session-9-case-Sony-AIBO-The-Worlds-First-Entertai

9-502-010REV:OCTOBER19,2005________________________________________________________________________________________________________________ProfessorYoungmeMoonpreparedthiscasesolelyasthebasisforclassdiscussion.Casesarenotintendedtoserveasendorsements,sourcesofprimarydata,orillustrationsofeffectiveorineffectivemanagement.Copyright©2001PresidentandFellowsofHarvardCollege.Toordercopiesorrequestpermissiontoreproducematerials,call1-800-545-7685,writeHarvardBusinessSchoolPublishing,Boston,MA02163,orgoto—electronic,mechanical,photocopying,recording,orotherwise—withoutthepermissionofHarvardBusinessSchool.YOUNGMEMOONSonyAIBO:TheWorld'sFirstEntertainmentRobotAIBOisafriend,acompanion,apet.IwanttoseetheAIBOplayingwiththekidsorthefamilyineverylivingroom.That’smydream.—TakeshiYazawa,SonyvicepresidentOfcourseIknowit’snotalive—I’mnotstupid.Butit’ssoeasytoforgetthatit’sjustamachine.Theotherday,Icaughtmyselftalkingtoit,youknow,doggie-talklike‘C’mereyouwiddlepuppywuppy.’AndIdunno,Icouldn’thelpbutfeel…psychedwhenheresponded,likehey,helovesme.—AIBOownerandenthusiast1AIBOteachesthatourheartsdonotalwayslistentoourbrains.Youareperfectlyawarethatthisthingisnothingbutcircuitryandsoftware,andyetitishardtokeepyourownemotionalresponsesincheck.WhenIsmackedmydog’sforehead(todiscourageabehavior,asthemanualsuggested),ithungitsheadinshame,itstailturnedorangeanditsspiritvisiblysagged.IfeltsoguiltythatIwonderedifIshouldbuyitasteak,ormaybesendittooneofthoseManhattandoggieshrinks.—TheNewYorkTimes2It’sbloodysinister,iswhatitis.—AIBOskeptic3“Here,takealookatthis,”saidTakeshiYazawa,pointingtoahugestackofmediaclippingsfeaturingtheSonyAIBO.“Seerighthere?We’vebeenfeaturedinallofthesemagazines.ThisisPopularScience.ThisisEntertainmentWeekly.ThisisCondéNastTraveler.”Hepulledafewmoreoutofthestack.“Hereareabunchofcomputermagazines,technicalmagazines...that’stobeexpected,”hecontinued,flippingquicklythroughthepile.“Butnowlookatthis,we’vealsobeenfeaturedinfashionmagazines,toyindustrymagazines.Whatdoesthistellyou?”hesmiled,sittingbackinhischair.“Whatittellsyouisthattheworldhasnoideahowtocategorizethisproduct.”Itwasthespringof2001,andTakeshiYazawa,thevicepresidentandgeneralmanagerofSonyEntertainmentRobotAmerica,hadplentyofreasontosmile.Twoyearsago,Sonyhadofficiallyintroducedtheworld’sfirst“entertainment”robot,theSonyAIBOERS-110(seeFigureA).4The1InterviewwithanAIBOownerconductedbytheauthor,June2001.2“WhoLettheRobotOut?”TheNewYorkTimes,January25,2001.3“BarkingMadOveraDogwithaMicrochipHeart,”TheTimesofLondon,March5,2001.4Thefirsttwolettersoftheacronym(AI)stoodfor“artificialintelligence,”whilethelasttwoletters(BO)stoodfor“robot.”Conveniently,theword“AIBO”wasalsotheJapanesewordfor“companion,”or“pal.”502-010SonyAIBO:TheWorld'sFirstEntertainmentRobot2responsehadbeenoverwhelming.The3,000unitsavailableinJapanhadsoldoutinanastonishing20minutes,whileintheUnitedStates,Sony’sservershadcrashedasthousandsofcustomershadcompetedfortheremaining2,000units.ThiswasdespitethefactthattheAIBOhadbeenpricedatawhopping$2,500andcouldbepurchasedonlyviatheInternet.Sonyhadrespondedbyofferingalottery-basedsaleofanother10,000unitsofaspecialeditionAIBO(theERS-111)viatheInternetinNovemberof1999.Theresponse?Over135,000ordersinamatterofdays,about98%ofwhichhadcomefromJapan.5Thishadbeenfollowedbyalimited-timesaleofanadditional30,000AIBOsinFebruary2000,about90%ofwhichhadalsoendedupinJapan.FigureATheERS-110(left)andtheERS-111(right)Source:Sony.OnlytwoproductsinthehistoryofSonyhadevercreatedsuchastir:theoriginalWalkmanandthePlaystationgameconsole.Bothofthoseproductshadgoneontodramaticallytransformtheirrespectivemarkets.ButunliketheWalkmanorthePlaystation,theAIBOdidn’tactually“do”anything,whichiswhatmadeitsinitialsuccesssounexpected.Itcouldn’tplayCDsorvideogames,andalthoughitphysicallyresembledadog,itcouldn’t“fetch”thingsforitsowner.Rather,theAIBOsimplyprovided“entertainment”bysimulatingsomeofthepersonalitycharacteristicsofapetwithouttheinconvenienceofarealanimal.Itcouldwalkaroundaroomwithoutbumpingintowallsorfallingoveredges,anditcould“playwith”aballtossedtoit.Ontheotherhand,itneverneededtobefed,anditnevermadeamessonthecarpet.InNovember2000,thesecond-generationAIBO(theERS-210)hadgoneonsale.Withinsixmonths,Sonyhadsoldover50,000unitsworldwide.Onceagain,mostofthisdemandhadcomefromJapan.ForYazawa,thismadeforaninterestingchallenge:ThereisnoquestionthattheAIBOhasexceededallofourexpectations,especiallyinJapan.Wealsohaveawonderfulbaseofhard-coreAIBOownersinAmericawhoareextremelypassionateabouttheirAIBOs.ButtherearestillalotofAmericanswhojustdon’t“get”thisproduct,sothequestionis,whatshouldwedotobuildabiggercustomerbaseintheU.S.?5Ofthe135,000orders,132,000hadcomefromJapan,2,000fromtheUnitedStates,and1,000fromEurope.SonyAIBO:TheWorld'sFirstEntertainmentRobot502-0103DevelopmentoftheFirst-GenerationAIBOAIBObeganasaskunkworksprojectwithinSonyaround1994.ToshitadaDoi,Sony’sl