Is Sony Coming Back?

It’s been a long time since we took a serious look at (or even thought much about) Sony stock. (NYSE: SNE – $26.51)  We know they have  bit of a history as a “value trap” but there is certainly some potential for valuation improvement and higher stock prices if the company can start doing some things right and maybe even innovate again.  A few recent things have coalesced in our mind after walking through a fairly large retail computer store here in Paris an hour ago.

1. They have recognized and seem to be ready to embrace a consumer revolution in 3D computing that will demand new displays and media centers.  Sony hasn’t been a technology leader in consumer entertainment for some time but they may have a chance to at least catch up a bit if they apply themselves to the right areas. We think 3D is one such area and the new CEO of Sony has recently gone on record as saying they were committed to mainstream consumer 3D displays by the end of 2010.
2. Moving away from “crapware.”    Recently Sony did a deal with Google to pre-load their Chrome browser on their Vaio laptop line.  We don’t yet know what the resulting software footprint will look on the Vaio post Windows 7 but in the past Sony laptops were so full of “free extras” that the machines could barely be used and hours would be spent removing and disabling all these extra “features.”   Combined with a very high price relative to other brands, most people stopped even considering a Sony Vaio a few years ago.

During a quick survey of laptops on offer at the FNAC La Defense we were surprised how well positioned the new Sony Vaio line was relative to the myriad competitive offerings on display.  In fact within the standard laptop lineup there were no competitive offerings that were close.  Most vendors, including HP, are using the same ugly and uninspired design one would find three or four years ago.  (No wonder Apple keeps gaining share in laptops.)   The Sony Vaio line however had the design, keyboards, size ranges and quality features at the same or very close to the pricing of the generic, pretty mediocre competition.

We watched about a dozen serious shoppers survey the offerings and the four different Vaio offerings were the ones that all but one settled on.   Of course this is wildly and purely anecotal and doesn’t include many offerings from Lenovo or Dell bacause FNAC doesn’t sell them.  However this is about starting to think differently about Sony rather than a market analysis.

On the netbook side we didn’t see a Sony offering there.  FWIW the best quality devices in that category appeared to be the Samsung and the Toshiba by a good margin.  The other 10 or so devices looked traditional, identical and a little cheap.  (I’m typing this on an Eee PC which I love but am already ready to trade up.)

On the desktop side a new tier has appeared at the low end.  They feature the Nvidia ION platform and the Intel Atom processor at prices that start just above 200 Euros.  They bump into the next 300 Euro class of AMD-based machines and then things get more traditional with Intel-based desktop machines in the 500-999 Euro range. As one might expect there are few more boring places in the Informatique section than the desktop aisle.

I’ll be attending the Broadband World Forum for the rest of today and tomorrow but will be doing a bit more work on Sony as a potential recovery story.

We’re always thinking a little bit over here at Research 2.0…

[At the time of this writing Research 2.0 has no position in the shares of Sony.]