Sony’s image sensor business aims to replicate the PlayStation’s success in overcoming its reliance on a handful of manufacturers in the volatile smartphone market: it plans to sell software through in-situ subscriptions to data-analysis sensors. Converting light-converting chips into a platform for software – essentially similar to the PlayStation Plus video game service – amounts to a sea change for a $ 10 billion (approximately Rs. 75,580 crore) business, which has been dominated by hardware success.
This effort is in tandem with Sony’s efforts to regenerate revenue after years of losses in the volatile consumer electronics sector. Success, analysts say, could answer Daniel Loeb’s call for active investor to close the business.
“We have a strong position in the market for image sensors, which serves as a gateway to imaging data,” said Sony’s Hideki Somia, who heads a new team developing sensor applications.
This kind of data analysis with artificial intelligence (AI) will “create a market larger than the potential for sensor market growth in terms of value,” Somia said in an interview, pointing to a repetitive nature versus software-dependent data processing. Hardware only business.
Sony has developed the world’s first image sensor with integrated AI processor. The sensor can be installed on safety cameras where it can isolate factory workers from not wearing helmets, or mounted on vehicles to monitor driver drowsiness. Importantly, the software can be changed or replaced wirelessly without disturbing the camera.
The Japanese company expects customers to subscribe to its sensor software services for a monthly fee or license, such as gamers buying a PlayStation console and then paying for the software or subscribing to online services.
Sony has not released a launch date for the service, but at a news conference last month, Somiya said there was demand from “retailers, factories – mainly business to business.”
Change of mindset
South Korea’s Samsung Electronics and Chinese-owned Omnivision Technologies are also expanding the software capabilities of image sensors, but analysts say 52 percent market share gives Sony a competitive edge in emerging areas.
However, Somiya said a software-centric approach would require a change of mindset in a department accustomed to adhering to the specifications of smartphone makers – of which only five are responsible for the lion’s share of its revenue.
U.S. hedge fund Third Point LLC, a minority investor led by Loeb, has been pushing Sony to spin off the image censorship division, saying it could be worth more if not masked by the company’s complexity.
Sony chief executive Kenichiro Yoshida counters that keeping the division at home gives it easy access to group resources, and says diversity is the company’s strength.
Junia Ayada, an analyst at JPMorgan Securities, said: “CEO Yoshida’s message suggests that Sony will focus on increasing profits with its diversified business.”
Sony’s portfolio may be growing in complexity, but it still reported record profits for two consecutive years between March 2019, Ayada said.
Atsushi Osanai, a professor at the Waseda University Business School, says having technology with a variety of applications can be helpful even in times of uncertainty.
“The next big thing for sensors may be in self-driving technology, but it’s important to explore other applications,” Oceanai said.
Still, others say it is difficult to factor in the potential of censored software subscription services because it could take years for such businesses to become drivers of Sony’s overall growth.
“The number of sensors used in factories and retailers will probably be less than the one billion-unit smartphone market,” said Hideki Yasuda, an analyst at Ace Securities.
ম Thomson Reuters 2020
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