Can Sony Reinvent Itself?

Bruce Rayner, Contributing Editor, Enterprise Efficiency OEM | 4/13/2012 | 35 comments

Bruce Rayner
Japan’s major corporations will be reporting their 2012 fiscal results in the next few weeks, and the word on the street is that it’s not going to be pretty, especially for the top electronics OEMs. As a preview, Sony and Sharp both warned earlier this week that their losses for the year, which ended March 31, will exceed previous projections. On Thursday, Sony’s CFO said the company’s loss will total $6.5 billion, the worst in company history and more than double its previous estimate of $2.9 billion.

A couple of months ago, I blogged about the sorry state of Sony, Nintendo, NEC, and others after they reported massive losses for the quarter that ended December 31. All were hit hard by the Thai flooding in 2011 that disrupted the supply of key components, and a strong Yen that makes Japanese products more expensive in foreign markets has eroded overseas earnings. The Yen is currently at a near record high against the US dollar.

In recent years, Japan’s electronics sector seems to have lost its technological edge to foreign innovators such as Apple and Samsung and a slew of up-and-coming competitors from China. Adding to their business challenges is the general malaise the country is feeling as it deals with the aftermath of the March 11, 2011 earthquake and tsunami and the Fukushima nuclear disaster. There’s a dark cloud hovering over the country.

The question now is: What steps will these former electronics powerhouses take to turn their fortunes around? Whatever they are, they better be bold.

Sony’s new CEO Kuzio Hiria provided a glimpse Thursday into the company’s plans to return to profitability. Hiria took the helm from Howard Springer, Sony’s first (and perhaps last) foreign CEO, earlier this month. “The time for Sony to change is now,” he said at a news conference.

But rather than laying out a bold and visionary plan for a reinvention of the company, Hiria spoke mainly of tactics. This included a focus on three existing businesses -- smartphones and tablets, cameras and camcorders, and games -- and a move away from the company’s unprofitable TV business. In addition, he announced plans to invest in medical equipment and cut 10,000 jobs.

In recent years, Sony lost its lead in TVs to Korea’s Samsung, which invested heavily in state-of-the-art mass production of flat-panel screens to become the dominant player in the market. Sony capitulated and entered into a joint venture with the Korean powerhouse to manufacture LCD screens but ended up pulling the plug late last year as the plant was not competitive.

Now Sony is banking on the Xperia smartphone to bring it back to life. Hiria said the Xperia will be the new hub of a networked environment that connects to a host of Sony devices, including the Sony PlayStation, and provides access to Sony’s vast inventory of music, video, and game content.

That’s a tall order as Sony is currently an also-ran in the smartphone market and faces a crowded field of financially strong, highly innovative competitors including top-ranked Apple and Samsung, not to mention a slew of Chinese companies that are looking to capture a piece of the low-end smartphone market. It’s going to be an uphill battle, for sure.

Of course, Hiria’s announcement was just the first salvo aimed at calming the markets and laying out the long-term plan for bringing the company back to life. If it’s to succeed, Sony -- and indeed, all the other major Japanese electronics OEMs -- needs to deliver products that will wow the world, game-changers on par with the Walkman of the 1980s. They all need to reinvent themselves. And that’s a tall order.

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keveend   Can Sony Reinvent Itself?   6/24/2012 9:46:17 AM
Re: interesting
You see, at the end of the day, the file plays on the Samsung tv and doesn't on the Sony one.

That's what matters.
batye   Can Sony Reinvent Itself?   6/2/2012 11:17:29 AM
Re: interesting
I have to disagree - sorry

Sony forgot about it customers

and right now on shaky grounds... 

inovation or not consumers do vote with the $$$
nasimson   Can Sony Reinvent Itself?   5/30/2012 1:40:56 PM
Re: interesting
So you mean to say that Sony is not keeping up with the present innovative market? See, the compatibility issue cannot be blamed on the sony format. It may be fault of the Samsung tv on the whole. How can you assume that it must be the Sony's file format fault? Sony is one of the biggest giants in the market and it has the most updated infrastructure needed to meet today's technological requirements. 
Syerita Turner   Can Sony Reinvent Itself?   5/21/2012 9:08:23 PM
Re: interesting
I agree. I believe that certain manufacturers have grown respect in the industry by having a strong product and the name that has been around for many years with much success, but that does not mean that they have the better product. I think that Sony will need to really step their game up and compete with some of the brands that people would not think twice about but has the better technology and picture quality overall. Technology grows overnight so I think the game is for those that can keep up with the constant changes that are out there. Names and awards can not measure to quality and performance.
keveend   Can Sony Reinvent Itself?   5/19/2012 8:38:20 AM
Re: interesting
Well some of their products are, like you said "the best there is" but their tv is really disappointing. I have a Samsung tv and my cousin has a Sony television, recently I put on a music video or something on to a flash drive and took it to his place to show it to him. I was really surprised when the tv didn't detect the format. His tv might not be the latest one there is but still I think Sony has to widen it's circle a bit more. What do you think?
keveend   Can Sony Reinvent Itself?   5/19/2012 8:31:10 AM
Re: interesting
Thank you for clarifying that up.
nasimson   Can Sony Reinvent Itself?   5/4/2012 9:49:05 AM
Sony vs Samsung

Sony has always captured the market with their supreme picture quality and their high quality products. So in no way other companies such as Samsung can compete the robustness of the Sony products. However, they may capture the market by producing low cost goods but then again, isn't that a sign of an anticompetitive conduct? Samsung may have top upped its product class by stepping in with android but that in no way can break the brand image of Sony. For me Sony products are simply outclass and way above its competitors in terms of quality.

Syerita Turner   Can Sony Reinvent Itself?   4/30/2012 10:34:42 PM
Re: interesting
You are right. I think that with Sony being on top so long ago and with the rise of such great technology, they are being left by the wasteside. I also believe that these products are still the best they just need some reinventing to keep up with the times. A year or so ago, I received a sony walkman MP3 for Mother's Day and I love it. They have done a great job with this and hope that they can do a great job with the new smartphone that they are coming out with. I just know they can compete, they just need to come on soon with something groundbreaking.
catalyst   Can Sony Reinvent Itself?   4/20/2012 5:18:59 PM
Re: interesting
@keveend:

What do you mean by "quite unlucky if you ask me?"

Imagine getting in an elevator that had a floor, with the number that when you pronounce it sounds exactly like the word death. If you're the type that believe in being lucky or unlucky then a 'death' floor would be quite unlucky.
singlemud   Can Sony Reinvent Itself?   4/20/2012 5:08:54 PM
Re: Can Sony Reinvent Itself?
that is true, people buy Sony product at a premium because of the good reputation and high quality in the past. Hope Sony can live up with this.
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