Sony will cut 17,000 workers from its payroll (a total of 10 percent of its 170,000-person workforce) and close 15 of its 70 factories in a new restructuring plan. Part of those plans will see Sony's PlayStation business elevated well into Sony's stratosphere - the PlayStation area will become a wholly owned Sony unit.

　　The reported restructuring represents Sony's intent to focus on a market that embraces the Internet and network-driven computers and will be completed by March of 2003. Part of the plan will allow Sony to raise its stake from 70 to 100 percent in three of its Japanese subsidiaries: Sony Music Entertainment (Japan) Inc., Sony Chemical Corp., and Sony Precision Technology Inc. By pulling these three units completely under Sony's wing, the company hopes to deliver music, video, and other services over the Internet and computer networks.

　　For gamers, the most interesting part of the deal will be that Sony will take Sony Computer Entertainment Inc. (SCEI) from Sony Music's ownership and make it a wholly owned Sony unit. And with Sony's focus on the Internet and gaming, we can assume that the upcoming PlayStation 2 will come enabled with extensive networking capabilities.

　　Sony executives say that the restructuring will help it focus on competing in the computer market more efficiently. Considering Sony's release of its inch-thick laptops, the company appears to be moving in the direction of even more innovation. And with its recent announcements detailing its intentions to build two new plants focusing on the PlayStation 2s main 128-bit processor and graphics accelerator, there has to be more going on at Sony than meets the eye.

　　Sony is one of the few companies still making money in the tough Japanese and Asian markets, yet the company is predicting that its overall profits for its fiscal year will be as much as one-third less than last year's earnings. Rather than lay off current workers, Sony will shrink its workforce through attrition and by limiting the number of new hires.

　　Apparently, Sony's weak link is that its TVs, VCRs, and portable stereos have not been selling all that well, and Sony believes it will become difficult to make money in these markets in the future. While Sony hasn't said what it will do to remedy this weak link, making the PlayStation 2 into a "multipurpose media device" may mean stereo and/or movie playback abilities will be included in the new system. With all the power under the hood, the PlayStation 2 could easily emulate effects like Dolby Digital or DTS without the use of additional hardware decoders. And as more DTS-based music CDs appear on the market, consumers' needs may grow for a higher sound standard.

　　Sony will exchange one share of Sony stock on Jan.1 for 0.835 shares of Sony Music, 0.565 shares of Sony Chemical Corp., and 0.203 shares of Sony Precision Technology, although these prices could change.