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(Reuters) - Incoming CEO Kazuo Hirai aims to re-shape Sony Corp by linking hardware and software through online networks -- a model he used at its PlayStation unit -- dismissing any suggestion the battered brand would revert to a gadget-centered strategy under his management.
In the meantime, he said, he would focus on paring costs at its TV unit and look to squeeze expenses elsewhere to return Sony to profit.
The Sony Computer Entertainment model "is a bigger concept we can grow into a bigger space," Hirai, 51, said in a group interview at the company's Tokyo headquarters. "Hardware drives software and software drives hardware," he added, referring to online sales of games and other content PlayStation owners.
Hirai oversaw the phenomenal rise of the PlayStation gaming system in the United States and since last March headed Sony's consumer products and services business.
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He didn't say what changes the wider application of that strategy would have on Sony, which unlike its consumer electronics rivals such as Samsung Electronics and Apple Inc, owns significant content in movies, music and games software.
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A more immediate task for Hirai, however, is to stem losses with cost savings that will add to cuts made by outgoing boss, Howard Stringer.
Hirai formally succeeds Stringer as CEO on April 1, with the once-stellar consumer electronics brand heading for what it warned last week would be a much bigger-than-expected $2.9 billion annual loss, its fourth in a row.
The surge of red ink has put Hirai under intense pressure from investors and ratings agencies to quickly staunch losses at the sprawling electronics group. Hirai pledged not to flinch from tough decisions to trim costs and renewed a promise to return the TV business to profit in two years.
"We have to make some hard decisions on where there are some redundancies and reduce the fixed costs in a variety of different areas," he said, pointing to sales units in Japan, Europe and the United States, supply chains and Tokyo headquarters functions as areas where cuts could be made.
Credit rating agency Standard and Poor's on Wednesday cut its long-term debt rating on Sony and warned it may drop it another notch within a year if Hirai fails to stem TV losses and deliver a significant boost to profitability. [ID:nL4E8D861P] Sony was also downgraded by Moody's last month.
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The TV division has lost more than $11 billion over eight fiscal years. Together, Sony, Panasonic and Sharp expect to lose $17 billion this year alone, highlighting the savaging of Japan's electronics industry by foreign rivals led by Samsung, weak demand and a strong yen.
A goal for Sony to end that bleeding in two years was "tracking where we said it would be at the end of the year, or a little ahead of that," Hirai said.
Better products would, he said, add as much as 40 billion yen ($520 million) in profit, with cost improvements adding another 50 billion yen, as part of a strategy he described as "defense and offense."
