Sony to exit CD, DVD, Blu-ray PC drive businesss, as wireless netbooks, tablets reign

IDG News Service - Sony will close its once-proud optical PC drive subsidiary by early next year, as part of its efforts to refocus on the connected world of smartphones, tablets and netbooks, a spokesman said Tuesday.

Subsidiary Sony Optiarc, which manufactures and markets Blu-ray and DVD drives for desktop and notebook computer makers, will cease operations by December and be formally dissolved by March of next year, said Sony spokesman Jin Tomihari. The company's 420 employees, about 300 of whom work in factories, will be reassigned to other areas or offered early retirement.

"Products without drives, like smartphones and tablets, are growing more popular. The optical drive business for PCs is shrinking," he said.

"It's also become the situation that almost anyone can manufacture optical drives."

Sony led the fight to make the Blu-ray format the successor to the ubiquitous DVD format for high-definition multimedia, eventually winning over the rival HD DVD format led by Toshiba. Sony's drives were initially among the most advanced on the market, such as in 2006 when it released its first rewriteable Blu-ray drive for existing PCs, which was priced at $750 in North America.

"Until now, Sony has led the industry with its DVD and Blu-ray technology. They could sell them at high prices, but now the price of DVD drives has fallen below US$50," said Gartner analyst Hiroyuki Shimizu.

The company has since refocused on its online music and movie platform, which it operates under the Sony Entertainment Network brand. Sony hopes to create an ecosystem that links up its myriad of devices and takes advantage of its music and movie holdings, including hit franchises like Spiderman and Men in Black, a rare asset for an electronics maker.

The Tokyo-based firm, which booked a record loss last year, is in the midst of a restructuring plan that will cut about 10,000 jobs through March, the end of its fiscal period. IT has increasingly embraced third-party manufacturing of key components in its products, including the panels used in its flat-screen TVs.

Sony Optiarc manufactures drives in factories in China and other parts of Asia, and maintains sales offices in Europe and the U.S. The company was originally founded in 2006 as a joint venture with NEC, but was bought out by Sony in 2008. About 75% of its workforce is outside of Japan.

Sony will continue to make optical drives used in products other than PCs, such as audio-visual products.

Analysts have largely supported Sony's efforts to jettison non-essential businesses as it refocuses on its core electronics and profitable technologies where it is the clear leader, like the sensors used in digital cameras. But some say the reduced scope will also mean less opportunities in the future.

"The question is, how will Sony find new businesses?" asked Gartner's Shimizu.