The rise and fall of Sony
- — 17 July, 2012 00:22
After striking it rich with products such as the Walkman portable cassette player and Trinitron analogue TV, Sony tried its hand with its PlayStation console to great success. However, recent years have not been as kind to the company and its subsequent products.
There was a time once when Japanese technology giant, Sony, occupied the same enviable position that computer vendor, Apple, does now. Sony revolutionised the music industry in the ‘80s with its Walkman range of tape recorders while its Trinitron range of analogue TVs were renowned for providing the sharpest and cleanest picture on the market. Off the back of innovative and well-designed products such as the Walkman and Trinitron, as well as others, Sony quickly grew in size and wealth in the following decades.
However, these days you are more likely to fi nd people listening to music on their Apple iPod instead of a Sony device, and a typical living room might have an LG or Samsung fl at-screen TV than a Sony Bravia. It is for these very reasons that Sony has had to make the unpleasant admission that it will lose $US5.8 billion for its last financial year ending Match 30, 2012. But after dominating the consumer space for such a long time, how could things turn out this way for the company?
Sony’s downward slide started long before 2012, though Sony seemingly tried to halt this trend by appointing Welsh-born Sir Howard Stringer as president of Sony Corporation in 2009. However, despite doing his best to implement broader corporate restructuring while at the helm at Sony, he was replaced this year with Kazuo Hirai from the company’s gaming arm, Sony Computer Entertainment. What positive effect Stringer had on Sony during his tenure as president is up for debate, but the fact that company will lose $65.8 billion this year is an undeniable fact.
Sony A/NZ managing director, Carl Rose, is the first to admit that Sony is facing “an incredible challenge globally”. “It would be naïve of me to not,” he said. However, with Kazuo Hirai stepping into the leadership role at Sony this year, Rose feels that the corporation has “wasted no time” in setting out his plan to turn Sony’s fortunes around. “Hirai's plans focus on growing the electronics business to generate new value, while further strengthening the stable business foundations of the entertainment and financial service businesses,” he said.
Following the announcement of Sony’s massive losses for this year, the New York Times published a scathing article titled How the Tech Parade Passed Sony By, which speculated on the reasons behind its poor financial performance. At the top was the accusation that Sony’s lack of success with products is due to its “astonishing lack of ideas”, though this was highlighted as being endemic of the Japanese technology industry as whole.
When faced with this accusation, Rose counters with how Sony recently launched its new 2012 TV line-up, singling out the Bravia HX50 as “the best TV on the market.” “We are in the midst of a plan to turn our TV business around and Sony Corporation plans to return to profitability in 2014,” he said. “We’ve been working incredibly hard on enhancing the image and audio quality of our Bravia range of LCD televisions.”
Thus, contrary to the accusations of detractors, Rose does not think the company is “out of ideas”. Instead, he feels the opposite is true and that Sony has instead been accused of “having too many ideas”. Two examples Rose uses to back up his claims of innovation are the Personal 3D Viewer and Digital Recording Binoculars. “We are not out of ideas,” he reiterated. “Instead, we’re returning focus to our business and the products we offer, while continuing to revolutionise the electronics industry.”
Ideas are not just limited to products, and Rose highlights that the experience consumers have with Sony, which the company refers to internally as the User Experience (UX), as being equally important. “We’re strengthening the UX across Sony’s entire product and network service line-up,” he said. “Just one example in this area is the launch this year of the service PlayMemories, which enables users to enjoy high quality videos and photos on a variety of devices including LCD TVs, PCs, tablets, and smartphones.”
Gartner Electronics analyst, Paul O’Donovan, is also on the same page regarding the “lack of idea” accusation, branding it as “boulderdash” and “rubbish”. “Sony has certainly had some ideas, and they have continued to be innovative,” he said. For O’Donovan, the problem lies in that Sony is not innovating in the right area or being able to put in enough money into R&D to push these new technologies forward.
As an example, he recounts how Sony brought out OLED TVs a few years ago, but since the yields were not very good, they did not persist in bringing the technology to the market. “That is a clear example of being innovative, but the dire consequences for Sony, like in all Japanese companies, is that there any no longer any bottomless pockets of money that they can push into these endeavours,” he said.
Because of Sony’s conservative approach, O’Donovan has seen the company instead focus on innovating in areas that it has been struggling in. “It’s very difficult when you’re losing all that money to spend a lot of money on R&D,” he said. However, O’Donovan says this goes to show that Sony is looking at new technologies, as recently at CES in January when they brought out a new TV technology called crystal LED. “So the assumption that they have an ‘astonishing lack of ideas’ is not true,” he said.
Another criticism levelled at Sony is that the reason the company has not been making “any money” in years due to its complete lack of a “hit product” during that time. Rose feels that this broad generalisation is not an accurate reflection of the company. “We’ve actually had numerous hit products including our NEX range of E-mount cameras, which Time Magazine even declared its ‘product of the year,’” he said. However, Rose concedes that at the same time, Sony has been hit with incredible adversity in the last 18 months, with a disastrous earthquake and tsunami in Sony’s home turf of Japan and the floods in Thailand.