Sony exec sees Eee-like PCs as having potentially negative impact on industry
So at Sony's Open House we were having lunch with Mike Abary, Sony's US SVP of Information Technology Products Division, who oversees Vaio computers (among numerous other things). Of course, the inevitable question came up about the Eee PC's success thus far, and what that means to computer companies on the higher end of the spectrum, like Sony. Mike's response was a little surprising, but certainly sensible enough: if consumer expectations begins to weigh too heavily toward the $300 end of PCs, he believes that kind of consumer adoption would have a profoundly negative impact on the industry, referring to its effect as "a race to the bottom."
We know there are a lot of Eee fans in the house, but the man makes sense. Sony isn't trashing ultra-cheap machines so much as recognizing that it's hard to push things forward when your primary objective becomes making the very cheapest possible machine you can (and not very best). Innovation is hard enough to subsidize, but when your already thin margins flatten even further in trying to sell ultra-cheap machines, it's easy to see the economics working against tech companies. (Asus has less to worry about here because its primary business is making PCs for other companies.) Of course, the reality is that ultra-cheap machines probably won't soon envelop the lion's share of computer sales and threaten what most think of as "real" PCs, so we probably don't have to worry about the industry bottoming out because of the Eee. False advertising and abusive trialware, however, are different stories entirely.
We know there are a lot of Eee fans in the house, but the man makes sense. Sony isn't trashing ultra-cheap machines so much as recognizing that it's hard to push things forward when your primary objective becomes making the very cheapest possible machine you can (and not very best). Innovation is hard enough to subsidize, but when your already thin margins flatten even further in trying to sell ultra-cheap machines, it's easy to see the economics working against tech companies. (Asus has less to worry about here because its primary business is making PCs for other companies.) Of course, the reality is that ultra-cheap machines probably won't soon envelop the lion's share of computer sales and threaten what most think of as "real" PCs, so we probably don't have to worry about the industry bottoming out because of the Eee. False advertising and abusive trialware, however, are different stories entirely.
SO lets get a ultra portable with better specs and cheap from Sony.
Its now a race for smaller and better and cheaper
Ryan once again writes a communist manifesto.
Sony is whining, plain and simple. It's called competition. What good is innovation if no one can afford it.
you need to get out more if you the first thing you think of is cosine when someone says cos. thats like ... defensive
what gives, have i offended you?
Negative on sony cos they didnt make it ......
Speaking of negative, Mr. Abary has quite the defensive posture to match his fake smile there. Coincidence?
exactly
You drop the name plate off your viao and knock down a couple of hundreds, i will go buy it tomorrow.
Regarding "defensive posture": I hate it when people try to read body language like that. Mostly because I have a standoffish look all the time myself. People always ask me really odd confusing questions out of the blue like "what's wrong?" or "what gives, have I offended you?" and so on. No, I'm quite happy and I'm not upset or annoyed nor am I trying to express any negative feelings, I just like to hold my arms crossed. Is that a crime or something?
PS stop using "cos" because I always read it as cosine.
Lars, denial's not just a river in Egypt ;p
but hey... research is research
Kia makes cheap cars. Bentley doesn't. The people who are buying each know what they're getting. When I bought my Eee, I knew it was a "toy" and not a serious work machine... that's what my good Lenovo laptop is for... one with a usable keyboard and screen resolution bigger than a postage stamp. I don't think it's going to have much impact.
Yeah! It's the age-old concept of "you get what you pay for!"
If you pay for a cheap price, then it's really cheap!
If you pay for a Lamborghini, that's what you get!
Exactly. Take the excellent Thinkpad out for when you need it's power and the Eee-PC out for when you need only basic functionality. They make a great adjunct to a full laptop for some. This is GROWING the industry, not hindering it.
Totally agree. Cheap Eee PC like laptops will expand the market. It doesn't have to be a zero-sum game.
ST*U Sony. Not all peeps can afford expensive laptops.
There will always be a place for expensive, performance oriented hardware. That doesn't mean people should have to buy systems that are overly powerful for their needs. He says cheaper, slower and smaller like it is a bad thing. It's not, it's just different.
Despite you being ranked highly, I think I'm going to have to disagree with how you took him up. He means bad for quality and innovation, you seem to think he means bad for that certain consumer segment who buys the E or portables like it, I don't think he does. What he's saying is how can thinks innovate and push forward, and not just on the power front if all that tech companies are thinking about is how to undercut each other.
Since when is miniaturisation not innovative?
The Asus Eee, while it doesn't work for me, is an incredible feat: it's small _and_ cheap. With the Eee, not only is Asus making ultra portable PCs available to the masses; it's also raking in cash it can use to innovate elsewhere.
It's just convenient for Sony to bash Asus for a thing they can't do, or haven't done yet.
Bravo Asus, boo Sony.
Actually Brendan, it's just as likely that introducing Eee's and the like will open up a new market segment. It doesn't have to mean innovators won't be able to innovate. giuliop's got it right.
@Brendan Sheehan
you mean to say SONY is whining because people will overlook their line of small laptops and go straight for the EEE PC?
Maybe it's because SONY wants to trap you in their thought process, because when you slide the Bluetooth switch over, you also have to enable Bluetooth from your system tray, which magically has WiFi enabled by default.
Quit whining, make laptops that are technologically appealing as they are aesthetically, and people will buy, Apple doesn't seem to have a problem.
From the looks of it, ASUS doesn't seem to have a problem either, they pretty much own the spotlight with the EEE, which is now giving them the ability to show off their other portables.
Proof positive that, although saturation marketing works, word of mouth is still king.
the real question is what do people DO with that really expensive hardware? Is it worth the price. My wife was just looking at notebooks and to get desktop level (what I could build for $500) graphic performance was a $200 premium from these guys for just 1 chip extra, even worse for Apple with the damn Macbook Pros... they've already split the market into "low end" and "high" end... EeePC just lowers the low end more, because games are about the only thing you'd need 3d for and they want you to pay extra for that, if you can't play 3D computer games, what's the point in anything but the cheapest? Sony, Apple.... waiting... for innovation.
I tend to agree with the first responder. People won't look at this and say, 'well, I bought a low end pc, it won't run everything.' They'll say, 'I got a NEW pc, you need to make your software work on my stuff, come on, this stuff was top of the line 7 years ago!'
I wouldn't necessarily call Sony Viao's margins "razor thin."
Some might say the race to the bottom has been going on for some time, but the relative success of Apple's products as of late shows that not everyone is interested in that race.
The Eee is a toy, but it's cheap and has lots of hack potential. And when it breaks you can just go down to WalMart and buy another one...
apples rise could just as well be a case of ipod halo...
as in, you have a product "everyone" wants for whatever reason (fashion as much as anything imo), and then one use that to bring other products of yours to their attention.
it works for that "lovable" kitty cat that has her face on just about everything, no?
hell, i could have sworn that some companies that started out selling sports wear now can sell just about anything at a premium just because they slap their logo on it.
or how about a pair of jeans that spike in price because the right brand is on the back label?
This is what's happening in nearly every industry in America. People want cheaper furniture--so they buy pieces of crap and then say stupid things like "things aren't made to last nowadays." No, you're stupid--30 years ago the quality furniture people bought was just as good as what's out now IF THAT, but back then they simply had no other options.
Today people like options, including options to buy things cheap. This does promote a race to the bottom--but only to a degree. There will always be a demand for quality. It's those who are on the medium-high end of the spectrum that will suffer.
Actually, there was plenty of cheap POS furniture 30 years ago. People tend to think "all furniture was better back then" because only the good stuff tends to last.
so sony...u just won the format war and now ur talking about razor thin magins? TSFU
SONY is claiming someone is having a negative impact on the market? SONY? Really?!
This from the dumbfucks who brought us nothing but over-priced proprietary shit (why use Memory Pro sticks and not just switch the the standard SD? come on now) and bundles their CDs with rootkits and Blu-ray with BD+, the world's worst DRM. Seriously Sony, go blow yourself.
Let's not forget, their stupid Vaio trash PCs, that always stop working (except for their top ends models that cost $2000+), and have some of the worst service and warranty quality in the industry.
In other words: "OMG if people are going to be happy with $300 PCs how can we charge $2000 for them anymore?"
I know this is an exaggeration, but the market is the market. If someone is happy with their $300 PC and it does everything they need it to do who am I to quibble with that? It does their e-mail and websurfing which is what a lot of people need. If people want more they will buy more.
If anything what negative Nancy isn't thinking is that many people will start with an Eee-PC and more up towards a full laptop when their needs grow. It will expose a lot of people who don't have a laptop on the benefits of having a full laptop by giving them a taste. I would start my kids on an Eee-PC and then they can grow into a laptop.
This guy is holding the industry back with his loose talk.
People faced a similar choice years ago, and overwhelmingly chose the more expensive option. Years ago there was a distinction between "home computers" (like Commodore) that cost $300~$600 verses "business computers" (IBM PC-compatibles) that cost $2000~$3000. Like the EEE PC, "home computers" were capable of everything the average person needed (e.g. they had word processing software, spreadsheets, etc.), but people wanted to run the same software and hardware at home as they did at work, so they bought the larger, more expensive computers. I predict the same will happen again, people will skip the capable low-cost option in favor of the expensive Windows PC that they are familiar with.
I agree. Throwing the economics about innovation at this is completely ignorant of economics. The same exact argument can be made that these expensive laptops have been stifling innovations in cost reduction.
If people want cheap, companies will innovate for cheap. If people want fast and sleek, companies will innovate for fast a sleek. Economics shows us that demand will drive innovation, and we have a healthy demand for both types of portables.
Sony can jump into cheap, or they can stay with the lineup they have. That's their decision to make. But, they should remember that some cost-reducing innovation will eventually find itself in the high-end as well and throwing R&D; into both pools will allow them to stay ahead.
engadget; guess you deleted the first post on this: "Eee PC strikes fear in the heart of Sony?"
Anyway, my comment there was: Feb 27th 2008 3:06PM: "Race to the bottom" of my bung hole maybe.
It wasn't to my liking -- and I was there, so I decided to rewrite it.
Negative for the industry as a whole....or just negative for sony? Sony isn't there to look out for the industry...it's only looking out for themselves.
asus (and soon HP) is providing something in the market that others aren't fulfilling.
It has never been all about price, and it never will be. Look at overpriced hot sellers like iPods! :) (Flame away Apple fan boys)
Well, two responses. First, for those of us who want a really small and light weight machine and don't need multi-megapixel machines to carry around, the form factor is a huge improvement that Sony and others have ignored at their competitive disadvantage ... Apple made the same mistake with the Air ... it's too big for my mobile life-style machine. Second, Sony may resent the "race to the bottom" but that's the nature of this market segment. Let 'em complain but they're ceding a nice (growing) chunk of the market to the "bottom feeders".
That's just MBA-speak for: "Asus beat us to a market segment we totally missed."
More options are never a bad thing for the overall market/industry. Expensive laptops will always be made. The market just becomes more efficient for low-end consumers, cheaper computers means people get more utility for their dollar on the low end of the market; they don't have to buy a $800 laptop if they can satisfy their needs with a $400 one.
It also opens up another market for innovative/ballsy companies like ASUS to step ahead of giant elephants like Sony.
He's right. Eee-like PCs are a niche market; they aren't for everyone. However, I know there are people out there who see an inexpensive laptop and think "why aren't ALL laptops this cheap?" With that, the demand for a cheaper PC market increases, which leads to computer makers shifting their focus to what's being demanded.
Unfair pricing aside (*cough* Best Buy *cough*), I'd much rather pay the price of a solid computer that will last me a few years than a small "fee" for a computer that's soon to be outdated (or already is).
That said, there's nothing wrong with the Eee PC, it fits SOME consumers' needs.
Yeah, so you get want you want and the Eee-PC owners get what they want. How is this holding the industry back? People who buy the Eee-PC can buy from a place with a 30 day return policy and see if they like it.
Who is this guy to tell me or anyone else what I want.
Agreed, the Eee is certainly not for everyone. I personally couldn't use it as my main machine, while other people could without any problem......and that's the beauty of it.
For me it's an ultra portable machine I can take with me at little cost to what I'm already carrying. For other people, it could be used as their main machine if they only need something for Email and Web Browsing. For my Mom, she uses it as a day planner with Outlook and full version of Word/Excel (not the crap "Pocket" versions).
@ sir
I never said the Eee PC was holding the industry back. What I'm saying is that its low price tag could generate unrealistic cost demands by the average or below-average consumer.
Believe it or not, there are people out there that don't understand the components of a product's pricing. Cost of parts, manufacturing, labor, shipping, a little markup for profit, etc. Most people say "build me a computer and make it cheap." I'm saying that that's not possible all the time. It's really only possible in cases like the Eee PC, which is a good computer for a small part of the market.
I think people already have unreasonable cost demands, but if they want quality they'll have pull out their wallets. The existence of a $300 isn't going to make me ask for cheaper Thinkpads, since I get what I pay for and more. The average person will expect more for less, but they'll learn their lesson when they get what they pay for. In that sense I see what you mean. I have friends who bought cheap Compaqs, Toshibas and Vaios when I bought my X31. My x31 still works like the day I bought it, all of theirs no longer work. Guess what they bought to replace their machines.
@ sr
seems like we're on the same page then. very nice.
@Alex Padilla
The only thing that makes $300 an unreasonable price for a laptop is Windows Vista.
As for "the components of a product's pricing"... A nice ARM CPU, such as Texas Instrument's "DeVinci" which includes an MPEG-4 decoder and 3D graphics accelerator, costs under $10! And that $10 CPU is more powerful than most Sun and SGI workstations that were used for scientific, engineering, and computer graphics applications a decade ago. That $10 CPU should be plenty powerful enough to check your email, except that due to software bloat, WE NOW NEED MORE PROCESSING POWER TO CHECK EMAIL THAN THE PIXAR USED TO CREATE TOY STORY!
They felt the same way about the iPod I'm sure, and look at them now. Making accessories for the iPod. This from the company that invented the Walkman. How sad.
"Of course, the reality is that ultra-cheap machines probably won't soon envelop the lion's share of computer sales and threaten what most think of as "real" PCs, so we probably don't have to worry about the industry bottoming out because of the Eee."
The reality is Sony and others are shaking in their boots because they know they haven't got a chance in hell of competing with the Eee.
My Eee is certainly a "Real" PC. It may not have the same high specs as my Laptop or Desktop machine, however that doesn't make it any less REAL.
My first computer was a Tandy 386SX25 which had a 25mhz processor, 1MB of RAM, an 85MB hard drive, and 512kb of Video Memory. Seems my Eee is far more powerful that my Tandy......yet it's not considered a Real PC? With BS spouted off by idiots like this, it's no wonder people get fooled into believing they need a $2k machine.
Hey Mikey, the way you guard against this is to create INNOVATIVE products that well, people want. You know, the ones that people will actually buy. So come one now, you aint new, you know how it’s done (someone from cooperate JC needs to school Mikey). All cars don’t cost 50k!
To Ryan Block:
Guys, you had a great opportunity and how come you did not interview Mike Abary like you do other execs and post your interviews here? It'd be nice if you were to do that and see where VAIO brand is heading and what's new and exciting to expect....
Do you really think it costs Sony that much more to make a Sony TZ Series notebook that starts at $2200 than a FZ Series that starts at $900 other than a carbon fiber package?
uh yeah, for some reason research for miniaturizing stuff takes money, completely the other way with French fries, who would've known?