Sony’s latest strategy sees it settling to live in the shadow of Samsung and Apple
Last week, Sony announced that it is likely to post record losses of US$6.4 billion. A few days later, new CEO Kazuo Hirai announced the latest strategy to try to turn the company around. Much of the talk focused on the idea of “One Sony,” but many have tried and failed to make Sony at least as valuable as the sum of its parts.
Games are a strength, but Sony must be wary of resting on its laurels
Unlike many of its other business divisions, Sony does not need to turn around its games unit. But it should not rest on its laurels. Whereas the PS2 was the runaway leader in the last console generation, the PS3 is third – admittedly only narrowly. The company has lost much of the initiative to its competitors, despite having the most powerful console and the most accurate motion controller.
And despite Sony’s boasts of its strength in games, the company has managed to miss the boat on both mobile gaming and social gaming. Both sectors can offer substantial returns for a low investment, and both appeal to much larger audiences than console gaming. And it is not Angry Birds that these gamers buy: Many have gone out and bought the iPhone, the Wii or the Xbox 360 with Kinect precisely because they want the casual- and social-gaming experience these devices offer. And although they might not buy as many games or play for as long, capturing the imagination of these casual gamers is essential for selling large volumes of games consoles.
TV can be made profitable, but what about desirable?
Although many of the announcements surrounding the TV division were already stated last November, they are worth going over, because this device more than any other is a symbol of all that is right and wrong with Sony today. Despite being the third-largest flat-screen-TV manufacturer, behind Samsung and LG, with expected shipments of 20 million TVs in the 12 months to end-March 2010, Sony has recorded a loss from its TV division for eight years in a row.
Sony is not just talking the talk about reducing the costs of its TV division but has already made several key moves in that direction. Its decision to move away from being a company that must build everything itself to one that will readily turn to third parties where it is economical to do so is a long-overdue action. And if it is good enough for the highly profitable Apple, surely it is good enough for Sony.
Sony’s decision to reduce the number of TV models it offers by 30% is a good move. For too long TV manufacturers have offered a product range so segmented that they have bamboozled potential buyers. Sony must ensure that its reduced TV range offers potential buyers a clear choice among high-end, midrange and low-end TVs. This reduced range should have much more understandable branding. There is little in names such as KDL-46EX524 and KDL-46HX753 to inspire consumers or indicate which one is better.
No. 2 on too many fronts
The Sony brand remains strong, but in too many of the markets in which it’s competing it is coming in second or third. Although this is not bad in isolation, it does serve to reduce the value of the Sony brand across its device and service portfolio. Put bluntly, it is not that Sony lacks an iTunes or Beats Audio or Spotify equivalent but that it lacks the power of these individual brands.
On paper, Sony’s latest strategy looks good, if lacking in detail. But it does not solve the key problem for the company that its TVs are in the public’s mind inferior to its main rivals’. Perhaps now that this strategy is in place Sony can create a TV that shows it can still be the leader in design it once was.