AIBO is the acronym for Artificial Intelligence robot. AIBO was one of the initial prototypes of robotic pets that Sony designed and manufactured.

It was initially meant to do more complex tasks, but eventually Sony realized that the technological basis of the project was flawed to begin with. Now that they had this project in which much financial resources were invested in, Sony executives wondered if there was a way to set up a value proposition to give the AIBO product a clear purpose to help in creating a strategic plan to help generate revenue.

Thus, Sony's value proposition began with answering this question: Why not create a robot that didn't do anything useful at all, a robot that was simply entertaining to people? The answer to this question is the essence of the value proposition of the AIBO product.

Toshitada Doi, the founder of AIBO, believed that consumers were searching for a product that would provide "love, healing, and relaxation." This AIBO project hoped to achieve that objective through continuing to create a robotic pet with the capacity to have characteristics of a real pet without the inconvenience of having to own a real pet. Sony is banking on this value proposition to be successful since it invested a large portion into R&D aspect of the AIBO project.

Although Sony did go the route of marketing the AIBO product as a lovable pet, some executives felt it was a mistake not to position AIBO as an actual serious productivity tool. The basis of their argument was that the value proposition should be focused on functionality, because it could be easier to mass market.

However, I do not think that emphasizing AIBO's "lovability" factor was a mistake. Sony was correct strategically positioning AIBO as a "companion," at least in the first generation of robots, because it was generally considered an inadequate household robot.

Perhaps in the future, after so many generations of AIBO, when the actually engineering that comprise the robots is perfected, they can market AIBO as a "serious productivity tool." The approach that Sony took is a testament to its resourcefulness of its marketing team. They utilized a stealth positioning approach to garner significant amount of revenues during a time when Sony was basically testing their robot technology. These revenues, in turn, helped finance the continued development of its robots.

Moreover, by having no functionality, it allows Sony to actually play around with ideas for functionality in the future. Sony's intelligent use of the value proposition helped them carve out a brand new niche in the industry.