Sony Group Corporation (6758) Earnings Call Transcript & Summary

[Presentation] [Interpreted] Thank you for waiting, ladies and gentlemen. It's time to start Fiscal 2022 R&D Strategy Briefing of Sony Group Corporation. My name is Tata of Corporate Communications, happy to serve as the moderator today. This briefing is for media. Ladies and gentlemen of the media and analysts, we invited today. At the outset, our Chairman, President and CEO Yoshida, speech on video will be presented, followed by the presentation by Senior Executive Vice President and CTO, Hiroaki Kitano, on technology and R&D strategy of Sony. And then there will be Q&A sessions participated by 10 participants involved in technology strategy for and traversing Sony Group for 30 minutes. Yoshida's speech first.

[Foreign Language]

[Interpreted] Next, I would like to invite Mr. Kitano to give presentations. Kitano, please. Mr. Kitano, please.

[Interpreted] Hello, everyone. Thank you for joining our R&D strategy briefing today. Today, I would like to share with you our perspective on R&D key vehicle for value creation over the mid- to long term at the Sony Group. R&D creates the future. Intellectual discoveries and new technologies have transformed our civilization time and time again. However, that is not to say that technology has been a long way agent of social change. The process has actually involved the complex interplay between technology and society. The inventions of the steam engine and internal combustion engine brought about the industrial revolution and in so doing, changed the very fabric of society. By enabling mass production and long distance travel, these inventions made our society incredibly rich in a material sense. At the same time, however, these technology developments have had a huge environmental impact focusing us to face issues such as climate change and the loss of biodiversity on a global scale, what we are calling our planetary agenda. In addition, the birth of digital computers and communication technology has made it possible for people all over the world to connect. And now with various devices connected to the Internet, we can instantly access the latest information and content from anywhere in the world. But there are some downsides. For example, it is said that if this led to the increased division due to the echochamber effect that amplified specific views. Furthermore, with the accelerated evolution of biotechnology and artificial intelligence, things that are previously thought to be impossible are now realized one after another. Cutting technology like this has a great potential, but at the same time, raises question on how we should utilize it. I feel that humanity right now needs to ask itself, what kind of future we are trying to create. One answer to that question is embodied in the Sony Group R&D mission statement, push our stabilization forward and make this planet sustainable. A keyword of Sony's purpose is Kando emotion. What R&D can do to keep the world fill with Kando is to continue to create technologies that unleash people's creativity and contribute to the sustainability of our civilization so that people can continue to feel Kando into the future. Motion Pictures, music, games, sports and other forms of entertainment, which we engage in play key roles in our society by enriching people's lives. By advancing entertainment through the development of cutting-edge technology, I believe we can contribute to pushing our civilization forward. In addition, our group portfolio includes image sensors and other semiconductors as well as financial services and the medical businesses, and we are working on adding mobility to our portfolio as well. We also have a range of group companies, including Sony Co. Inc., which enables us to create farming-related businesses, delivering both biodiversity and stable food supplies. Sony Space Communications, which provide technology for the construction of optical communications network, leveraging low earth orbit satellite; and Sony Global Education, Inc., which promotes steam education. R&D in these businesses not only helps form our social infrastructure, but also advanced fields that could make a major difference in contributing sustainability of society. The role in Sony's R&D is to make Sony future ready by continually creating technology that support existing business and enable new business development to fulfill Sony Group's purpose over the long term. Also to realize the purpose and further develop it, I think that the research and development strategy needs to be consistent with our strategic objectives. First, to help us achieve our objectives to be the brand chosen by creators around the world, we plan to develop a certain suite of technologies. In particular, this refers to technologies that realize 3 axis of maximization, namely helped create Atos, unleash the full extent of their creativity; maximize the value of their IP; and maximize fun engagement. To ask the term creator does not refer only to artists and other professionals that produce entertainment. The term includes the researchers, engineers, device and new technologies, entrepreneurs and old innovators working hard to create a better future. When it comes to achieving our other goals, which is to connect directly with 1 billion people, we intend to work to produce technology that convey the greatest thoughts to people with demographic and geographic diversity, diverse content preferences and diverse cultural backgrounds, including language. In order for us to fulfill this role, we need to utilize a wide range of technological domains. 3 domains and integration between them will be our core drivers, they are sensing, AI and digital virtual spaces. Thus, our sensing technology has to cover the real world into data, which will in turn train our AI advanced and voice recognition, which will help us create extremely realistic virtual spaces based on massive amounts of data taken from the real world. Massive amount of data generated in those virtual spaces will inform further AI training thus bolstering the AI's ability to perceive and analyze the real world. This is a loop we are aiming to create. By creating this loop, we aim to maximize the value of our business, both in physical real space and virtual spaces. By realizing this double flywheel that leverages sensing data and AI, I believe we will transform Sony into an AI data-driven company. And let me show you some examples now. First example using CMOS image sensor. CMOS no longer use survey to generate images for human consumption. But instead, sensing technology now serves as the eyes of AI. In a smart city project in Rome using the IMX 500 Intelligent Vision Sensor, many sensors hub is installed throughout the city to demonstrate image recognition for next-generation mobility and spaces. The data from the sensors as nice it can be used to reconstruct the process 3D model of the city. This contributes to convenience. Also it has become possible to acquire human movement data from a large amount of sensor information, built a separate precise model and move that well in the virtual space, leveraging this image and movement data, it has also become possible to generate a variety of attractive virtual characters. This is an essential technology for games, movies, the metaverse and more. Next is inside the virtual space, what can be done. Now I updated AI also put the world of games where precise virtual spaces are being realized. The first example of superhuman AI agent that contributes to enhancement -- enhanced enjoyment is the virtual space, that is the Gran Turbo Turismo. So successfully developed by SafiAI. GT Safe is an AI agent that outraces the top human players on Gran Turismo, a hyperrealitic racing simulator. Technically speaking, this performs a distributed deep reinforcement learning. We created a large-scale computing system comprising thousands of PS floors and to perform this to train SoFi for several months. And now our developers are working to incorporate GT Sufi into Gran Turismo 7 to improve the Gran Turismo gameplay experience. And furthermore, it's becoming possible to link real and virtual spaces. Virtual production studio, which makes full use of our video technology can produce content that uses virtual and real spaces. In addition, content in which AI character interact with actors in the real world in extremely precise background is now within technological feasibility. This is indeed the fusion of the virtual and real space. The level of realism required depends on the field of application. But a digital virtual space can be a game or a metaverse in the entertainment or high-definition digital twins in the social system domains of mobility and industrial applications of sensors. We believe this serve as the important technology architecture in a variety of areas from entertainment to social systems and sustainability. As you can see, the combination of sensors, AI and virtual spaces are at the core of our technology portfolio, and we expect this core to represent a better strength for the future. In addition, we plan to start building a large-scale AI model called a foundation model. And recent research has demonstrated that such foundation models, which are built upon extremely massive quantities of data are very powerful as they are. So we were saying that the future and the competitiveness of a company will be determined by whether that company has its own foundation model or not. Well, how to put [indiscernible] to really use is a question and still be answered through trial and error. But we believe that [indiscernible] and the power of AI that will be created through [indiscernible] will contribute significantly to expand people's creativity and to the creation of a more sustainable society. To create such foundation models, we need massive accounts of data that meets copyright and AI ethical requirements. And we will need to build a universe of technologies around those foundation models. We plan to further prioritize our end-to-end technology development efforts, covering not early setters virtual spaces, AI and the foundation was at their center but also the high value-added services that will maximize the potential of these technologies. This will be credit goal to making Hasani an AI data-driven company. Now we plan to make organizational changes as after April 1 next year to equip ourselves versus on technologies that support our business. The first part of this involves linking businesses and R&D more closely, aiming to improve consistency between mid- to long-term business strategies and R&D and to enable rapid commercialization. This includes relocating R&D themes, probably R&D center at Sony Group Corporation to operating companies. In our R&D center teams conducting research into debates that individual operating companies are looking to strategically strengthen have joined forces at operating companies in order to accelerate their R&D efforts. Teams have transferred to Sony Semiconductor Solution Corporation, will work to strengthen and diversify our Image Sensing Technology. Teams that will be Sony Corporation which is home to the Entertainment Technology and Services segment plan to develop video and interaction technologies, especially in high-precision digital virtual space in an integrated manner, contributing to the realization of the metaverse and digital twins. Secondly, we plan to establish the technology infrastructure center TIC in order to pursue R&D into fundamental technologies for the entire Sony Group and privately deploy them in the business units. This center will pursue a wide range of AI-related R&D as well as R&D into data science and security technologies and rapidly deploy these technologies in business units. It will also aim to provide the computing resources required for R&D efforts across the Sony Group. By working closely, we reused R&D in each business unit. TIC aims to be an engine of growth for the Sony Group today technologies, not just the domain of corporation. It is the infrastructure of the society as a whole. In this sense, our contribution to the open source community. We're building a technology infrastructure, not only for the Sony Group, but also for the whole of society. Thirdly, we plan to establish Sony Research that takes an extremely challenging project called brand challenges and create innovative technologies from them. Founded in 2020, Sony AI has served as the hub of our R&D efforts, which we have pursued in the U.S., Europe and Japan with the health of a diverse range of top talents assembled from around the world. So AI is expected to remain the service of the new organization that we intend to establish to undertake unpresented disruptive research. Sony AI has taken on the grand challenges, which is extremely challenging projects. the GT project we've interest earlier is one example. Sony Research is intended to drive our development of foundation models and R&D, integrating a wider range of technological development centered on AI to take on greater challenges. Fourthly, we plan to create a new division dedicated to technology promotion and deployment. The division's goal will be to take R&D findings and a variety of other ideas with limited applicability to our existing businesses and work to see them quickly implemented in society and businesses. The creation of new division will mean that our existing business divisions will no longer be the sole exit but a deployment option for research findings. We plan to now have multiple potential deployment parts, including collaboration within the broader Sony Group with external companies organization, the creation of start-ups, contribution to public spaces, academic contributions and contribution to the open source community. Sony Computer Sciene laboratory will continue to conduct research for the future of humanity and our planet in Tokyo, Paris, Kito and Rome, a new place. The new organizational structural enhancement brings greater clarity to the role of each organizational constituent. In order to maximize the potential of this diverse organization, we'll view the various R&D organizations within the Sony Group as a single ecosystem. And by dynamically linking them together, we expect to contribute to the value creation of the Sony Group from the perspective of technology. This is the basic concept of Sony's R&D ecosystem. In terms of organizational connections, the Sony Technology Exchange Fair staff itself, which is being held now provides a forum for exchange of technology, and we are working to strengthen many other initiatives to deliver broad support to efforts across the Sony Group. In addition to taking these initiatives to the next level, we also plan to introduce mechanisms that cross organizational boundaries to enable development, agreements and ideas from every group organization to be cultivated in the best way possible. The key to the evolution and success of this ecosystem is diversity. In order to create technology that will inspire emotion among diverse users, it will become even more important for us to incorporate diversity and to be able to incorporate a wide spectrum of perspectives. The ecosystem is not confined just to the Sony Group. We will strengthen ties with creators to build future together and ties with academia. We are already engaged in a variety of activities, including joint research projects with universities around the world and are working to broaden this approach even further. We believe the R&D activities of the Sony Group through its broad business portfolio in collaboration with diverse stakeholders are in a position to make a significant contribution to improving the state of civilization and the future of our planet. In addition, we want to take an active leadership role in leading this transformation. As CTO, I want to create an environment that draws out the best from every member of the Sony R&D team. While at the same time, driving innovation in the organizational structure itself, I want R&D to be the engine of innovation that constantly innovates the Sony Group. I will work hard to help achieve our mission which I mentioned earlier, to push our stabilization forward and make this planet sustainable. We naturally cannot achieve our mission alone. I believe we will make it happen by working alongside many others. I hope we can make a difference in our joint endeavor to build a better future. I invite you to watch with interest and anticipation to see what Sony Group's R&D will do next. Thank you for your attention. [Presentation]

[Interpreted] With this, we would like to complete the presentation. And after this, from 1:30, we are going to have a question and answer. And first 15 minutes, we will receive the question from the media. And the second 15 minutes. We will answer the questions from analysts. And in this briefing, there are cases where the speakers on the stage may answer your questions in English. And those who would like to listen to simultaneous interpreting, please use interpreting equipment. And those who join online, you are able to watch a question-and-answer with the language which you are watching now. So please wait for a while.

[Interpreted] Thank you very much for waiting. Now we'd like to begin question-and-answer session. First, Kitano will introduce the members on the stage.

[Interpreted] Thank you. Hello, everyone. This time, during the question-and-answer session, at the beginning, we thought that I and some other members should answer. But the R&D ecosystem of Sony, it cuts across the different organization of Sony in the study and research and done by the people. And so it cannot involve everybody, but there's some of core members in R&D. I'd like you to see those members in person. And so we have a quite a few members, but they are management, the members in charge of R&D at different organizations of Sony. Let me introduce. And from the first row, Hisashita Mai, Senior Vice President, the Sony Group Corporation in charge of R&D and President of R&D Center; sitting next to him is Katsumoto Nomoto, he's R&D Center, Technology Fellow of Sony Group Corporation and Corporate Distinction Engineer; and then Michael Spranger, he's the COO of Sony AI, Inc.; sitting next to him is Erica Cato Marcus, the Director of Sony AI Inc.; and at the end of this row, the Alan Sumiyama, The Sony Group Corporation in charge of the Corporate Technology Strategy Department. And the second row, Yoshinori Matsumoto, Executive Deputy President of Sony Corporation and President of New Business Technology Development Group; and then Kaigi Nuono, Senior Vice President of Sony Semiconductor Solutions Corporation, in charge of R&D and External Relations; seated next to him is Welli Galitzi, the Sony Interactive Entertainment, he's SVP of Sony Future Technology Group; and then next to him is Alice Shrann, Global Head of AI Ethics of Sony Group Corporation; and lastly, the Tetsu Natsume, he's from Sony Computer Science Laboratory, Inc., in charge of the Technology Promotion Office. So with those members, we would like to begin the R&D question-and-answer session. So now we'd like to answer the question from the media. And in light of the research and development, the theme, we would like to focus on the questions on the R&D. And there are the cases where we cannot answer the questions about the specific business strategy of the business. [Operator Instructions] The second gentleman in the first row, please.

[Interpreted] [indiscernible] from Nikkei. I have 2 questions. First, today's briefing, I think that you are emphasizing the collaboration amongst the different business units. But in case of Sony's history, PlayStation back then, and Sony Music and Sony jointly produced PlayStations. So I think that you have in the past have some partnership with new products that have come out. Kitano-san, Mr. Kitano, through this collaboration, what is the image of products that you'd like to see, maybe around 2030 or maybe beyond 2030? Look, any innovative products that you have in mind that you would like to see Sony come up with in that future?

[Interpreted] Well, yes, about collaboration, the fact that it's as important as you've just identified, well, I think that we have a diverse range of organizations. The question is how we can create dynamic synergy amongst these different groups. There will be also an opportunity and challenge. Or what kind of product, that's a difficult question to answer, but I think I cannot give you any specific idea as to what kind of product. It's not appropriate for me to say so. But I think will be something that I can even imagine now. So that will be the biggest success if they can come up with something which is beyond our imagination. If such products and services come out, that will be a success for us. Target 2030. In 7 years, it might be a good target, may come out earlier or there might be others where we are spending more time on. So I really cannot give you a specific answer to that question at this point in time, I'm afraid. But my hope is that things that I cannot imagine now will come out.

[Interpreted] And the next question about the technology talent, I think there's a race to go after talent and Sony AI has working on this in China, United States. And recently the semiconductor sector, there are a lot of talent being gathered and they are being attracted by very good working conditions. But as for Sony R&D, how are you going to try to capture talent and retain talent within Sony, so that they do not go to other competitors?

[Interpreted] Well, I would like to comment briefly and then after, Sony AI Spranger, will talk about what is happening at Sony AI. And then Sugiyama will talk about the policy going forward in terms of HR. Well, about the technology talent, yes, it is true that there is a fierce race right now. And this is because of the salary and also stock option issue of compensation. That is one area of competition. But of course, we are offering very competitive packages to a certain extent, and we will continue to focus on this. But just those numbers is not everything. Because for engineers, what's important is how much opportunity, unique opportunities, challenges can be done only in Sony? So they want to leverage their own skill capability and think about their future career path. So what kind of interesting challenges await them at Sony will be key. Therefore, a challenge, they're being able to challenge and there's a reality at the same time. So we have to provide a competitive compensation package at the same time. I think these 2 will be key to attract talent. But for example, GT Sofie, this is something unique to Sony. This is a unique challenge. And I think that Spranger can respond to that.

Yes. Michael Spranger of Sony AI. Thank you for the question. So Sony AI has been able to grow to 100 full-time employees within 2 years. So quite successfully attracting really the global top talent. And of course, we are working on issues of compensation. But one of the key things that Sony can offer is a unique combination of the impact of the technology that maybe I think is very unique to Sony in terms of the broad reach and potential impact to millions of people through our sensing technology but also gaming. And so engineers and researchers are always looking for challenges. Compensation is one aspect, but it's really about the kind of work environment and the projects that we can give people an opportunity to achieve. And Kitano-san mentioned GT Sofie, which is an amazing breakthrough. And it's really a project that's only possible in Sony. And so through the right combination of great technology, great projects and compensation, we are confident that we can attract the top talent and Sony AI is showing that, that is possible.

[Interpreted] And next, talking about human resources trailing, we would like to ask Alan?

[Interpreted] Thank you. I'm from the Corporate Technology and Strategy division. My name is Sumiyama. Well, so I think that we have to use the talent in diverse business areas. And the fact that they can be given challenging opportunities is important as an organization. I think there are 4 things that Sony Group can offer. One is a corporate distinguished engineer system. And the top engineers at Sony are given this title and these top engineers in the Sony Group can come up with a technology strategy, and they can train the next generation of engineers, young engineers. So they have the opportunity to train younger engineers. And there's a technology strategy committee for several domains that we have in this organization. Well, this is on a voluntary basis. But in these committees, they try to engage in the state-of-the-art areas in their expertise. Another is the core technology training. And we have a lot of training that is provided. And lastly, the [indiscernible] has seen this and analysts will be seeing Sony Technology Exchange Fair. And there, we are trying to internally share our technologies so that engineers will be able to exchange views and create new collaboration, innovation. So I think that such an exciting environment is in place. And as a result, we find that engineers are very much attracted to and like working for Sony. Thank you.

[Interpreted] Next question, please. Yes, on the front row, the person sitting next to the person who asked the first question.

[Interpreted] My name is Asaka. Utilization of AI make an advance. That's my impression in the past. No, now is -- Sony is creating AI, which is different from traditional one. AI general which is the direction for AI to go forward. And how are Sony going to use this? You talked about structure and other things, but please elaborate more.

[Interpreted] Thank you for the direction and orientation. Allow me to answer or comment. And for -- as an important element is an AI ethics and Alice Xiang will answer. First, about the direction. AI is a very powerful tool ability. It has the ability with massive amount of data, which is accelerating. Google DeepMind AlphaGo, well, that's a champion of the Go. And 2 weeks ago, Meta came up with the diplomacy in the game. One, it's not only fought, but they try to partner with others, other participants. Those are the logic which is proceeding, that's one direction of flow. As you know, foundation model, which is a technical term, utilizing foundation model, mid-journey, diffusion, AI system come out of this. Very high definition imaging content can be created by foundation models. So what are we going to do with it? As we look at AI, we not try to replace human. How can we expand the ability of the people and to make them more creative? That's how we want to use AI for. And as technology is concerned, sensor and images technology, we have strengthened these. Utilizing on this, AI, leveraging on this unique strength differentiates us from other competitors. We have the advantage, leveraging on the advantage to the health. For example, we have the sensor and virtual space using audio and video and AI. These 3 should be linked. That's the unique strength of Sony. Well, I don't think competitors can catch up with us in an overnight. And a massive amount of data is used for AI. Where do we get data? In my speech, I said there's a copyright issue, AI ethics is an issue. And after creation, that's going to be a powerful tool. How can we use -- how should we use this? From the very beginning, there should be a policy. Otherwise, after we created, maybe we cannot use that. That's a loss, a waste. So we place focus on it. Alice Xiang is the Global Head of AI Ethics. So is Alice Xiang can answer you on our idea of AI Ethics.

So as discussed, AI is an increasingly important aspect of many of our businesses. And as part of that, AI ethics must be a key component of this. So AI technology has tremendous promise, but also carries with it potential legal, ethical and reputational harms that must be addressed as well. And we see AI ethics as a very important part of the strategic advantage for Sony. And so Sony has taken a very strong leader position in this area. In fact, we are one of the first major technology companies to release AI ethics guidelines back in 2018. And we have also played a key role in many multi-stakeholder initiatives around AI, including the partnership on AI, global partnership on AI and recently, the CSIS AI Council as well. And we have created our AI Ethics Committee within Sony Group, which consists of senior leadership that deliberate in advance of AI usage and consider high stakes AI use cases and ensure that they are aligned with our Sony AI ethics guidelines. And we have since also created our AI Ethics office, which is responsible for conducting AI ethics assessments across our business and research units. And we have already completed 100 assessments and have our assessment part of the mandatory electronics quality management system. And so when we think of AI ethics, we think of it in terms of AI ethics by design, meaning that AI ethics is not something that is just considered at the end, but is instead embedded in every step of the AI development process from the design to the development to the deployment processes. And this is very key because AI Ethics is still a relatively new field and we must work closely with our business and research units on developing solutions in AI ethics. And as a result of this, we also have our AI Ethics Research Flagship within Sony AI, which is a dedicated lab of AI ethics research scientists who are working closely with our businesses in order to develop solutions in this area. And through all of our work through AI ethics, we hope that this can become a key part of ensuring that as technology develops in this area, it does so in a way that is beneficial for society and helps to enhance human creativity. Thank you.

[Interpreted] The time is very limited. And so the next question is the last question.

[Interpreted] Thank you for this opportunity. Motosuki of Bloomberg and rapid commercialization of the product is important. I have 2 questions. What kind of challenge that you decided to advocate this? And the second question is for good or bad, R&D and the product planning seems to have some distance. But through the organizer change, how are you going to close the gap between the two?

[Interpreted] The first, with regard to speed, I am going to answer your question. And from the R&D head Matsumoto and Ono and Willie, I would like to ask you to answer the questions as well. And this time, various technology for the commercialization and translate that into business, many of the technology is a mature technology to enable this. For instance, as for AI, releasing AI and then you're able to obtain the data. In other words, training process is very important to release it to the world for the R&D. So the first research is conducted and then the business. That was the traditional way. But now we need to the incorporate R&D into business as is possible to obtain data. And so the business unit, of course, there has been the R&D arm. But now there is a wider integration between R&D and business. So what exists now is further enhanced. And for instance, business, the area which strategically enhance will be enhanced through the collaboration with R&D. So Matsumoto and Ono and Willie, I think that I would like to ask you to answer those questions.

[Interpreted] So my name is Matsumoto and, thank you very much for your question. As was just mentioned, R&D was the main body to develop the technology. And using that technology, we commercialize the product. That was the traditional process. And we actually create the products. But marketing the trend has changed in the society right now. Directly to customer is a major way. So BOC of the customer needs to be absorbed and that is reflected in the R&D and commercialize the product along those lines. So speed is much faster now in this process. So in order to meet the needs and demand, the structural change has been carried out. So we too try to solve the needs of customers in the place which is close to the customers in order to reflect that into the product development.

[Interpreted] So next, Ono, please?

[Interpreted] And I am Ono from Sony Semiconductor Solutions Company. And as was mentioned by Kitano, and within SSA, we have R&D function. And from R&D Center, technology has been transferred and it has been connected to commercialization. That is the process we have already experienced in the past. And with this structure change, the new members join and they play the partner, they play the role to be close to the customers, be close to the partners in order to quicken the pace of commercialization. At SSS, technology developed the R&D system, which is created by the new CTO. The Sony Group companies can receive those technology. And so we need to have a closer collaboration, and we would like to accelerate this pace of collaboration. M

[Interpreted] And from SIE from Galitze at SIE. At this moment, there is no not the team to transfer from R&D. But what kind of connection collaboration between R&D and SIE, I think that will be closer in future. So I would like Uli to answer that point.

Thanks a lot for the question. And I'm Uli Galitze from SIE. What was mentioned before and also what your question is going is like the -- it's getting much, much faster in all the technology that is in mention, we have to integrate those things much closer into our production process. And with the new structure, we are really excited about the new structure because it really brings R&D closer to the business unit and these business units can more influence and directly coupled with the R&D process. I think a very good example was the GT Sofie project, where MiOS SIE collaborated very closely with Sony AI, and I think the result speaks for itself. And how this collaboration could help really accelerate in 1 area and bring those things also back into the business unit. Thanks a lot.

[Interpreted] About the R&D and product distance, let me try to answer and then Namoto and Natsume will respond in that order. Now in regards to this question, R&D and the product planning and business units. Well it's close to R or close to D. There is this distant spectrum. So not everything is close, so not everything is distant. But currently, if you look at the new services that are out in the world today, well, the tech giants, GAFA included, R&D and products or service distance is very short. It could be that at a very early stage, they work together. And therefore, at Sony, we wanted to try to make that happen. So Namoto will talk about the past study method and how we are going to try change this so-called distance and there are several exit strategies. Natsume will explain about how they're trying to narrow this distance and not only work with Sony but also look for other business partners. Time is limited, so I'll ask them to be very short. Namoto, Natsume, the two of you, please.

[Interpreted] Well, this is Namoto. I've been asked to be brief. Well, we have been doing mid- to long term and the STC R&D has been doing and the short term has been done mainly at the R&D business units. But we -- the business unit also want to look into the mid- to long term. Listen to the voices early on of the customers and try to incorporate the process. So mid- to long-term, the development can be made more efficient by doing so. That is all. Thank you.

[Interpreted] My name is Natsume and I am working on the -- well, I was originally from the computer side, and I've been doing technology promotion office and sales and control and I have a lot of different background. And together with the researcher, I've tried to do social deployment. And this time, this R&D ecosystem. And this sales know-how that I have. In what way will understand what the communication would be, who has the decision-making power. Together with the researchers, I'm trying to leverage my knowledge so as to realize social deployment.

[Interpreted] And with this, we'd like to conclude the Q&A with the media. And after this, we will take questions from analysts. The moderator will change, so we ask for your indulgence.

[Interpreted] Now we would like to take questions from analysts. Allow me to introduce myself. My name is Shinji of Finance Department, IR Group. I serve as a moderator. [Operator Instructions] On the fourth row, yes, that's the person, wearing jacket, fourth row from front. No, the third row I'm sorry.

[Interpreted] JPMorgan, my name is Ayada. Two questions. Today, well, we didn't -- what you didn't talk about is the virtual space area in terms of hardware and software. Which is the focal point of Sony, hardware or software? And superiority and application is with Sony. So what is the Sony's edge on the virtual space?

[Interpreted] Concerning the virtual space, we are strengthening the virtual space. Sony Corporation's Matsumoto will answer and the gaming business is so important for this. So SIE's Galeski will answer. Now for me, hardware and software both are needed for the success of virtual space for the hardware that includes sensor technologies and display and audio technology is so important. These technologies should be fused for high level of the reality 3D virtual space. I think Sony is #1 in this area. And by -- and there should be contents even if there's an excellent hardware. If content is not there, it won't mean fan engagement, games, but we create games for this for industrial use digital twin is the application. The strength of the software is needed only the mere hardware wouldn't go far. Now contents and hardware important that Matsumoto covers both areas, so he will answer. And then for games, PlayStation, so SIE's Willie Galitzi will answer.

[Interpreted] Thank you for your question. In the virtual space, hardware software both have advantages. Both are needed in creation in the adventure space is what we focus 3D creation or advertise creation. Various types of creations will go through major changes. And from us, in both hardware and software, we support creators to draw out the creativity from the creators. For example, the other day, we announced Mocopy, which can capture motions quickly and SRD, which has been commercialized at a special display as far. As hardware is concerned, creators gave us good evaluation. So with the hardware and associated with the software, both are needed to create more creative 3D world, that's the direction we are heading for.

To say the same as before, I think it's not hardware also. I think the strength from us is that we can combine hardware and software together to build a platform, and others can build the creativity on top of it. I think that's one of the big strengths that we have of Sony and SIE. So you really want to go into this direction more and provide the best ecosystem for other creators to build their creation on top of our platform that we provide.

[Interpreted] The second question about the research education. Sales and marketing, is it going to be on the R&D center? Or is it going to be set in the business unit?

[Interpreted] For what is the expectation of having the technology promotion and deployment division, allow me to comment and followed by Natsume. This is the head office side, Sony Group Corporation covering Sony Group as a whole. In our activities, various activities have already started. And then why is it necessary? As a result of our R&D, the technology is transferred to the business unit to be commercialized. That's smooth. That's good. But if you do the research, various things happen and the policies may change. If there's a seat, good seat for researchers, it may be difficult to handle. Sometimes that happens. If it is not too good, we can abort it. But if it looks promising, it's too good to be wasted. And those in charge are quite highly motivated, then we need to decide whether to do it inside, outside by academia or spin out. So this result of the efforts of the engineers should not be left and touched. So at the technology promotion division, we have to focus on the commercialization of technology. And of course, the transfer of the technology business is one thing. And also, we create the business together or to establish spin out the entity or we can use open source so that we can release the technology to external community. Whatever the case, the technology, which is created needs to be implemented in a society in order to create the value. So it is very important to commercialize the technology. We believe that is our mission. Thank you.

[Interpreted] So we would like to move on to the next question. So we would like to receive the questions from many people as possible. So please confine your question to just 1 question. So from the second block, the person in blue shirt, please?

[Interpreted] POV Securities, my name is Iyakawa. And about Sony AI, sensor and the image will be used. So what is your competitor? For instance, Google has having a lot of data learning or Amazon will be your competitors. But what is the strength of Sony's AI?

[Interpreted] For Sony, as you said, for Google, Amazon, in terms of business structure and purposes are quite different. And so whether we can define them as competitors, I don't think that they are not direct competitors. We need to define this clearly. What we would like to do is creativity of creators should be maximized. So that is the purpose of our business and creators using technology can deliver Kando to people in the world. So who our competitors? Sometimes we collaborate with Amazon or sometimes we collaborate with Google. So rather than the fighting against the competitors, we would like to be very faithful to our purpose in order to proceed with the business. Of course, in reality, tech giants and GAFA, they are proud of having the huge data. And therefore going forward, we have to secure the large volume data and refine our data. And what is very important, it's not just the volume of data. But the ethical, the quality or copyright issues. So we have to use clean data so that we are able to use it in an effective way. So responsible AI is a term, which is used. So that's the direction we'd like to move on to.

[Interpreted] Next question. This block, the third person in the third row on the right.

[Interpreted] Nakane from Mizuho Securities. Mr. Kitano, what specifically -- what sort of outcome are you expecting? And well, by reorganizing what you said, research is done by people. But Mr. Kitano, the KPI against which you assess, your manpower, well, it may be not just 1 year but 3, 5 years. What are the benchmarks that you'll be using to assess your personnel. What are you expect and also the assessment, well, appraisal?

[Interpreted] Well, we want to be faithful to our purpose, and we have to come up with an organization so that the organization can collaborate to be faithful to our purpose. That's the core. But we cover a lot of business, including mobility, has been newly added. And we started out with consumer electronics. We have movie, pictures, music, picture, finance game and plus mobility. So you see That the business domain is expanding. And there are businesses which are related to social infrastructure, too. So given this range of business, we are an entertainment company. But even more than that, we have to have a long to midterm and have a social contribution. We can do it. We are looking at our corporate portfolio. And looking at the depth and width of our business, we think that we can do it. So we want to maximize leverage our potential to the maximum. And how the R&D group trying to maximize and leverage the talent of the people, diversity will be key. And every individual has to be strong, there has to be a good collaboration. We shouldn't be inward looking. So we have to have collaboration both inside Sony and as well as outside of Sony. And from here, the Sony Group Technology, Sony Group, the company, these 2 will be upgraded to the next notch. Well, it's not an easy goal but as a goal, that is a goal that we have set out for ourselves. Now what was the other -- yes, by KPI, yes. Well, the people belonging to different organizations. The members -- looking at the members here. Well, I don't know if you're talking about specifically these people. But along in line with the philosophy, we want them to be bold in acting. Numerical KPIs do not work in R&D. People are very talented. So if you use a numerical KPI, they managed to achieve the numerical KPI, but that's not enough to achieve our goal. So we want to focus more the qualitative aspects and making appraisals. We want them to be very bold and try to organize a top-level team in their respective domains so that they can promote research. And in the early stage and a very fast speed, they can make it into business being that they can contribute to society. So what to what extent this technology outcome to contribute to society will be the yardstick to be used.

[Interpreted] Thank you very much. Since time is running out, I would like to make the next one, last question. On the front row, yes, I see your hand.

[Interpreted] From SMBC Nikko Securities, my name is Katsura. In the Corporate Strategy Meeting, you talked about your aspiration to build the ecosystem. There are certain resources to be sent to the business unit. There are 3 layers that you talked about. And what's the size of each entity? It seems to me that rather than expanding its size, I think you would like to bring out the potential to service that's why you are going to set up a new research institute technology promotion and deployment division, isn't that true?

[Interpreted] I think what you're driving at it is this. Basically, in case of R&D, there are certain areas which is very close to business and research and there are more basic works, and there's a remote portion as well. There are 3 layers. And then we are going to talk about layer 1 and 2 by transferring R&D centers to a business unit. And then Tomai-san is in charge of technological infrastructure. And then there they're going to back up all those things. It's a core engine. And of course, I would like to ask my colleague to answer. This is a very important mission. There are basic technology, which traverse various businesses, shouldn't be necessary academic. But starting from basic to application, that's a basic strength. How can we deploy this throughout the organizations? Technologies and infrastructure as a tech company. So it's so important to focus on it more challenge against Sony, CSL, they do the part for Sony AI Spranger talked about this. How do we look at the mobility? Kato can comment on. Tomai-san first.

[Interpreted] Thank you for your question. My name is Tomai. And as Kitano-san said we are going to merge on R&D to the business unit. And we, as a technology infrastructure group, but we use cloud, we look at security AI and data management And we would like to support all those business. We would like to have the basic function. So we set up a group to do this to support other business units. One more thing. It's not that we can do it alone. We need to resort to external forces. For example, something held by third parties by universities, we would like to utilize them. And we can nurture our understanding about what external organization has as technologies and expertise. And as an infrastructure, we built this up. Well, let's call it, a bank of technology, we hold this as a technology assets within us.

[Interpreted] And Kato will discuss. Be it Sony Ericsson, SIE, Kato has an experience of various business units. So what is the position of Sony AI? Of course, I want to say something, but something as someone who is inside this topic from a different vantage point, I would like Kato to comment.

[Interpreted] Thank you very much for your question. Within Sony, I have experienced various aspects of Sony's business. How can we empower the business under R&D? We have discussed this at Sony AI, somebody talked -- Kitano talked about GTS Sofie. AI is a new technology we develop, but to give new tools to game creators and to deliver new game experience to the users from basic research to game creators as end-to-end development from endpoint to endpoint. And this is going to be installed in Gran Turismo 7. This equation can be utilized by a new organization to set up Sony Research and then to strengthen this flow.

[Interpreted] So with this, we would like to complete the RL&D briefing session. Thank you very much for your participation. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]