"Entertaining The Future"
2006 International Consumer Electronics Show Las Vegas, Nevada � January 5, 2006

Good Morning. And thank you, Gary, for that very kind introduction � it sounds much more exciting when you tell it. I think Gary and his team deserve a round of thanks from all of us for the terrific job he does year in and year out at CEA, and for once again organizing a dazzling Consumer Electronics Show.

And while we're on the subject of tributes, I want to take a moment to give a tribute to another giant who died last week � the Australian media tycoon, Kerry Packer. Kerry Packer loved Las Vegas because he was an extraordinary gambler. And I was here one time when he was at one of the tables and sat next to a rather stiff Englishman while they were gambling who was rather upset � felt he wasn't treated with respect by Kerry and at one moment, he turns to Kerry Packer and he says, "You know, I'm worth 100 million dollars." Kerry Packer says, "Toss you for it." And he would have. That's a man who is not risk averse, and those are the kind of industry leaders we really need in all our industries. So, Kerry, wherever you are, good on you mate.

Today, the relationship between content, technology and the consumer is being turned upside down. Or, more accurately, right side up. Content is no longer pushed at consumers. Content is pulled by them. Pulled when they want it. Pulled where they want it. How they want it. And often even in the precise format in which they want it. The whole world is essentially plugged in and turned on.

It has been said that owning content is a handicap for Sony, which is a company primarily dedicated to electronics. The recent copy protection issues at Sony BMG have once again brought this to the forefront. But it is surely too cynical to assume that Sony BMG was intent on punishing the consumer rather than protecting content and the rights of the artist. It is appropriate, I believe, for all of us to worry about content protection, even while recognizing that some of our efforts to address it may prove problematic.

In the movie, "Good Night and Good Luck," Ed Murrow's words still resonate. Television can teach, he said. "It can illuminate, yes, and it can even inspire. But it can do so only to the extent that humans are determined to use it to those ends. Otherwise it is merely wires and lights in a box," he said. We are very proud of our boxes, but we are also aware of our debt to the artists that illuminate them. So for the next hour, our brilliant boxes will hold center stage but they'll share it with artists. This, I believe, is Sony's magic times two!

"Entertaining the Future" is not merely a slogan. It is our mission, and our passion. Sony's unique marriage of content and technology enables us to understand the creative process, consumer desires and the technologies that unite them. No other content company has Sony's intuitive grasp of technology. And no other technology company has Sony's intimate understanding of the creative demands and possibilities of content.

Today we are sharpening our focus, shattering internal silos, streamlining our product offerings and growing ever more consumer-centric. We have analyzed our product lines and reorganized our corporate structure to become more nimble and better able to deliver champion products and a focused product line-up.

Our display here at CES is comprised of four pillars that reflect this sharpened focus, support the future of electronics and entertainment, and act as a roadmap for all, and we welcome you to join us there at the end of this speech.

First, e-Entertainment . . . personalized and available anywhere, anytime.

Second, Digital Cinema . . . at the theater.

Third, High-er Definition . . . in the home.

And fourth, PlayStation . . . highlighting the potential of the virtual, multi-media world of tomorrow.

Together, these four pillars are the source of Sony's promise, and the foundation of our mission: Entertaining the Future.

e-Entertainment

Some think that the "e" in e-Entertainment stands only for "electronic." Not so. It also stands for "everyone." Everyone can create, distribute, consume, and communicate. In that sense, e-Entertainment is Personal Entertainment, and Entertaining the Future simply means recognizing and accommodating the needs of the individual, providing choice and convenience in all of the ways consumers use products.

One great success story this year was the introduction of the Sony Ericsson Walkman� phone. It established the mobile phone as a credible digital music player.

Here to demonstrate the latest device is Suzanne Cross, Sony Ericsson product marketing manager for North America.

Good morning Suzanne.

SUZANNE: Good morning Howard.

Sony Ericsson Walkman phones are designed to seamlessly blend your love of music and entertainment with your need to communicate...any time any where. With four Walkman phones already in the market, we are thrilled to present the fifth, the Sony Ericsson W810. Just announced yesterday, the new W810 is Sony Ericsson's first two-mega-pixel, auto-focus camera phone for the North American market. You can listen to great music, take fantastic pictures and still never miss a call.

Along with incredible music quality, the integrated Walkman player can find tracks by artist, title or album. With dedicated music control keys you have familiar access to your music, letting you play, forward and rewind with the same ease you have come to expect from the family of Walkman products. With the W810 Walkman phone you can organize, simplify and access your music on a mobile phone that is always with you wherever you go.

Now, let's listen to what music sounds like on the W810.

How's that for music quality � synonymous with Walkman. With up to 30 hours of music listening, the W810 lets you take music with you wherever you go. Or you can share the fun with others through our line of music accessories like these great music speakers.

But we believe a music phone has to be a phone first. At Sony Ericsson, we never forget why you carry a phone with you. The Sony Ericsson W810 is the most advanced phone we've brought to the U.S. market, with a 2 megapixel camera with auto-focus that has won awards around the world. It supports high-speed EDGE networks and has an integrated Internet browser to help keep you on top of the latest information and news. And for the world traveler the W810 supports Quad band, enabling it to work around the world.

The W810 will have heads turning. It's a great mobile phone, and a great Walkman music phone, in the great tradition of Sony. Thank you everybody.

HOWARD: Thank you Suzanne.

Sony's groundbreaking Personal Entertainment and Communication products enable consumers to experience on-the-go entertainment of all types.

New this month is the ultra compact Cyber-shot� T9, with an enormous screen. It's not much bigger than a credit card. With the T9 you'll get crisp, clear, blur-free images because it adjusts for motion as well as lighting conditions. Sony's built-in image stabilizer keeps your photos in focus, even if your hand moves when you snap the picture. And you'll capture more pictures without the need for a flash in places with dim lighting, like nightclubs, restaurants, and even this theater. After you've taken those great photos, just take out your Memory Stick and share them on your PlayStation� Portable, VAIO� computer, or even your Sony Ericsson Walkman� Phone.

Sony's HDR-HC1, the lightest HD consumer camcorder, puts high definition in everyone's hands. Combine this cutting edge device with a Sony VAIO� and our Vegas movie editing software, and you get not just a spectacular picture, but a new form for artistic expression. You no longer need a movie studio budget to produce, shoot and edit in high-quality, high definition.

And while we are making it even easier and more convenient to manipulate audio and video for personal entertainment, we also want to remind you that in the beginning was...the Word.

Introducing the brand new Sony Reader. I love this gadget because if you have eyesight problems, and there are 30 million people who do, this is the device. When it is released this spring, thousands of titles will be available for the Reader through our CONNECT store. And downloading will be as easy as a digital song. If you look carefully on the screen, you can see you can adjust the size of the font, turn over a page, adjust the size up or down, and if I want to go backwards, I can press the previous button, and I'm back on the title. You can store nearly 100 books on your Sony Reader's internal memory at any given time, or hundreds using Memory Stick or other memory cards � and use the extra space in your vacation bag for more tanning lotion, or, better yet, more Sony products!

One of the first books available on the Sony Reader will be author Dan Brown's record-setting, best-selling The Da Vinci Code. Not surprisingly, Dan is an avid reader himself. So we invited him here today to talk about what digital book publishing means to him.

Please welcome the great author, Dan Brown.

DAN: Good morning. One of the reasons I was asked to come here today to speak to you about eBooks is that in 1997, my first novel, Digital Fortress, appeared on the very first eBook bestseller list in history. For that year, Digital Fortress was the #1 bestselling eBook on the planet...having sold about...12 copies.

A lot has changed since then...and all for the better.

For me, personally, eBooks are all about choice. They're not about replacing traditional books...If I'm sitting at home by the fire and I'd like to read a novel, I'm still going to choose to read a traditional hardcover and I'm going to enjoy the feel of the pages and the smell of the leather. However, there are some situations where eBooks offer me features that traditional books simply cannot.

For example, if I'm overseas on a research trip, and I'd like to take with me all of my research material, taking an eBook enables me to take an enormous amount of reading material in electronic format...and the good thing is, I'll have a much lighter suitcase and in the process, maybe even save a few trees. Better yet, if while I'm traveling I discover I need another book, I can simply download it instantly online...even if that country does not have an English-language speaking bookstore...even if it's 2 in the morning and there's no bookstore even open.

As some of you may know, I've been a teacher for quite a while, and I can already tell that eBooks are going to be wonderful for education. Soon, students will be able to carry all of their textbooks in a single book (no more 12-year-olds lugging 50-pound backpacks to the bus stop). More importantly, a student's textbook will always be current...always be the newest edition � and that's even in school districts that can't afford to buy new books every year.

A lot of my friends are authors, and there's been a lot of talk about eBooks among authors, and most of them believe that eBooks will be just wonderful. I certainly believe eBooks will be wonderful for authors � especially for lesser known authors. EBooks help level the publishing playing field. The much lower costs of publishing eBooks will mean publishing companies can afford to take risks on unknown writers. These authors will have instant global distribution for pennies. The effect of this will be that there will be more books in print ... and more choice. This is good for writers, great for readers, and absolutely terrific for the written word.

The final point I wanted to make today is that for this new generation, eBooks will be as natural as television is for us.

The new generation will grow up in an era that soon offers them instant access to the words of the entire world � novels, textbooks, poetry � almost any book, instantly in their hands, 24�7, no matter where on earth they may be. eBooks are here, and I believe they are here to stay. And to that, I say ... welcome to the wonderful world of choice.

HOWARD: Thank you, Dan. Oh Dan, about that sequel?

DAN: I'm writing it...I'm writing it...

HOWARD: I forgot to mention on the Reader that because it is not backlit like a computer screen, it doesn't have any of that flicker. It mirrors the actual experience of reading a book, which is what makes it so great. It's not just for books, either. You can also download your favorite web content and transfer work and personal documents from your computer.

When the Sony Reader is introduced in the U.S. this spring, an ancient format, the written word, will be updated to entertain the digital future. But here at Sony we are committed to creating new formats as well. When I envision "Entertaining the Future," the image that comes to mind looks exactly...like this (PlayStation Portable). Already the most critically acclaimed portable game player in the world, and we have only scratched the surface of this device's potential.

The PlayStation� Portable is the ultimate in personal entertainment for games, movies, videos, photos and music anywhere, anytime. As Popular Science magazine said recently, "The introduction of Sony's PlayStation Portable was the moment portable game consoles stopped being toys."

Ten million PlayStation Portables have been shipped around the world. Sony has been joined by every major Hollywood studio in distributing movies on the Universal Media Disc, or the UMD, specifically for the PlayStation Portable. The UMD format of the Chinese film "House of Flying Daggers" shipped nearly one hundred thousand copies in just three months. By comparison, it took nine months for the first DVD movie to reach that milestone.

The PlayStation Portable also works with Sony's Location Free� technology, to let you watch your favorite programs any time, from anywhere in the world. With a base station connected to your home entertainment system, you can use your PSP to remotely access personal videos, your DVD collection, television shows recorded on your PVR or even live television broadcasts. Location Free works remotely with a broadband wireless connection to the PlayStation Portable � and indeed also to a VAIO or other PC. You can watch American television from a hotel room in London, or British television from a hotel room in Tokyo.

This is great to talk about, but what I really want to do now is to show you. Here to demonstrate this is Rob Bartels from our Location Free group.

ROB: Good morning, Howard. As you noted, I can watch live TV programming from another city right here on my PSP via Location Free and a broadband Internet connection. For example, we can watch what's playing on TV in New York right now.

HOWARD: That's incredible to be able to do this right on the PSP�.

ROB: And that's not all. Whatever you can do in your living room, you can do on your PSP. For example, we can change channels right here � even in New York.

HOWARD: And you can do this all while you're traveling?

ROB: Yes, absolutely. And if you happen to have homes in Tokyo or London, you can still watch your TV programming from anywhere. As you can see, we actually have live TV from Tokyo and London playing on these PSPs right over here.

HOWARD:This is actually perfect given my travel schedule so I can watch European Cup football, I can watch all this from anywhere in the world, from Tokyo. I never have to come back here. I won't miss any of my favorite programs. Now that's a great product! Thank you very much for showing it, and go sell it!

ROB: Thank you, Howard.

HOWARD:The world of personal entertainment continues to expand. But shared entertainment remains a uniquely powerful experience that unites us all. To truly Entertain the Future, there's still no destination quite like the movies. And just as digital technology is enabling us to transform personal entertainment, it is also redefining the way we experience cinema.

Digital Cinema

Sony has created a new standard for cinema, a digital technology that we believe will transform the theater experience and reinvigorate the movie business. Sony's 4K digital cinema projection system, using our SXRD? high definition technology, offers four times the resolution of most other projectors commercially available.

But before movies can be presented to the public in all their digital glory, they must be shot. Sony digital cinema equipment is not only the choice of Star Wars Director George Lucas, but of many other leading directors such as Michael Mann, John Avnet and James Cameron. Co-developed by Sony and Panavision, Genesis� is the world's first digital 35 millimeter motion picture camera system. It allows cinematographers to use their existing lenses, giving them the look and feel of film they're accustomed to.

We've just finished Adam Sandler's new film "Click" at Sony Pictures using the Genesis camera and Sony's top-of-the-line high definition video deck.

More directors are shooting in HD, and more theaters are going to be showing it. We've already reached an agreement to put Sony 4K SXRD projection systems in Landmark Theatres, the nation's largest art-house chain owned by Mark Cuban and Todd Wagner. It's great to have such enthusiastic support from Mark and Todd, who have both been in the vanguard of new technologies throughout their careers.

We are using the same SXRD projection system for this keynote. I promised, however, that artists would also grace this stage. Dan Brown was the first but here are two more who are truly bright lights in and out of the box, two Academy Award-winning filmmakers. Please join me in welcoming "The Da Vinci Code" producer Brian Grazer and director Ron Howard.

RON: It's our pleasure to be here today, Howard.

HOWARD:Since you two are working together on what is one of the most anticipated projects of the year, I thought you might be able to tell us a little about how things are going on "The Da Vinci Code."

BRIAN: Before we do, we were backstage, and we watched this presentation and I think you put yourself in a very dangerous position in that it's opened up a wide range of possibilities of gifts for Ron and myself...things that we had never imagined could be possible!

HOWARD:Well you guys are notorious for gift bags in Hollywood. I mean, gift bags are usually bigger than you are, but we're going to give you a very small gift bag.

RON: Small seems to be okay, though; in fact small may be the best.

HOWARD:Small is okay. Under $200, but...but small.

BRIAN: We're not comfortable with those conditions.

RON: So, you're getting right to the point in asking about "The Da Vinci Code." We just finished filming, and I'm editing and, of course, when you are adapting one of the most talked about and popular books of modern time, the stakes are pretty high, but I have to say that at this point, we couldn't be more proud of the movie, the experience making it, and the way it is shaping up.

BRIAN: What I think people loved about the book and will love about the movie is that it's a masterful, gripping murder mystery that brings together fascinating historical elements in an incredibly accessible way.

RON: And at the same time, of course, you don't need a history degree to follow the action. It's really just a fantastic whodunit that gets played out against some of the most amazing locations in Europe. And, we got to film in those places � it was fantastic! Also, of course, because of the subject matter of the book and the movie, people have been inspired, I think, to learn about the topics sparked by Dan Brown's novel. I think that they are seeking the truth for themselves in an exciting way; I think it's a great thing.

BRIAN: Since day one the entire team at Sony has been completely committed to bringing the best version of this book to theaters. But enough with all the talk. Let's give you a glimpse of part of the movie � a scene in the movie � that literally no one has seen. Let's roll a piece of "The Da Vinci Code."

HOWARD:For that shameless plugging, I'm going to up your cap to $500.

If you thought that clip looked fantastic, it was projected with the new high definition projection system. The color and clarity are nearly life-like, too. It was almost as though Tom Hanks was right here in front of us. Well, here he is, larger than life, Tom Hanks.

TOM: It's a pleasure to be here with you today, Howard, to be able to deliver these heartfelt comments off of one of your new extraordinary Sony SXRD high-definition teleprompters.

HOWARD: Well, I was going to say that here you are in "The Da Vinci Code" portraying the character of perhaps the world's best known fictional intellectual. And I was going to say, a case of art imitating life? Now, I'm not so sure.

TOM: You know, Howard, it doesn't take an intellectual to figure out the easy menu and simple controls on well over 88% of the fine Sony products.

HOWARD: Oh, for God's sake, talk about, "The Da Vinci Code."

TOM: Well, Howard, "The Da Vinci Code," as you might know, is a small little art house film that few people have ever heard of and there's a couple dozen people looking forward to seeing it. I must say I'm delighted to be in such company as actors like Audrey Tatou, and Jean Reno and Paul Bettany and Sir Ian (McKellen) � who I believe you know from your "Knighthood Club" where you all get together, order pizzas and talk about the Queen, I believe � but in all seriousness, this is my third film with Ron and with Brian and I think it is fair to say that for everybody in the production, it was quite a journey, quite a quest; it was a great time for all of us.

And if you are eager to know how the movie differs from the book, you don't need a Harvard cryptologist to figure it out. What you do is just read the book and then you see the movie. I believe there's a program on your Sony Reader that you just punch in and it comes up "what was" and "what was not."

HOWARD: I suppose you want one of those, too.

TOM: Hey, I came here this morning, Sir Howard. So, I either want gambling money or some of those prizes over there.

HOWARD: Tom, what about the box office decline? Does it worry you?

TOM: Well, it's always going to come down to content. As you said earlier, the audience will be pulling content towards them, and I think that any time there is an up or a down in the final box office figures at the end of the year it's because the content hasn't been magnificent, the material hasn't been first rate, or it hasn't quite been there. I think that as long as the filmmakers, the storytellers in Hollywood do their job to the best of their abilities, box office will always be there; people will always want to go to the movies. I do say that as far as this past year, I must shoulder some of the responsibility because quite frankly, there was no Tom Hanks film in the theaters. I was so busy trying to figure out the interface of some of my...because I'll be damned if I can turn this flash off, Howard.

HOWARD:Well, I guess this will be known henceforth as "the lost year." The year that Tom wasn't on the screen.

TOM: Well, it's not up to me to make those claims, but...

HOWARD: Didn't we just do that?

TOM: I was just reading what was on the teleprompter, Sir Howard...those Sony SXRD high-definition teleprompters that are easily affordable for almost every home.

HOWARD: Thank you very much, Tom.

TOM: Happy to be here, Howard.

HOWARD: Brian, say something.

BRIAN: I think the technological tools we've been given will pave the way to an increasingly exciting future in the motion picture industry. And I was mentioning to Ron and to Tom that in preparation of this meeting, as an Academy member, at the end of the year, we're all given every single DVD of all the movies that are out, or under consideration, or are going to be out, and I know for myself that if I have 20 of them, there are going to be four or five or six of them that I really really want to have the most heightened emotional experience. And I know that with the marriage of technology today and as it's advancing into the future, and the cinema experience � the socialized experience of going to the movies � that for those five or six movies, the only way I want to see them is to drive to the promenade or wherever I can go to a movie theater because it's that experience that's going to be the best emotional experience for me. And there are other movies that, of course, are going to be better suited to your home system, but I have a great belief in the expansion of the theatrical exhibition.

RON: And for me as a director, as a storyteller, I think that the technological innovations provide all kinds of exciting options both in front of the camera in terms of what you can get on the screen, and then also what you can offer viewers. And I'm a fan as well, and I know that I � along with the rest of the audience � will define for ourselves a whole broad range of viewing experiences as, again, we've been seeing today in your presentation, Howard. But, like Brian, I'm certain that nothing is going to replace the social shared experience of going to a great movie theater. And I think we have the responsibility to keep heightening that experience.

HOWARD: I think that with talents like the three of you, we're all in pretty good shape and the future of the digital cinema is going to be dazzling. Thank you for coming all the way here. It's been great fun.

High-er Definition

As an increasing number of theatres outfit themselves for digital cinema, the movie-going experience is clearly going to change dramatically...for the better. But the impact of high definition technology in other areas of entertainment, including the home, may be even more profound.

The CEA tells us that in 2006, for the very first time, sales of high-definition television sets will eclipse the number of analog sets sold. The scale of the transition from analog to HD will make the shift from black-and-white to color seem small by comparison.

Where does this transition lead for everyone in this room? Only one way...up. Because when consumers experience true HD, they never want to go back. I know people � and research suggests there are plenty of them � who would rather watch grass grow in HD than tune in to a football game in standard definition. Introducing consumers to HD initiates an upgrade cycle that sweeps through the whole house, encompassing televisions, video players, camcorders and every audio-visual device in its path.

The transition to HD is especially important to Sony, because from film production in Hollywood to television viewing at home, Sony has already connected every link in the HD chain. With professional equipment, camcorders, television displays, Blu-ray Disc players, packaged media and more, no one is better positioned to lead the way to full high definition. That's why we say Sony is High-er Definition.

For years, Sony has been the worldwide leader in professional broadcast and production equipment. Our HD camera systems have more than a 70 percent share in the fast growing market for prime time programming and live entertainment events. Our HD cameras, VTRs, displays and switchers are the leading choice of high quality program producers and broadcasters all around the world.

With the proliferation of high definition production equipment, HD programming is ramping up quite dramatically.

In fact, I am pleased to announce today that the most successful game shows in all of television history, Sony Television's Jeopardy and Wheel of Fortune, will be the first game shows available in HD this fall. That doesn't mean the prizes will be bigger.

One of Sony's strongest partners in expanding the HD frontier is CBS. Sony is a sponsor of CBS football in HD as well as The Masters golf tournament. Here are some of the highlights of a great partnership in high definition.

And right now, I am honored to be joined by an old friend, CBS Sports broadcaster Greg Gumbel. Greg, thank you for joining us. Who better to describe the difference between watching professional football in HD and watching in standard definition?

GREG: Well, standard definition gives you the very best view that a TV sports director can provide. But with HD, you're able to view the entire field of play. So instead of seeing the director's slice, which is only part of the field, you're seeing the whole field and everybody on it. You can also see the entire crowd, tattoos and all. It's similar to viewing the game from the broadcast booth � except that, when I'm in the booth, I can't see the expressions on the players' faces, which the HD viewer at home does see.

HOWARD: CBS also broadcasts The Masters and the NCAA basketball tournament, doesn't it? What are the distinctions there?

GREG: When you watch golf in HD, for example, you can actually see the texture and roll of the fairways and the greens. Watching Tiger Woods line up a putt in HD, you see the same ripples and rolls that he sees. Putts that look relatively easy in standard definition acquire a whole new level of complexity in HD. When the ball dips around the hole and stops a foot away, you understand why.

The NCAA basketball tournament in some ways presents an even more stark contrast between standard and high def, but for some different reasons. This is a college sport � with young players and extremely emotional crowds. When you watch the NCAA tournament in HD, you can feel the electricity that runs through the arena. You see the hope and you see the anxiety clearly written in the faces of the ballplayers. It's a very dramatic spectacle. And with HD, you get enhanced surround sound, and that puts you, of course, where we all want to be � and that's right in the middle of the action.

HOWARD: "The thrill of victory and the agony of defeat." Didn't some network once say that? Somebody else's, I think. Well, anyway, as difficult as it is to imagine this in high definition, you were wonderful at Lillehammer. But I can't help but remembering that as I went rushing to see you at Lillehammer and, more particularly, to see the female figure skaters, I slipped on the ice and broke a leg.

GREG: Yes, I recall it put you out of the marathon.

HOWARD: Yes, it did. And there I was on television with General Schwarzkopf standing.... It's the last exciting moment of my life.

GREG: I will recall this. We were at one production meeting in Lillehammer, and Howard made an appearance and was walking around basically reassuring the troops, telling everyone what a very good job they were doing and he stopped behind me, put his hands around my neck and said, "I even like the host this year." And then you didn't squeeze any further, which was very nice.

Did I thank you for the positioning here, by the way? It's fun to follow Brian, and Ron Howard and Tom. People are out there saying, "Wow, did you see them? Did you see them? Who the hell is this up here?"

HOWARD: Yes, but you have a contract. They just go from movie to movie. They never know where their next meal is coming from.

GREG: I feel for them.

HOWARD: Thank you, Greg. We'll all be watching you.

GREG: Thank you, Howard. Nice to see you all.

HOWARD: And for those of you who don't know, you can watch the Cincinnati vs. Pittsburgh game on CBS this weekend.

And I am delighted to announce another HD first for CBS. In March, CBS owned and operated television stations will become the first local stations to use Sony's XDCAM HD. News directors around the world will love the fact that the blue-laser-based XDCAM system stores HD video on a relatively inexpensive and rewritable disc.

Sony's expertise in professional technology has enabled us to deliver Higher Definition to consumers in their homes. Sony's SXRD televisions and projectors realize the full power of HD. They use three chips � not the kind you all lost in the casino last night � but one each for red, green and blue color reproduction, with two million pixels on a picture that you will not forget...

...which explains why Sony's 60-inch SXRD Grand WEGA� commands over 50 percent dollar share in its category in the U.S. market � and just received the top television rating ever awarded by CNET, which called it "the pinnacle of performance."

We are particularly proud of our new BRAVIA� line of LCD flat-panel television sets, which produce a wider range of colors than any other flat-panel set on the market, either LCD or plasma. Since the launch of BRAVIA in August �e05, Sony has moved from single-digit market share in dollars to a category-leading 30 percent of the LCD market.

And our efforts are certainly not limited to the U.S. Just before the holidays, Sony UK and Sky announced a major marketing agreement to promote the benefits of High Definition television. Sky is set to launch a broad package of HD programming in the first half of the year and Sony has just launched BRAVIA in Europe. The two companies will implement cross-marketing activities to promote their products and content.

Sony will entertain the future across a range of HD applications. But one of the most important is Blu-ray. We began research and development of Blu-ray disc, or BD, technology in 1993. Since then, we have been joined by more than 160 partners, allies and supporters from the consumer electronics, IT, games, movie and music industries.

BD is not evolutionary, it is revolutionary, with dramatically greater storage capacity than any other format. With five times the capacity of a DVD, BD stores nine hours of high definition, or 23 hours of standard definition video. This means that even in high definition, you can have a full movie, director's cut, along with interactive features and all kinds of extras. BD is an amazing experience for your eyes and your ears.

It incorporates powerful encryption and other content protection. But once you buy a Blu-ray disc, you also buy the right to copy its contents onto compatible devices throughout your home. You can even make legal copies across a home network to enjoy music and movies on your PC.

But don't throw away your old DVDs, because with BD's backward compatibility, you can continue to enjoy them on your new BD player.

BD is supported by Walt Disney Pictures and Television, Twentieth Century Fox, Paramount, Warner Brothers Entertainment, MGM, Lions Gate and, of course, Sony Pictures, which distributes the world's largest library of digital and HD films. Taken together, studios supporting BD account for a critical mass of 90 percent of Hollywood library titles. And that's just Hollywood. In addition, we've got tremendous support from the game and music industries.

On the IT and consumer electronics side, the list of BD supporters includes Apple, HP, Hitachi, LG, Mitsubishi Electric, Panasonic, Pioneer, Philips, Samsung, Sharp, TDK and Thomson. They�re all members of the Blu-ray Disc Association.

One of the key Blu-ray supporters, however, is Dell, which recognized early on that the future of entertainment is not just an issue for consumer electronics; it's an issue for the IT industry as well. We're particularly thrilled to have Michael Dell here with us today...

MICHAEL: Thank you, Howard.

HOWARD: So why is Dell committed to Blu-ray?

MICHAEL: Our customers told us they wanted a new optical standard that would last at least a decade and we've been working with Sony and several other companies for the last several years to create a standard that would allow customers to be able to store, manage and enjoy their content at home and on the go.

Dell has always been an advocate for industry standards. And we've seen how many companies have come together around Blu-ray. We see how it's revolutionary � not a step that's going to last another year, but really a 10-year step. A revolutionary step.

HOWARD: You clearly think that's a particular, big advantage for Blu-ray.

MICHAEL: I think it gives customers high-definition access to their movies on their desktops, on their notebooks � in high resolution. A lot of customers actually already have high-resolution displays. You mentioned televisions, but in computer displays, Dell is the worldwide leader...and those displays already...

HOWARD: You're allowed...

MICHAEL: I'm allowed...okay.

HOWARD: You're in great company here, today!

MICHAEL: Alright. Well, almost two out of five displays, in fact, in the United States � flat panel displays � are Dell. So as I was saying, a DVD can display 480 lines of resolution. But these flat-panel monitors, of course, can display well beyond that. In fact, we're going to be showing later today a new 30 inch display that displays 1600 vertical lines of resolution � so almost four times the capability of a DVD. So what you're seeing is that the display monitors that customers have today in the computing environment go well beyond the capability of DVDs, and so we really need a new standard.

Another key issue is that when the DVD first came out, we had much smaller hard disk drives. But today we have 500GB hard disk drives. So, if you have a DVD with a 500GB hard disk drive, that's only two percent of the fixed storage � not very good for archiving and storing data. So, with a 50GB Blu-ray disc, you have a much more appropriate standard to build to store and archive your data.

We think this architecture is going to provide for innovations that even we can't predict. And we're very pleased to be working with companies like Sony to be a part of it and to bring all of this great technology to everyone's lives.

HOWARD: Well, you've convinced me. Do you think we can convince the consumers?

MICHAEL: We're hearing from our customers that they want a new standard. This 480 lines of resolution is a real limitation, and we've got to have a way to bring high-definition content to all these users. We just shipped in the fourth quarter over 10 million PCs, so we've got a great opportunity with this volume platform to bring a new high-definition standard into the computing world. I won't talk about the displays anymore, but we've got a number of new revolutionary products beyond Blu-ray that are pretty interesting that everyone should enjoy.

HOWARD: Well, in fairness to Sony, I should say that if you want a really expensive laptop, buy a VAIO. Thank you very much, Michael. Thank you for coming.

MICHAEL: Thank you.

HOWARD: Lord knows he has led the way in the IT revolution with vision, time and again providing a roadmap to the future. I thank you for supporting BD and I'm confident consumers will ultimately thank you, as well.

At E3, Sony Computer Entertainment announced support of BD for the PLAYSTATION� 3. And that was just the beginning. Here at CES, Sony Electronics is debuting five new Blu-ray products.

On the content side, Sony Pictures Home Entertainment has just announced its initial 20 titles for release on the Blu-ray disc format, including "Hitch," "House of Flying Daggers" and "Black Hawk Down." They will be released in conjunction with hardware manufacturers' delivery of the first Blu-ray disc products at retail this spring. Also this week, Sony BMG announced its support for the format.

And just yesterday, Sony's disc manufacturing operation, Sony DADC, announced that beginning in March it will be ready to accept orders for Blu-ray discs on a global basis.

This is all part of the tremendous momentum around Blu-ray. It's here and it's happening now!

PlayStation

Now I want to share a preview of the world not as it is, but as it will be. Because in the future, Sony devices will achieve levels of speed, interoperability and functionality that today one can only imagine.

HOWARD: Please welcome to the stage, the President and CEO of Sony Computer Entertainment America, Kaz Hirai.

KAZ: Hi Howard.

HOWARD: Good to see you. Before we get down to the business at hand, perhaps you can tell us a little bit about how PlayStation performed during the festive season.

KAZ: Absolutely, Howard. I am pleased to report that PlayStation products once again topped consumers' gift lists for the holiday season. While we are still in the process of analyzing holiday sales results, PlayStation� 2 experienced a 10.5 percent gain year-over-year, and it was the only platform in the videogame industry with positive growth. Cumulatively, we have shipped more than 100 million PlayStation 2 units worldwide and counting, which is an industry record. The only other home console platform to achieve this milestone is the original PlayStation, but with PlayStation 2 we hit the 100 million mark in half the time. In the U.S. alone a PlayStation 2 can be found in more than one out of every three households.

HOWARD: And then there is my favorite little machine, the PSP�...

KAZ: Exactly. PSP is such a hot product we had to increase production to try to keep up with demand. Oh, and by the way, Howard, not only did PlayStation 2 outsell Microsoft's new Xbox 360 this holiday season, but so did the PSP.

All in all, 2005 was a great year for PlayStation. And the future looks even brighter.

HOWARD: As we are here talking about how Sony is strategically positioned to entertain the future with breakthrough products and compelling content, what about the next generation of games?

KAZ: At Sony Computer Entertainment, we know that the next generation of interactive entertainment doesn't really start until we launch it, and in 2006 we are ready to introduce the future with PLAYSTATION 3.

HOWARD: Yes, let's talk about why PLAYSTATION 3 is worth waiting for...

KAZ: PLAYSTATION 3 will be the third home console platform we introduce into the market. And once again it is destined for great success and, of course, a very long lifecycle.

At the heart of PLAYSTATION 3 is the Cell processor. Along with our partners IBM and Toshiba we have invested billions of dollars and hundreds of thousands of man-hours in creating the Cell processor. It is so powerful that it rivals super computers, but is uniquely designed to really support broadband-based consumer applications and HD video streams. Cell is actually eight processors on a single chip, seven of which will be active for the PLAYSTATION 3.

HOWARD: And, of course, speaking of the Cell processor, with all its enormous power, flexibility and potential, the application is not going to be limited to empowering just PLAYSTATION 3, correct?

KAZ: That's correct. And as a matter of fact, in order to harness the huge potential of Cell processor, Sony has established an organization that is specifically tasked with developing Cell-based products other than PLAYSTATION 3 and also applications in that field, as well.

HOWARD: Okay then, Kaz. Let's cut to the chase. What about content for the PLAYSTATION 3?

KAZ: The introduction of any new platform bearing the PlayStation name has been synonymous with presenting revolutionary ways in which creators create and consumers enjoy content. PLAYSTATION 3 is no exception. In addition to the Cell processor, we have adopted Blu-ray as our storage medium.

Another first brought by PlayStation is back-catalog compatibility. When we first introduced PlayStation 2 in 2000 it supported many formats: PlayStation games, PlayStation 2 games, audio CDs and, of course, DVD video playback. But with PLAYSTATION 3, we are taking this to the next level. Not only will PLAYSTATION 3 support Blu-ray video and PLAYSTATION 3 games but, of course, all of the other formats I just mentioned. With PLAYSTATION 3, users can access tens of thousands of assets right out of the box, not to mention digitally distributed content. We respect and appreciate the investment that our customers have made and will continue to make in in-home entertainment, which in some cases can add up to hundreds, perhaps even thousands, of dollars. Only consumer-centric companies like Sony, one with such a long history in consumer electronics and also entertainment, can deliver a forward-thinking product like PLAYSTATION 3.

HOWARD: From the looks of things, Kaz, PLAYSTATION 3 will be certainly the most powerful computer entertainment system ever to hit the market.

KAZ: Absolutely, Howard. But as we all know, hardware alone cannot provide entertainment without compelling content. And in the gaming world, killer applications, titles that give consumers new, exciting experiences never before encountered, drive market penetration of hardware in the market. The game development community worldwide has been hard at work creating new experiences that will really exceed consumer expectations. In fact, we have already distributed more than four thousand PLAYSTATION 3 development kits to partners around the globe. We would like to share with you a brief visual taste of the fruits of their labor.

HOWARD: Let's take a look. If that doesn't tease you all, nothing will. PLAYSTATION 3 is one of the key pillars of Sony's growth strategy for 2006 and beyond, and now all of this just reconfirms why everyone is so excited about this product. Not just for Sony and its partners, but for consumers around the world. Thank you, Kaz. Go get 'em.

KAZ: Thank you, Howard.

HOWARD: In our time together here this morning, you have seen the world through Sony's eyes. It's a vision that combines content and technology to create a vibrant tapestry of the future. Indeed, everywhere you see Sony � in High Definition, Digital Cinema, Personal Entertainment, PlayStation � you see the b