Sony: the collapse of the electronics giant?

Sony, the creator of “Walkman” and Trinitron TV; the big consumer electronics giant does not make money with consumer technology divisions. Yes, it began as a creator of electronic after World War II, but today, the computers, televisions and PlayStation don’t offer earnings.

Last week Sony announced the sale of its Vaio computers to investment fund Japan Industrial Partners in a bid to curb the huge losses. Its TV business and marketing will also be modified. Some 5,000 employees of Sony Corporation will be laid off in this new restructuring plan. Consider their fiscal year end with losses of 802 million euros. The truth is that for some time, investors and analysts had been recommended to Sony to get rid of your unit’s electronic business because it produced only loss. A giant electronic, without electronics?

Sony Starts

Akio Morita and Masaru Ibuka, founders of Sony, met during meetings of the Research Committee Wartime while studying the development of new weapons. Morita was a little more than 12 years younger than Ibuka but this did not prevent becoming friends.

In September 1945, relate from Sony, Ibuka returned to Tokyo to work in the capital destroyed by the war. It was established by a small group in Ginza with which he began experimenting with silicon wafers and other elements coming from factories. He was called “Tokyo Tsushin Kenkyujo” (Telecommunications Research Institute of Tokyo). They explain that to date, despite the fact that Japan already had a good background in engineering, no one wanted to take the first step.

His first idea was to repair radios damaged during the war and make shortwave adapters. They report that the Japanese were “hungry” world news, and repair business started on the right foot. The initiative was profiled in a newspaper in a popular column called “Blue Pencil”. Morita, who was in his hometown, read the article, recognized the name of his friend and did not hesitate to contact Ibuka. Morita moved to Tokyo and began to work in the city.

In May the following year the company Tokyo Tsushin Kogyo KK was established (Tokyo Telecommunications Engineering Corporation) known as Totsuko, for research and development of telecommunications equipment. It started the successful commercialization of a megaphone. In 1950 begins atener very successful company thanks to the tapes. In March this year launched “Soni-Tape”, the first recording tape coated magnetite Japan. In May 1950 sold the G-Type, the first magnetic tape recorder. Five years later they decide to incorporate the logo of Sony in Totsuko devices.

By that time, executives ‘Sony’ traveled to the U.S. in order to expand the business. As it says on their official website, they convinced Bell Laboratories which sell you the licenses of the newly developed transistor. With these licenses, the company so far called Totsuko, could make electronic compact and portable. In 1955 launched the first radius japanese transistor, the TR-55. In January 1958 officially changed the company name to Sony Corporation.

The decade of the “Trinitron”

In the 60s, Sony started to produce different types of televisions and related products, as the “world’s smallest” TV (TV5-303), or the first compact transistor VTR. Launches Chromatron color TV, the first Japanese amplifier and the first cassette tape recorder TC-100

In late 1960, Sony joins CBS, creating the company CBS Sony Inc., which later would become completely Sony and become what is now known as Sony Music Entertainment. In 1968 (Japan) and 1969 (USA) Sony launches its flagship TV, the Trinitron color. It becomes a bestseller. In fact, a couple of years after Sony received an Emmy for his contribution to the television industry with the Trinitron. In last year’s 70, throws a mythical device, the first stereo cassette player, the ‘Walkman’.

80’s, the golden age

Julian Close, Nasdaq columnist, recalls that as a teenager, he learned two things about electronics: it was made in Japan always better than manufactured in the U.S. and if it was Sony, you had the best of the best. In this summarizes the 80’s for Sony. It was the best mark in the electronic world. It was pioneering and innovative and its products were synonymous with good quality. It happened to the Walkman, with the first CD, with Betacam, with its better known as camcorders ‘HandyCam’.

In the late 80 enters a new business. Buy from Columbia Pictures and producer Enterteinment is movies. In 90 the division was renamed Sony Pictures Entertainment Inc. Ditch the tape to digital with the portable CD player, best known as “DiskMan” develops a new format called DVD, released his first digital camera ‘Cybershot’. Also enter the video game business with PlayStation, its first video, and also inserted into the computer market with the Vaio PC line. Experiments with robots like AIBO, an intelligent robotic dog. Many explain that in the late 90s, Sony began to experience decline.

New millennium, declining

In the past 15 years Sony has been very irregular. It expanded its business areas of the financial sector, such as a bank or an insurance company. Although the war leads to the PlayStation video games, the truth is that if you adhere to the numbers, Sony does not make money with their consoles. In the first 24 hours of sale, got a PlayStation 4 million units sold. However, Sony only makes $ 18 per PS4 selling. A silly profit margin, as calculated by IHS.

From that point Nasdaq in the explosion of the financial crisis of 2008, Sony was very, very beaten. In fact, it lost two thirds of its value. What we showed was never recovered from a previous crisis, the tech bubble suffered between 2000 and 2001. From 2008 Sony continued to sink, and deepened their losses came another disaster in 2011; a tsunami and earthquake hit Japan and its financial situation. According highlights from Nasdaq, the tsunami wiped out much of the production capacity of the company.

But its decline not only has to do with financial crises or natural disasters, but by competition. Kotaku, a specialized video game website did a story on the perception of the brand Sony in Japan, its main market, and found that the Sony products seemed very expensive. With the entry into the Japanese market for Korean firms like Samsung, the Japanese have viewed your pocket and have opted for cheaper and high quality products. Many electronics stores in Japan have also stopped selling Sony products, even when the Japanese mentality is to support the local product.

In May 2013 The New York Times (NYT) emphasized that the biggest revenue Sony did not come from its best-known electronics divisions but their businesses Hollywood by Sony Pictures, the music industry with Sony Music and Information life insurance in Japan. NYT noted that in 2012, the financial arm of Sony accounted for 63% of total revenue. The sale of life insurance has been mu higher income in the past 10 years, representing about 9,000 million dollars in profits.