Sony Aibo

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SONY AIBO

Camille Le BianDhruv Bhatia

Niranjana NarayananSaswath Suresh

Srinithi SSundeep Allamraju

Umakanta Sahu

Group 4PPBMSection A

+Introduction of the AIBO

1999

• Introduced the Sony AIBO ERS -110• 5000 initial AIBOs sold out• 30000 additional AIBO’s sold in Feb 2000, demand mainly in Japan

• Priced at $2500

2000

• November 2000, second generation AIBO (ERS 210)• Sold 50000 units worldwide, with major demand from Japan

• The markets did not know how to categorize the product• While there was a hard core AIBO owner base in America, a large chunk still do not understand the need for the product

• Need to build a bigger customer base

+First Generation AIBO

Independent manner

Remote control for

commands, but had it’s

own personality embedded on an 8MB memory

stick

Showed emotion through musical

tones, eye color and

body language

AI software made AIBO learn about its owner,

recognizing rewarding

vs. punishing

pats

+Consumer Reaction

Hit with Japanese market Lived in small apartments where real pets were not allowed

Consumer AIBO communities were formed, such as AIBO enthusiast website, birthday parties etc.

AIBO Town magazine a cross between a parenting and technology manual

Popular among elderly population letters of appreciation from senior citizens

Robots as heroes in Japan, hence highly popular in Japan

Americans highly skeptical about robots distrustful of the AIBO

+AIBO 2nd Generation

Lowered price to $1500

Voice recognition

Greater variety of emotions

More realistic movements

Personality modules (with varied functions)

Sold 50000 units

Created a new division – Sony Entertainment Robot Company

+Increased Applications

Development of Wireless system to communicate with PC AIBO messenger software AIBO Navigator Software AIBO Master Studio

Unveiled ‘entertainment architecture’ Open R architecture Planned to allow third party developers to create

applications for the AIBO Ultimately, AIBO owners would be able to customize

the AIBO

+America’s Reaction

American adopters were just as passionate as Japanese counterparts

Most consumers however did not understand the need Introduction of cheap knock offs flooded the US toy

market

Customer base: Children below age of 12

Competitors were working on developing robots, but based on utility such as household chores etc. Honda’s ASIMO Matsushita, Toyota, Hitachi

+Problems

American Consumer market: Educating US market about AIBO

Ability to sell it to the mainstream market

Positioning AIBO as a companion/pet OR a functional product

Potential threat from major technology companies & cheap knock offs

Choice between way of promotional activities

Optimized

Strategy?

Publicity & subsequent

WoM

Mass advertising

+Challenges with the AIBO innovation in US market

Characteristics Challenge for AIBO

Relative Advantage• As a functional ROBOT, AIBO lacks relative advantage• As a companion ROBOT, it has an advantage (Only advanced

product in the industry)

Compatibility• Often considered as an evil, fighting against mankind• “Dangerous & Threatening”

Complexity• Uncomfortable with the idea of loving something which is not

alive• “WHAT DOES IT DO?”

Trail-ability• Expensive product due to huge R&D investments• Can’t be tried in phases

Observability

• Low observability due to the fact that the product is mostly used indoor & less prone to get noticed unless there is a party or something

• Relatively less penetration in US currently

+Alternatives

Don’t Enter American Market

Enter As functional ROBOT

Enter As an Entertainment ROBOT/ Companion

+Criteria

Sony’s overall strategy & competencies

Potential of the market (Buyer’s prospective)

Competition in the market

Profitability of the business: Short term & Long Term

+Evaluation: Alternative 1Don’t Enter American Market

Criterion Decision Rationale

Sony’s Overall Strategy & competencies

Wanted to put entertainment ROBOTs worldwide

Potential of the market(Buyer’s prospective)

There is a huge market base

Competition in the market NOT Applicable

ProfitabilityShort Term & Long Term

Without tapping the market, we lose the potential market share and increase in bottom line

REJECT

+Evaluation: Alternative 2Enter As functional ROBOT



Wanted AIBO to be a part of the family as a companion/ pet


Main stream America wanted robots to assist in serious household tasks

Competition in the marketAlready established big Names in the market


Short Term: Good, as the product matches what consumers wantLong Term: AIBO not designed to be functional product; to add new functionality, Huge cost & time requirement

REJECT

+Evaluation: Alternative 3Enter As an Entertainment ROBOTor Companion



“Want to see AIBO playing with the kids or family in every living room”


Effort required to change consumer perception is high; however potential for ROBOT market is high (Unique Product)

Competition in the market

Unique high end product; but competition from Cheap knock-offs


Short Term: Medium, as we have to change consumer perception and it requires time & marketing effortLong Term: Good, as we have the required competencies & are the pioneer of this market

ACCEPT

+Marketing Mix

ProductKeep the product as the same

Price1. Price it at $1500- $16002. Skim the price to $1000-$1100 prior to launch of later models

Place1. Launch in electronic retail chains where people can observe and experience the emotional attachment2. Retain online format as well

Promotion1. Through publicity and subsequent word of mouth: Help in forming and changing attitude Interpersonal Channel2. AIBO events like a pet show

+Promotional Mix

Advertisements in Print Media,

TVCs

Brochures & Materials in

Online Stores

Ads in Movie Halls, Shopping

Malls

WOM - Approach Opinion Leaders

AIBO Web Sites, Bulletin boards

AIBO Events

E-mail Campaign to

Leads from Early Adopters

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T h a n k y o u

Documents

Sony Aibo