Sony president Kazuo Hirai is looking to position the company at the forefront of future developments in tech and ...
The president of Japanese technology and entertainment giant Sony has predicted the end of the smartphone as we know it within 10 years and said virtual reality is finally poised to make a serious impact in homes and industry.
Despite still being a prominent player in the smartphone market, with its recently launched Xperia XZ impressing many reviewers as a premium alternative to Apple or Samsung, Sony President Kazuo Hirai conceded it is no longer looking to win the handset game, and has its eye on what comes next instead.
In Australia this week to support the company's charitable Sony Foundation, Mr Hirai spoke to AFR Weekend in a wide-ranging interview befitting of the diverse empire under his stewardship.
Mr Hirai said that, while he expected his phone division to be commercially viable, its ongoing participation in the hotly contested, but slowing, market would continue regardless of its ability to take market share from Apple and Samsung.
Sony's push into virtual reality is beginning with the PlayStation VR, but promises to expand greatly.
"Unless we can communicate with each other telepathically, there's always going to be some sort of a device and a network that is going to allow people to communicate with each other," Mr Hirai said.
"A paradigm shift in how we communicate with each other occurs every 10 years or so, but if we don't remain currently in the business then we don't get to play or we don't get to create the next paradigm shift of communication, we basically throw a towel in and lose all the relationships with our retailers and carriers around the world.
"If we did that then whatever idea we may come up with, we're not going to be able to bring to market quickly enough."
Mr Hirai said Sony did not have a concrete idea about what the next step change in mobile communications would be, but said the company was experimenting with developments related to the internet of things, whereby multiple points around the home and office are connected. It has also already begun to release form factors, such as in-ear devices, which remove the need to check a handset.
Despite being well reviewed Sony's Xperia XZ is not expected to challenge the likes of Apple and Samsung for smartphone ...
He said it was likely that the smartphone form of today will not be the consumers' choice in 10 years and that alongside figuring out the next stage, Sony was more excited by evolutions elsewhere such as commercial-grade virtual reality.
VR has been promised for the best part of a decade and Mr Hirai is confident that Sony finds itself in an advantageous position compared to all rival companies as both entertainment and industrial uses become viable.
He said VR would become increasingly influential across the Sony group, which entails its movie and television production arms, as well as in TVs, gaming and business technology.
Citing a future example of Japan Airlines training staff to do hazardous tasks like cleaning the fuselage of planes virtually, he said the potential for business to business applications was ultimately bigger than entertainment. However, its huge base of Playstation 4 customers worldwide meant this was the logical place to start its push.
Sony's FES Watch is made out of one piece of ePaper and can change into 24 different designs.
"Currently content creation in VR is best done, not with live images, but with computer graphics because you can tweak the angle and do different kinds of things with it to make sure that it's a great VR experience," he said.
"Once we're able to establish VR as a great entertainment platform, first with game content, then the potential for other non-game content is obviously there. The fact that for ours, all you need is the PS4 and the PlayStation VR is a massive advantage for us, because we already have such a big install base."
Late last year research firm Telsyte released a study into the emerging Australian VR market, predicting that 115,000 VR headset units would be sold in the second half of 2016, with sales growing to over 500,000 units in 2017.
Sony's portable electronic scent dispenser, known as the Aromastic, which Mr Hirai described as the "Walkman of fragrances".
Its numbers back up Mr Hirai's assertion that Sony holds a distinct early advantage, saying that 46 per cent of these sales would be for gaming console-based VR systems. It also predicted that by 2020 3.3 million units will have been sold in Australia, with VR being present in 2.5 million households, or 22.3 per cent of the population.
"We have a lot of professional business groups that are involved trying to come up with professional cameras for VR content creation, and we also involve Sony Pictures and Sony Music from the content perspective," he said.
"So as a company it's important that VR is successful, not just because it helps the video game business but in fact the tide actually lifts all the Sony boats. We stand probably to benefit more than some of the other companies that are pursuing VR, because we are involved in so many different aspects that touch the VR experience and the content creation."
Aside from such high-profile areas, Mr Hirai also said increasing importance is being placed on smaller strategic bets in its internal ventures group, known as the Seed Acceleration Program (SAP). This division promotes and backs ideas that could one day become lucrative business lines, usually proposed by internal staff, but occasionally from external start-ups.
As part of the SAP initiatives, Sony created First Flight, an online platform for crowdfunding and e-commerce, which enables each SAP start-up project to connect directly with customers to ascertain the needs for their business proposals and improve their products.
Mr Hirai demonstrated two recent developments of the program, which are yet to make an appearance on retail shelves in Australia, but which he said would be available before long.
One was a portable electronic scent dispenser, known as the Aromastic, which Mr Hirai described as the "Walkman of fragrances" as it allows users to carry multiple fragrances around with them for use as the occasion arises. While the second was a flat watch known as the FES Watch, which is made out of one piece of ePaper and can change into 24 different designs.
Pushing the envelope
FES Watch U successfully ended its crowdfunding campaign on First Flight last October, and is being developed for delivery to its supporters ahead of a wider release.
"We have created a different model that's very unique, and it's not just confined to electronics, it's actually anything that we can think of," Mr Hirai said.
"The employees understand that we have a culture of pushing the envelope of challenging the status quo and that it's OK to be challengers and to come up with new ideas.
"I think that for a while we kind of lost that mojo, and when I became president I wanted to make sure that we talk about that, but at the same time reinforce it with actions from the top that show employees that it's OK to innovate and take calculated risks."
Mr Hirai said there was, as yet, no firm global release dates for its more experimental products, as he was keen to avoid the kind of supply issues the company has experienced in the past when popular products have gone on sale around the world.
While stock shortages in shops can prove to be good marketing in terms of creating a sense of heightened demand, Mr Hirai said he was not interested in playing those kinds of retail games.
"We want to expand as quickly as possible of course, but what we don't want to do is get into a situation like when I was running the PlayStation business, we would launch worldwide and then we can't service any market properly," he said.
"So I want to make sure that we satisfy the markets that we are already in and then move to the next."