Sony Banking on Virtual Reality, Artificial Intelligence to Juice Its Revenues
For Sony (SNE) - Get Report , this is a time of reckoning.
For years, this company was an exciting pioneer. Sony's 1957 TR-63 Radio was the device credited with launching the entirely new industry of consumer micro-electronics. The 1970s and '80s saw the advent of Walkman products. Then came the Trinitron TV.
However, that kind of game-changing success has lately eluded Sony. To be sure, Sony stock has risen 19% this year. It closed Thursday trading at $29.34 a share, exactly as it had started. The company's sensor business has slowed, partly due to tapering demand for smartphones. In recent years, the company's has relied heavily on PlayStation console sales.
Sony's recent bets on virtual reality (VR), robots, and artificial intelligence (AI) could give the company a needed jolt, making it an innovative leader again and padding investors' pockets.
Sony is planning to rely more heavily on gaming, including VR. Virtual reality is not an open field, with the likes of the mighty Facebook eyeing this emerging opportunity.
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When Sony launches its PlayStation VR headset for the PS4 in October, the combined system is poised to deliver the cheapest, high-end VR experience at $850. PlayStation VR is less expensive than Facebook's Rift, which can cost as much as $1,600, including a PC to work it.
Microsoft also has plans to unveil a smaller/cheaper Xbox One and launch a 4K and VR-capable model next year.
To boost its VR appeal, Sony will bolster the PS4 with a new hardware update to give 4K support ammo for PlayStation VR games.
The company's gaming business needs to do well if Sony wants to relive its glory days. Hardware sales, driven by the gaming unit, will add money to the company's bottom-line, as well as profits for investors.
From that perspective, Sony has priced its VR bet just right. High price tags for first-generation VR headsets can potentially throttle the $150-billion market's growth.
If the final product is as good as Sony indicates, this snazzy combination of software and hardware will help it maintain leadership in the current gaming console market and prep it for securing a possible tent-pole position in the VR technologies space.
Robots and AI are also an exciting space for Sony. Sony intends to get into the business of making companion robots, which can connect emotionally to humans. With this in mind, Sony plans to leverage its stake in Cogitai, a startup specializing in artificial intelligence. It's clear that Sony also expects to expand into other branches of robotics and AI, including manufacturing and logistics.
With a little bit of luck and a lot of hard work, Sony can finally add juice to its flattish top line and sustain profits, which have been volatile for too long.
While Sony has rejiggered its TV set, laptop computer and mobile phone operations, regaining its technological competitiveness through AI is vital.
By the end of 2017, if Sony releases a product or service with Cogitai along with its VR set, the 70-year-old company should begin a profit-packed, new chapter.
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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.