levels by FY13)

- Allows for flexible panel procurement - Target 30% reduction excluding panel JV-related fixed business costs

FY11

FY13

Operating costs

2. Operating cost reduction target: 30%

(Reduction from FY11 levels by FY13)

- Model count reduction - Target 40% reduction vs. FY11 levels by FY12 - Operational improvement
(supply chain, one-time charges, disposal costs etc.) FY11 FY13
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Turning around television business: Enhancing product competitiveness

Differentiation through Sony-unique technologies

LCD TV Evolution
High resolution & high sound quality Addressing regional needs

Next-Gen Display
OLED

Sony Convergence
Mobile & Connectivity
Simplified connection & operation

Crystal LED Display

Outstanding resolution suited for large-sized screens

Enhanced network services

Sony Corporation

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Key Initiatives Strengthening core businesses

Digital Imaging / Game / Mobile

Turning around the television business Expanding business in emerging markets Creating new businesses & accelerating innovation Realigning the business portfolio and optimizing resources
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Expanding business in emerging markets

Further expansion in rapidly growing emerging markets

Emerging Market Sales Target

(Electronics All)

FY14 FY11

1.8 trn yen

2.6 trn yen

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Expanding business in emerging markets

Further expansion in rapidly growing emerging markets
FY09 FY11 FY14

Emerging Market Sales Composition Target

(AV / IT businesses)

40%
India
Consumer AV / IT No.1 share

50%
Mexico

60%
Consumer AV / IT No.1 share

Emerging Market Initiatives Strengthen supply chain & operations Products tailored to local needs Promote Group-wide assets
Joint promotions with Pictures & Music, etc. Notebook TV

Sony 30% Sony 60% Sony 15%

TV

Sony 30% Sony 35% Sony 15%

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Home Audio

Home Audio

Notebook

* FY11 revenue share

Growth in Emerging Markets

Deploy total Sony Group-wide operational strengths in emerging markets India:
Strong consumer product sales & operations
270 stores nationwide (Sony Centers, etc.) No. 1 consumer AV/IT share made possible through stable supply chain management

Leading the industry through high-quality content creation

Promoting HD/3D content production through the Media Technology Center in Mumbai

Brand enhancement through Entertainment

Sony Pictures Television operates multiple highlyviewed television channels, including one of the most watched general entertainment channels, and targets a leading industry position.
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Key Initiatives Strengthening core businesses

Digital Imaging / Game / Mobile

Turning around the television business Expanding business in emerging markets Creating new businesses & accelerating innovation Realigning the business portfolio and optimizing resources
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New Businesses: Medical

Medical peripherals:
FY14 sales target: 50 billion yen
Printer Camera Monitor Recorder

Current Businesses

Medical Equipment B2B Business

Grow medical equipment business (endoscopes, etc.)

By leveraging image sensor, lens, image processing and other Sony technologies

Life Sciences Businesses

Enter medical diagnostics business

- Acquired iCyt, maker of cellular analysis equipment
- Acquired Micronics, maker of medical and diagnostics equipment

Sony Corporation

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Accelerating Innovation: 4K

4K-related technology

LSI 8K-CMOS Image sensor 4K signal processing image compression High-speed optical transmission module 4K ultra high resolution processing LSI SXRD: worlds smallest 4K display device

CineAlta F65

Worlds first 4K home theater projector VPL-VW1000ES

Digital cinema projector SRX-R320

Expand lineup of professional-use and high-end consumer-use products

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Key Initiatives Strengthening core businesses

Digital Imaging / Game / Mobile

Turning around the television business Expanding business in emerging markets Creating new businesses & accelerating innovation Realigning the business portfolio and optimizing resources
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Realigning the business portfolio

Invest in core and new businesses through stringent selection and focus
Invest in core and new businesses Realignment in other business areas

Core Businesses
- Digital Imaging - Game - Mobile

Small & mid-sized LCDs

- Business spun off into JV

Chemical products businesses

- Business transfer negotiations

New Businesses
- Medical

E-vehicle batteries & energy storage

- Exploring alliances

Others
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Realigning the business portfolio and optimizing resources

1. Modify the business portfolio 2. Restructure headquarters, subsidiaries, sales groups etc.

Estimated headcount reductions of approx. 10,000 in FY12 Restructuring charges: 75 billion yen in FY12

Sony Corporation

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Electronics Corporate Strategy

1. Current Issues 2. Key Initiatives to Transform Electronics Business 3. Management Structure to Execute Key Initiatives

Sony Corporation

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One Sony

Sony Corporation

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One Management

Sony Corporation

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New Management Structure

CEO
CFO CSO

Entertainment

Electronics

Financial Services

Sony Corporation

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New Management Structure

CEO: K. Hirai
CFO : M. Kato CSO : T. Saito Technology: S. Nemoto Product Strategy: K. Suzuki

S. Nemoto

K. Suzuki

Direct to CEO

T. Suzuki

H. Yoshioka

Digital Imaging

Professional Solutions

VAIO & Mobile

Sony Mobile Communications

Sony Computer Entertainment

Home Entertainment & Sound

Sony Network Entertainment

Semiconductors Device Solutions

Medical

Headquarters Global Sales & Marketing Corporate R&D, System and Software Technology, Advanced Device Technology UX / Product Strategy / Creative Manufacturing, Logistics, Procurement and Quality
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New Management Structure

CEO
CFO CSO

From June 27

Entertainment

Financial Services
SFH President: K. Ihara

SCA CEO: M. Lynton

Electronics

Sony Bank

Sony Assurance

Sony Life

Sony Pictures Entertainment

Sony Music Entertainment

Sony/ATV Music Publishing

Sony Music Entertainment (Japan)

* SCA : Sony Corporation of America , SFH: Sony Financial Holdings

Sony Corporation

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Summary

Strengthening Core Businesses:

Digital Imaging Game Mobile Targets: Sales: 1.5 trillion yen / Operating income margin: Double-digits in FY14 Targets: Sales: 1 trillion yen / Operating income margin: 8% in FY14 Targets: Sales: 1.8 trillion yen / Operating income: Significant improvement in FY14

Turning around the television business:

Profitability in FY13, Solid Execution of Turnaround Plan

Expanding business in emerging markets: Emerging Markets sales target: 2.6 trillion yen in FY14 Creating new businesses and accelerating innovation: Medical business, 4K, etc.

Creating new businesses and accelerating innovation Management Structure: One Sony / One Management

Sony Corporation

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FY14 Targets Sony Group

Sales: 8.5 trillion yen Operating income margin: >5% ROE: 10%
Electronics

Sales: 6 trillion yen Operating income margin: 5%

Sony Corporation

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Statements made in this presentation with respect to Sonys current plans, estimates, strategies and beliefs and other statements that are not historical facts are forward-looking statements about the future performance of Sony. Forward-looking statements include, but are not limited to, those statements using words such as believe, expect, plans, strategy, prospects, forecast, estimate, project, anticipate, aim, intend, seek, may, might, could or should, and words of similar meaning in connection with a discussion of future operations, financial performance, events or conditions. From time to time, oral or written forward-looking statements may also be included in other materials released to the public. These statements are based on managements assumptions, judgments and beliefs in light of the information currently available to it. Sony cautions you that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in the forward-looking statements, and therefore you should not place undue reliance on them. You also should not rely on any obligation of Sony to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Sony disclaims any such obligation. Risks and uncertainties that might affect Sony include, but are not limited to (i) the global economic environment in which Sony operates and the economic conditions in Sonys markets, particularly levels of consumer spending; (ii) foreign exchange rates, particularly between the yen and the U.S. dollar, the euro and other currencies in which Sony makes significant sales and incurs production costs, or in which Sonys assets and liabilities are denominated; (iii) Sonys ability to continue to design and develop and win acceptance of, as well as achieve sufficient cost reductions for, its products and services, including LCD televisions and game platforms, which are offered in highly competitive markets characterized by continual new product and service introductions, rapid development in technology and subjective and changing consumer preferences; (iv) Sonys ability and timing to recoup large-scale investments required for technology development and production capacity; (v) Sonys ability to implement successful business restructuring and transformation efforts under changing market conditions; (vi) Sonys ability to implement successful hardware, software, and content integration strategies for all segments excluding the Financial Services segment, and to develop and implement successful sales and distribution strategies in light of the Internet and other technological developments; (vii) Sonys continued ability to devote sufficient resources to research and development and, with respect to capital expenditures, to prioritize investments correctly (particularly in the electronics business); (viii) Sonys ability to maintain product quality; (ix) the effectiveness of Sonys strategies and their execution, including but not limited to the success of Sonys acquisitions, joint ventures and other strategic investments (in particular the recent acquisition of Sony Ericsson Mobile Communications AB); (x) Sonys ability to forecast demands, manage timely procurement and control inventories; (xi) the outcome of pending legal and/or regulatory proceedings; (xii) shifts in customer demand for financial services such as life insurance and Sonys ability to conduct successful asset liability management in the Financial Services segment; (xiii) the impact of unfavorable conditions or developments (including market fluctuations or volatility) in the Japanese equity markets on the revenue and operating income of the Financial Services segment; and (xiv) risks related to catastrophic disasters or similar events, including the Great East Japan Earthquake and its aftermath as well as the October 2011 floods in Thailand. Risks and uncertainties also include the impact of any future events with material adverse impact. Sony is currently modifying its business segment classification to reflect its reorganization as of April 1, 2012. Sony expects to report its operating results in line with new business segments from the first quarter of the fiscal year ending March 31, 2013.