How can it be okay to sell only chips? Sony develops subscription services for semiconductor customers

Sony is developing subscription-based services for its semiconductor customers, according tomedia reports, a move that suggests the company is no longer content with selling chips but is looking to extract more revenue from its $10 billion chip business.

How can it be okay to sell only chips? Sony develops subscription services for semiconductor customers

Sony set up a new team last year to explore new business models for providing image sensors for a variety of products, including Apple’s iPhone and Hasselblad V camera. Sony is the global leader in the smartphone camera market, but it is vulnerable to the device upgrade cycle and relies too heavily on big brands such as Apple and Huawei.

Hideki Somemiya, Sony’s new program director, said the company was building a more comprehensive product, including software platforms that support and enhance the sensor capabilities.

Sony’s goal is to be a solution provider for companies that want to optimize their business using sensorand and analytics technology, providing them with not only hardware, but also software and fee-based support, similar to the way Amazon AWS or Microsoft Azure support source of enterprise online needs. In addition to traditional photographic sensors, the opportunities are particularly great in emerging areas such as autonomous driving, factory automation and retail planning, says Mr Somyer.

“Most of our sensor business today relies on the revenue of our five largest customers, who will buy our products as we develop the latest sensors,” he said. To be successful in the solution business, we need to move beyond this product-oriented approach. “

That means Sony needs to foster a service relationship, as it did for its PlayStation Plus consumer business. PlayStation Plus has more than 40 million paid subscribers. Hardware sales in the gaming division are in a slump due to high expectations for PlayStation 5, and a large user base could help the division stay stable. Somyer’s goal is to raise the company’s semiconductor division to a self-sufficient income level.

“We often receive inquiries from customers about how they use our products, such as polarization sensors, short-wave infrared sensors and dynamic vision sensors,” Somyer added. That’s why we provide them with hands-on support and custom tools. “

Sony last month unveiled a sensor chip with a built-in artificial intelligence (AI) engine, which Mr Somyer said would “liberate hundreds of millions of people around the world”. They are currently working around the world to identify defects on the production line. The same sensors can also be used to determine retail inventory and ensure that the products on the shelves meet the needs of customers. Sony’s after-sales support is critical for such applications, Somyer said.

Customer support is currently included in a one-time payment for Sony sensors. But Mr Somyesaid said Sony would offer the service in the future through a separate subscription. He added that Sony’s software tools will initially focus on supporting the company’s own sensors, and then the coverage may be expanded to retain customers, even if they decide to switch to non-Sony sensors.

“We should abandon the deep-rooted principle that everything should be decided by Sony,” Somyer said. We must have the flexibility to provide the best possible solution to the challenges faced by our customers. “

Sony will seek to establish new business partnerships and make acquisitions to expand its software engineering team and provide seamless support anywhere in the world. Mr Somyer said the sensor division’s service subscriptions were a long-term plan and should not be expected to be profitable any time soon, at least not on a significant scale any time soon.