Sony sees the future of data subscription image sensors as a software subscription

Sony Corp.’s image sensor business aims to replicate PlayStation’s success in addressing the small number of manufacturers’ reliance on the whimsical smartphone market. We plan to sell the software on the spot with a subscription to the data analytics sensor.

Converting an optical conversion chip to a software platform is basically similar to a PlayStation Plus video game service, but it makes a big difference to the $10 billion business that has built its edge through hardware breakthroughs. Bring

This effort symbolizes Sony’s pursuit of recurring revenue after years of loss in the volatile consumer electronics sector. Success could be a joy to activist investor Daniel Robe’s call for a spin off, analysts said.

“We have a strong position in the market for image sensors that act as gateways for image data,” said Hideki Somemiya of Sony, who leads a new team developing sensor applications.

Analyzing such data with artificial intelligence (AI) “creates a market that is larger than the growth potential of the sensor market itself,” Somemeya responded in an interview, focusing on software-dependent data processing and hardware-only businesses.

Sony developed the world’s first image sensor equipped with an AI processor. Sensors can be installed, for example, on security cameras that identify factory workers who are not wearing helmets, or they can be mounted on vehicles to monitor driver drowsiness. Importantly, the software can be changed or replaced wirelessly without disturbing the camera.

The Japanese conglomerate wants customers to register for sensor software services through a monthly fee or license, similar to how gamers buy PlayStation consoles and pay for software or register for online services. is.

Sony hasn’t disclosed the start date of the service, but at a press conference last month, Someya said there was demand from “retailers, factories-mainly business-to-business”.

South Korea’s Samsung Electronics Co Ltd and China-owned OmniVision Technologies are also expanding image sensor software capabilities, but analysts say 52% market share gives Sony a competitive edge in emerging markets. I will.

Yet, according to Someya, a software-centric approach requires a shift in thinking for departments familiar with the specifications of smartphone makers. Only 5 of them make up most of the revenue.

The new direction is of great value if the minority investor, Robe-led minority investor U.S. hedge fund Third Point LLC, continues to drive Sony’s image sensor spin-off and is not masked by the company’s complexity. It could be.

Sony’s CEO Kenichiro Yoshida argued that having departments within the company would make it easier to access the Group’s resources, saying that diversity is a strength of the company.

“Yoshida’s message suggests that Sony will focus on profit growth from its diversified business,” said Junya Ayada, analyst at JPMorgan Securities.

Sony’s portfolio may be more complex, but it still had record-breaking profits for the second straight year until March 2019, Ayada said.

Technology that has diversified uses will benefit even in uncertain situations, says Atsushi Kobayauchi, a professor at Waseda Business School.

“The next important thing for sensors may be in autonomous driving technology, but it’s important to explore other applications,” said Osanai.

Still, some may find it difficult to take into account the potential of sensor software subscription services, as it could take years for such a business to drive Sony’s overall growth.

“The number of sensors used in factories and retail stores will probably be less than the sensors in the smartphone market of over 1 billion,” said Hideki Yasuda, an analyst at Ace Securities.

© Thomson Reuters 2020.

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