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Sony CEO: We can still innovate with 'wacky' products

Sony's recent round of tough restructuring has not come at the price of innovation, the company's chief executive told CNBC, adding that the company was still able to create "wacky" products to wow consumers.

Speaking to CNBC at the IFA consumer electronics show in Berlin Thursday, Sony boss Kazuo Hirai also said the company was not going to sell its smartphone business, despite a small global market share, as it could be a major player to drive a "paradigm shift" in mobile communications industry.

Last year, Tamotsu Iba, a former chief financial officer and vice-chairman at Sony, attacked Hirai for his leadership style, saying the the cost-cutting measures at the company are leading to the "the Sony spirit" being lost. Iba said Sony risked "sinking".

Hirai, who took over the reins of the Japanese electronics giant in 2012, has overseen jobs cut in places where Sony was losing, such as mobile, while it sold off its Vaio computer business in 2014. Hirai has doubled down on areas of strength for Sony such as its image sensors and PlayStation video games unit.

The CEO said that despite all this, Sony still has the ability to innovate.

"Sony is committed to making sure we innovate on both fronts - traditional products and also really new ideas, sometimes wacky ideas, but ideas that really wow our customers," Hirai told CNBC in a TV interview.

"One of the things that we really focused on as we were going through a very tough restructuring through the past several years was that we were not going to skim on R&D and that we were not going to skim on innovation. As a matter of fact, it was during those times where I actually instituted and started...the business unit dedicated with coming up with those edgy products and that's paying off today."

Kazuo Hirai, CEO of Sony.
Justin Solomon | CNBC
Kazuo Hirai, CEO of Sony.

Last year, Sony launched a crowdfunding site to finance employees' business ideas, in a bid to bring back innovation to the firm.

Smartphone business not for sale

Hirai also reiterated that the company had no plans to exit the smartphone business, despite speculation in the last few years that it would.

Sony has cut jobs, shrunk its portfolio of devices, and focused on markets where its brand is strongest in mobile, which has led to smaller market share but a return to profit. The mobile communications division swung to an operating profit of 400 million yen ($3.8 million) in the three months to June 30 after a 22.9 billion yen loss in the same period last year.

The Japanese giant released a new flagship phone at IFA called the Xperia XZ as it showed its commitment to mobile. Hirai said Sony needs to stay in the industry in order to remain relevant when the next wave of innovation comes in.

"I've always said that we are not looking to be number one or number two in this generation of smartphone product, but we need to be in the business of smartphones and personal communication so that when the next paradigm shift comes, and hopefully Sony will be the one making that paradigm shift with innovative new technologies and products, we continue to be a player, so that we can have the chance to become the leadership in the next generation of communication devices," Hirai told CNBC.

Sony

The chief executive did not elaborate but the company has been experimenting with new devices. It's Xperia Ear, which is coming to market in November, is a "smart" set of earbuds which you can talk to carry out functions such as replying to messages or answering calls. Another concept product Sony has unveiled this year is the Xperia Agent, a digital personal assistant that sits in the home and can connect to items such as a coffee machine or TV to carry out tasks.


'Hit the gas' in TVs

While Sony has been getting its business in order, it's also been focusing on one of its biggest divisions - gaming. PlayStation 4 has been a success for the company and it has added new services - such as the PlayStation Vue TV streaming service - to help it get recurring revenues, something Hirai said he hopes will filter through to other areas of the company.

And despite speculation over the last year that Sony could also sell its TV business, Hirai said that now the unit was profitable, now was the time to accelerate investment.

"Technology moves at a very quick pace in the TV space so I think contrary to popular belief, there's a lot of things that Sony and the industry can do to really improve even further the television watching experience," Hirai said.

"Now that televisions have been a very profitable business for us, we are ready to hit the gas and really innovate in that space as well to make sure that....the Sony brand...is an exciting brand within consumers' homes. The TV business is very important to us."

Correction: The Experia Ear will be launched in November, not June as previously stated.