Sony Transformation 60

1. Nobuyuki Idei
Nobuyuki Idei
Chairman and Group CEO
Chairman and Group CEO

2. A transformation plan
to create new value and growth
as a leading consumer brand

3. Transformation 60
Transformation 60
Transformation 60
* Excluding financial services
1 Structural Reform for Higher Profitability
2 Enhance Value of Core Businesses
Reduce Fixed Costs
Implement “Convergence Strategies”
To Realize Consolidated Operating Profit Margin
of at least 10% by FY 2006*

4. Sales, Profitability and Headcount Trend （FY87 – FY02)
Sales, Profitability and Headcount Trend
Sales, Profitability and Headcount Trend （FY87 – FY02)
(Sales
bln-yen)
(Profit
bln-yen)
Sales
Op. Profit
Net Profit
Sales and Profit
161,100
189,700
71,000
Structural Reform
Phase 1
Headcount
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
FY87
FY88
FY89
FY90
FY91
FY92
FY93
FY94
FY95
FY96
FY97
FY98
FY99
FY00
FY01
FY02
0
300
600
900
1,200
1,500

5. Transformation 60
Transformation 60
Transformation 60
Reduction of Fixed Costs on a Consolidated Basis
330 billion yen
Approximately 4% Improvement in
Consolidated Operating Profit Margin
1. Structural Reform for Higher Profitability (FY 03～FY 06)

6. Transformation of Electronics Business Profit Structure
Transformation of Electronics Business Profit Structure
Transformation of Electronics Business Profit Structure
Variable cost
Operating Profit
(excl. restructuring)
4,940.5
Flat sales
scenario
4,940.5
2% 10%
(bln Yen)
Sales
FY02 FY06
-2 pt
Fixed cost
-300 bln
(-6pt)
Growth
Scenario
FY06+

7. Sony’s Core Businesses
Sony’s Core Businesses

8. Current Market Landscape
Current Market Landscape

9. Current Market Size
Current Market Size

10. “Convergence Strategies” in Electronics
“Convergence Strategies” in Electronics
1 Focus and Concentration of Engineering and Other Resources
on Home Electronics and Mobile Electronics
2 Convergence of Sony Electronics’ and Sony Computer
Entertainment’s Technologies
3 Convergence of Sony’s Mobile AV Technology with
Telecommunication Technology
4 Consolidation of Semiconductor Businesses
5 Key Device Strategy Including Display Devices

11. Mobile
Electronics
Home
Electronics

12. “Convergence Strategies” in Electronics
“Convergence Strategies” in Electronics
1 Focus and Concentration of Engineering and Other Resources
on Home Electronics and Mobile Electronics
2 Convergence of Sony Electronics’ and Sony Computer
Entertainment’s Technologies
3 Convergence of Sony’s Mobile AV Technology with
Telecommunication Technology
4 Consolidation of Semiconductor Businesses
5 Key Device Strategy Including Display Devices

13. “Convergence Strategies” in Entertainment
“Convergence Strategies” in Entertainment

14. ‹ Establish Financial Holding Company: Sony Life Insurance,
Sony Assurance and Sony Bank (planned for 2004)*
*subject to approval of the relevant financial authorities
‹ IPO planned for April 2006
“Convergence Strategies” in Financial Services
“Convergence Strategies” in Financial Services
To Procure Funds for Growth and
Realize the Value of the Business

15. Transformation 60
Transformation 60
“Beyond FY2006”
Creation of New Business Domain
1 Structural Reform for Higher Profitability
2 Enhance Value of Core Businesses
Reduce Fixed Costs
Implement “Convergence Strategies”

16. Kunitake
Kunitake Ando
Ando
President and
President and Group COO
Group COO

17. Structural Reform: Phase 2 (FY03-05)
Structural Reform: Phase 2 (FY03
Structural Reform: Phase 2 (FY03-
-05)
05)
Transform to a highly efficient operation
with high value-added
Reform structure for high profitability
Reduce fixed costs
drastically
(Improve breakeven point)
Improve variable costs
(Expand value-added)

18. May Corp. Strategy Meeting
Electronics
Electronics
Electronics Other
Other
Other Group Total
Group Total
Group Total
280
Fixed cost reduction
(FY06 vs FY02)
Restructuring costs
(FY03 - FY05)
20 300
170
⇒ Group & Elec: 3 pt increase in Operating Profits
（bln Yen）
300
Restructuring costs
(FY03 - FY05)
35 335
Fixed cost reduction
(FY06 vs FY02)
300 30 330
⇒ Group: 4 pt increase in Operating Profits
⇒ Elec: 6 pt increase in Operating Profits
Transformation60 Plan
Restructuring costs and fixed cost reduction targets
Restructuring costs and fixed cost reduction targets
Restructuring costs and fixed cost reduction targets
Structural Reform: Phase 2 (FY03-05)
Structural Reform: Phase 2 (FY03
Structural Reform: Phase 2 (FY03-
-05)
05)
Note: FY02 denotes Fiscal Year ending 3-31-03, FY06 ending 3-31-07, etc.

19. Structural Reform: Phase 2 (FY03-05)
Structural Reform: Phase 2 (FY03
Structural Reform: Phase 2 (FY03-
-05)
05)
Transform to a highly efficient operation
with high value-added
Transform to a highly efficient operation
Transform to a highly efficient operation
with high value
with high value-
-added
added
1. Focus resources on strategic businesses
2. Global EMCS: accelerate total realignment of
EMCS functions
3. Streamline sales, marketing and support
operations
4. Reduce costs of non-production procurement
5. Improve product cost competitiveness and
quality: design process, quality and production
material procurement

20. 1. Focus resources on strategic businesses
1. Focus resources on strategic businesses
1. Focus resources on strategic businesses
CRT TV
CRT Rear Projector
VHS
DVD Player
Set Top Box
Home Audio
Analog Personal Audio
Maturing Categories
Home
Flat TV (LCD & PDP)
SXRD Rear Projector
PSX・DVDRec
Home Server
IT&Mobile
VAIO・Clie
DSC・Camcorder
Network Audio
Cellular Phone
Device
Key Device, etc.
Strategic Categories
„ Focus resources on strategic growth categories to expand
business and increase value-added

21. 1. Focus resources on strategic businesses
1. Focus resources on strategic businesses
1. Focus resources on strategic businesses
„ Focus resources on strategic growth categories to expand
business and increase value-added
„ For maturing categories, enhance EMCS engineering
function and increase outsourcing to enhance efficiency
„ Increase Sony’s own value-added to improve profitability
FY06
FY02
Maturing categories
Shift
Strategic categories
Electronics business
sales breakdown
<50%
70%+

22. M
M’
CFC CFC
E
CFC
CFC
CFC Strengthen ties within E. Asia
E: Engineering
CFC: Customer Front Center
M: Manufacturing
2. Global EMCS: accelerate total realignment of functions
2. Global EMCS: accelerate total realignment of functions
2. Global EMCS: accelerate total realignment of functions
Knowledge-intensive approach to product creation
Knowledge-intensive approach to product creation
„ Realign global engineering, manufacturing, logistics and service
¾ Japan: position as leading-edge engineering center by strengthening
engineering & shifting to key device/semiconductors
¾ N. America, Europe: establish Customer Front Center by integrating
logistics, supply chain management and service functions
¾ China: position as cost effective manufacturing center capable of
meeting needs of growth markets
¾ SE Asia: CFC and complementary manufacturing base to China

23. Facilities Area (mil Sqft) CRT Production Lines
• Consolidation
• Outsourcing
• Licensing
„ Enhance efficiency through worldwide realignment and consolidation
¾ Number of manufacturing, logistics and service facilities:
approx. 200⇒30% reduction （by end FY05）
¾ Space at manufacturing, logistics and service centers：
approx. 366 mil sqft⇒30% reduction （by end FY05）
„ Management of CRT production lines
¾ Consolidation of worldwide CRT production lines:
17 lines （FY02）⇒5 lines （by end FY06）
¾ Close CRT production lines in Japan within FY03
14
3 5
Japan
Outside
Japan
3/03 3/06 3/03 3/06 FY02 FY06
-30%
approx. 200
-30%
approx. 366
Worldwide facilities
17
2. Global EMCS: accelerate total realignment of functions
2. Global EMCS: accelerate total realignment of functions
2. Global EMCS: accelerate total realignment of functions

24. „ Establish common platform for support functions across
companies and locations
„ Enhance effectiveness and Group collaboration through
integration of business locations
¾ US: integrate consumer marketing and support
functions of Sony Electronics <West Coast in FY04>
¾ Europe: integrate selected marketing functions of
Sony Europe <UK in FY04>
„ Increase productivity of sales, marketing and support
functions through business process reengineering and
use of IT
3. Streamline sales, marketing & support operations
3. Streamline sales, marketing & support operations
3. Streamline sales, marketing & support operations

25. 50,000
75,000
100,000
125,000
150,000
175,000
Group headcount
Group headcount
Group headcount
3/06
3/97 3/99 3/01 3/03
-20,000
(-13%)
3. Streamline sales, marketing & support operations
3. Streamline sales, marketing & support operations
3. Streamline sales, marketing & support operations
Reductions in
Japanese operations:
ca. 7,000
Support function
reductions:
ca. 11,000
Breakdown
-20,000
-20,000

26. Areas for reduction
Fixed cost reduction for non-production items
-12% (FY06 vs FY02)
Examples:
Design-related outsourcing costs
Personnel outsourcing costs
General purchase & leasing costs
Software purchasing costs
Facility maintenance & energy costs
Communication costs (Network costs)
Consulting costs (incl. IT)
4. Reduce costs of non-production procurement
4. Reduce costs of non
4. Reduce costs of non-
-production procurement
production procurement
„ Strengthen cross-company control of non-production
procurement
„ Concentrate procurement responsibilities on world-wide
basis

27. „ Enhance quality and efficiency of design process to
accelerate time-to-market
„ Reform customer service and product quality
„ Transform group-wide production material procurement
¾ Parts standardization:
840k ⇒ 100k parts by end FY05
¾ Supplier concentration:
4,700 ⇒ 1,000 vendors by end FY05
5. Improve product cost competitiveness and quality
5. Improve product cost competitiveness and quality
5. Improve product cost competitiveness and quality
Material cost reduction: -15% p.a.
Variable cost ratio improvement: -2pt (FY06 vs FY02)

28. Structural Reform Initiatives: Entertainment
Structural Reform Initiatives: Entertainment
Structural Reform Initiatives: Entertainment
Reforms in Music business
„ Distribution & manufacturing
„ Back office functions
„ US label operations
„ Regional Offices
Fixed cost reduction: -27 bln Yen (FY06 vs FY02)
Headcount reduction: -1,700 (3/31/06 vs 3/31/03)
Reforms in Pictures business
„ Marketing cost reduction
„ Production cost reduction
¾ Minimum margin requirement
¾ Cost overrun sharing
Continued vertical and horizontal structural reform
Continued vertical and horizontal structural reform
Continued vertical and horizontal structural reform

29. Structural Reform: Phase 2
Structural Reform: Phase 2
Structural Reform: Phase 2
Breakdown of Financial Impact on Sony Group
Breakdown of Financial Impact on Sony Group
Breakdown of Financial Impact on Sony Group
255
Fixed cost reduction
(FY06 vs FY02)
Restructuring costs
(FY03 - FY05)
80
166 34
Headcount
related
Headcount
Headcount
related
related
Asset
disposal
Asset
Asset
disposal
disposal Total
Total
Total
335
330
（bln Yen）
0
1,000
2,000
FY06
97 98 99 00 01 02
Sony Group
(excl. Financial
Services)
96
Electronics
-300
-330
Non-prod.
proc. &
others
Non
Non-
-prod.
prod.
proc. &
proc. &
others
others
130
--
Fixed Costs
Fixed Costs
Fixed Costs

30. Transformation of Electronics Business Profit Structure
Transformation of Electronics Business Profit Structure
Transformation of Electronics Business Profit Structure
Variable cost
Operating Profit
(excl. restructuring)
4,940
Flat sales
scenario
4,940
2% 10%
(bln Yen)
Sales
FY02 FY06
-2 pt
Fixed cost
-300 bln
(-6pt)
Growth
Scenario
FY06+

31. 4%
Fixed cost reduction
(FY06 vs FY02)
Operating profit
(FY02, excluding restructuring)
Variable cost & growth
contribution
(FY06 vs FY02)
Operating profit target
(FY06)
4%
2%+
10%+
Transformation 60
Transformation 60
Transformation 60
Transformation to high profitability structure
Sony Group financial impact
Transformation to high profitability structure
Sony Group financial impact

32. Ken
Ken Kutaragi
Kutaragi
Executive Deputy President and COO in charge of Home,
Executive Deputy President and COO in charge of Home,
Broadband and Semiconductor Solutions Network Companies,
Broadband and Semiconductor Solutions Network Companies,
and Game Business Group
and Game Business Group

33. Power of Technology
Power of Technology

34. Digital Flat TV
Home Server
Digital Still Camera
Mobile Phone
Digital CE is the new driving force for
Digital CE is the new driving force for
next generation technologies
next generation technologies

35. Game
PC
TV
Video
Home today

36. AI
Flat TV
Home Server
Digital
Sound
IP
Camera
Projection TV
Remote
Commander
Home tomorrow

37. Optical / Wireless
Broadband network
Home tomorrow

38. PSX

39. PSX new generation GUI

40. PSX digital CE platform

41. Felica ETC
ETC
PSP
Network
Music
Mobile
Phone
Emergency
Digital Still
Camera
Navi
Navi.
.
Mobile CE

42. PSP concept model

43. Semiconductor
Semiconductor is the “heart”
Mobile pone
PDA
Digital still camera
Digital camcorder
Digital flat TV
Home server
Computer
Entertainment
System

44. Home
server
Home
server
Authoring
tool
Authoring
tool
Graphics
WS
Graphics
WS
Super
computer
Super
computer
AI
AI
“CELL” Computing
CELL
CELL
Multi CELL
Blade
Rack
Server room
Cabinet

45. Entertainment is the “key” application

46. New Digital Content

49. Howard Stringer
Howard Stringer
Vice Chairman and COO in charge of Entertainment
Vice Chairman and COO in charge of Entertainment
Business Group, Sony Corporation
Business Group, Sony Corporation
Robert Wiesenthal
Robert Wiesenthal
Executive Vice President and CFO,
Executive Vice President and CFO,
Sony Corporation of America
Sony Corporation of America
Chairman and CEO, Sony Corporation of America
Chairman and CEO, Sony Corporation of America

69. *Reconciliation to GAAP: FYE 3/02 FYE 3/03
Operating Income (per financial statements) 423
$ 423
$
Plus: Depreciation and Amortization 393 401
Restructuring 161 212
Inter-Company Allocations 7 28
Adjusted EBITDA 984
$ 1,064
$
Note: Please see slides on Sony's website for further reconciliation to Net Income.

71. FYE 3/02 FYE 3/03
Adjusted EBITDA - Music & Pictures $ 984 $ 1,064
Subtract: Depreciation and Amortization (393) (401)
Restructuring costs (161) (212)
Inter-company allocations (7) (28)
Operating Income - Music & Pictures $ 423 $ 423
Yen/Dollar Exchange rate 121.6 118.9
Operating income - Music & Pictures ¥ 51,441 ¥ 50,310
Operating income for other segments 87,287 145,421
Operating income for all segments 138,728 195,731
Eliminations and unallocated corporate expenses (4,097) (10,291)
Consolidated operating income 134,631 185,440
Other income 96,328 157,528
Other expenses (138,184) (95,347)
Income before income taxes, minority interest,
equity loss and accounting changes 92,775 247,621
Income taxes (65,211) (80,831)
Minority interest 16,240 (6,581)
Equity loss (34,472) (44,690)
Cumulative effect of accounting changes 5,978 -
Net income ¥ 15,310 ¥ 115,519
EBITDA RECONCILIATION
EBITDA RECONCILIATION