Sony to Sell 350 Million Internet-Capable Devices Next 2-3 Years, CFO says

Sony will “very broadly” deploy Google’s Android-based software, including Google TV, across a range of CE products to help drive the company’s annual global sales of Internet-capable devices to 350 million units in the next two to three years, Sony America Chief Financial Officer Robert Wiesenthal told us Tuesday at the UBS Global Media and Communications conference in New York. Sony’s global sales of Internet-capable devices will hit 50 million units during its fiscal year ending in March, Wiesenthal said. It had sold 41 million units through September, UBS analysts said.

Most Sony Internet-connected products sold this year will be non-Android PS3 consoles, but also will include Google TV-equipped 24-, 32-, 40- and 46-inch LCD TVs and a Blu-ray player, Wiesenthal said. Other products will use Sony’s Bravia Internet Video Link and both platforms have access to the company’s Qriocity video-on-demand service that provides HD and SD movies from a range of studios including Disney and Warner Bros. in addition to Sony Pictures.

In addition to video, Qriocity will add a music service “shortly” and Sony may make some movies available in between theatrical release and availability for video-on-demand, Wiesenthal said. Sony made the movie Hancock available for download to Bravia TVs in November 2008, shortly after its release in movie theaters. Despite a limited base of Internet-capable Bravia TVs, about 10 percent of those who purchased the sets downloaded the movie, Wiesenthal said.

The partnership with Google frees Sony from developing operating system software for its products, allowing the company to focus on selling services to consumers that buy its products, Wisenthal said. It also will likely speed Sony’s product cycle since creating operating system software has been a “difficult challenge” for the company in the past, Wiesenthal said.

"Android and open source systems are an important part of our future,” said Wiesenthal, noting that Sony Ericcson already deploys it in cellphones. “For the first time we will have the opportunity to generate revenue past the threshold of the retail store. We have a lot of people working on this and it’s going to add a lot of value to Sony. Android will be deployed very broadly” but it won’t be on devices where “it doesn’t make sense,” he said.

While initial sales of Sony Google TV products have been “pretty good,” Wiesenthal conceded the user interface “isn’t what it eventually will be.” He didn’t elaborate. But he said full development of a user interface and an Internet-connected platform is “going to take some time” and “these are early days."

UBS Conference Notebook

Hughes Communications’ $400 million Jupiter Ku-band broadband satellite will have capacity for 1.5-2 million HughesNet customers when it goes into service in mid-2012, Chief Financial Officer Grant Barber said. The Space Systems/Loral-built spot beam satellite, which will be located at 103 degrees west, will launch in early 2012 on Arianespace’s Ariane 5 vehicle. The new satellite will increase download speeds to as much as 25 Mbps from 1-5 Mbps, while the uplink jumps to more than 600 kbps from 200 kbps, company officials said. Hughes is targeting 21 million U.S. homes without access to DSL or cable broadband services, but only expects to get, along with rival ViaSat subscribers, subscribers in 4-5 million households, Barber said. HughesNet pricing is expected to continue to start at a $60 monthly fee, Barber said. Hughes currently charges about $300 for the hardware for the HughesNet service. But about 60 percent of new HughesNet subscribers finance the cost by paying a $100 activation fee and $10 a month, Barber said. Hughes completed the last leg of financing needed for Jupiter earlier this fall, securing a $115 million loan from BNP Paribas and Societe Generale guaranteed by the French export-credit agency Coface. Milestone payments on the loan began this quarter, Barber said. The loan carries a 5.13 percent fixed interest rate and is to be repaid over a 8.5-year period after the Jupiter launch in early 2012. The satellite has 100 Gbps of throughput, up from 10 Gbps with the current Spaceway-3 satellite, and will largely be used for the consumer service. Spaceway-3, which has capacity for 650,000 subscribers, will be maintained for several years as existing customers gradually move to the new satellite as new hardware is introduced, Barber said. Spaceway-3, which launched aboard Ariane 5 in 2007, is at 95 degrees west. Canadian wireless broadband provider Barret Xplore recently signed a 15-year $245 million agreement, securing capacity on Jupiter, Barber said. Hughes start recognizing revenue from the pact when the satellite starts operation, Barber said.