Do you remember the Walkman? The CD? The CD Walkman? Sony created (and co-created) all of them, along with the Trinitron TV, Blu-Ray discs, the PlayStation and dozens of other consumer electronics devices that helped create our modern world. But over the last few years, others have captured Sony’s traditional markets, while very little Sony innovation has made an impact. The result is a bloated workforce, unsold inventory and a stock that’s down more than 90% from its all-time high in 2000.
Sony has posted losses for four consecutive years, and the company has lost its leadership position in just about every market it used to dominate. Can Sony’s new rock star CEO refocus the company before Apple, Microsoft and Samsung devour everything it has left?
Consumer electronics used to be Sony’s cash cow, but now it’s more of an expensive hobby. Sony’s VAIO line of PCs no longer commands a premium. Improving phone cameras have eroded point-and-shoot camera sales, and Sony’s SLRs have barely dented the market. Sony’s eReader charge died long ago.
But the biggest devastation has come in TVs. While Sony packed its spendy sets with features like Google TV, Samsung made a less expensive, more reliable product that still included the things (like Netflix and Pandora) that customers really wanted. Earlier this year, Sony admitted defeat, hacking its ambitious plan to produce 40 million TV sets per year by 50%.
Gaming also hasn’t gone well. The company that pushed Sega out of the console business has fallen on hard times. The PS Vita handheld has been a flop, even in Japan, where the previous generation PSP continues to outsell it even as tablet and smartphone gaming threatens the entire category.
The PlayStation 3, Sony’s gaming bread and butter, is aging poorly. Despite a giant pavilion at the recent Electronic Entertainment Expo (E3), Sony barely made a peep at the show. Microsoft, which also had no new hardware, still made a stir with its SmartGlass platform announcement. Game publishing looks no better, with the once-mighty Sony Online Entertainment now best-known for being part of a 2011 hack that compromised millions of accounts.
Phones are still a growth business, but Sony is late to the game. Its newest Xperia Android smartphones are solid middle-of-the-pack contenders, while Samsung and HTC are worlds ahead in features and carrier relationships. Unless Sony can create meaningful tie-ins with its gaming or entertainment properties, purchasers will consider Sony handsets only when the price is right.
The Prognosis Sony isn’t going bankrupt in the near future, but when upper management acknowledges the bleeding, things are bad. There are problems that won’t get better on their own. Sony’s phones are likely to languish in the U.S. and Europe, and perform better in Japan. Some mildly interesting consumer electronics products, like the new Google TV box, won’t be enough to change the company’s fortunes. Its film and video division (one of the few lines of business still making a profit) will probably perform well, but without an anchoring technology, distribution will depend on third-party partners. Gaming remains Sony’s strongest chance to gain a distribution foothold in the living room, and the next year will be critical. If Hirai has his way, the Sony of 2015 will be a smaller, more focused, more innovative company that may have shed much of its commodity electronics business to focus on gaming, telecommunications and entertainment content. If he doesn’t get his way, Sony will continue to leak money until it breaks up under its own weight.
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Consumer electronics used to be Sony’s cash cow, but now it’s more of an expensive hobby. Sony’s VAIO line of PCs no longer commands a premium. Improving phone cameras have eroded point-and-shoot camera sales, and Sony’s SLRs have barely dented the market. Sony’s eReader charge died long ago.
But the biggest devastation has come in TVs. While Sony packed its spendy sets with features like Google TV, Samsung made a less expensive, more reliable product that still included the things (like Netflix and Pandora) that customers really wanted. Earlier this year, Sony admitted defeat, hacking its ambitious plan to produce 40 million TV sets per year by 50%.
Gaming also hasn’t gone well. The company that pushed Sega out of the console business has fallen on hard times. The PS Vita handheld has been a flop, even in Japan, where the previous generation PSP continues to outsell it even as tablet and smartphone gaming threatens the entire category.
The PlayStation 3, Sony’s gaming bread and butter, is aging poorly. Despite a giant pavilion at the recent Electronic Entertainment Expo (E3), Sony barely made a peep at the show. Microsoft, which also had no new hardware, still made a stir with its SmartGlass platform announcement. Game publishing looks no better, with the once-mighty Sony Online Entertainment now best-known for being part of a 2011 hack that compromised millions of accounts.
Phones are still a growth business, but Sony is late to the game. Its newest Xperia Android smartphones are solid middle-of-the-pack contenders, while Samsung and HTC are worlds ahead in features and carrier relationships. Unless Sony can create meaningful tie-ins with its gaming or entertainment properties, purchasers will consider Sony handsets only when the price is right.
The Prognosis Sony isn’t going bankrupt in the near future, but when upper management acknowledges the bleeding, things are bad. There are problems that won’t get better on their own. Sony’s phones are likely to languish in the U.S. and Europe, and perform better in Japan. Some mildly interesting consumer electronics products, like the new Google TV box, won’t be enough to change the company’s fortunes. Its film and video division (one of the few lines of business still making a profit) will probably perform well, but without an anchoring technology, distribution will depend on third-party partners. Gaming remains Sony’s strongest chance to gain a distribution foothold in the living room, and the next year will be critical. If Hirai has his way, the Sony of 2015 will be a smaller, more focused, more innovative company that may have shed much of its commodity electronics business to focus on gaming, telecommunications and entertainment content. If he doesn’t get his way, Sony will continue to leak money until it breaks up under its own weight.
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