Sony patina in its efforts to regain technological leadership
Two years after Kazuo Hirai took over as CEO of Sony, the company is returning to a familiar pattern. After investors assure that the recovery of the conglomerate was close, the company is poised to spread Wednesday its fourth annual balance with losses over a period of five years.
Consumers have become brands such as Apple and Samsung Electronics. Rating agencies have downgraded the debt to junk grade Sony. Analysts who follow Sony longtime fear that Hirai is more concerned with taking away from the failures to find the star product that Sony might return to his reputation as one of the most innovative companies of the last century.
“There is a long-term type of lifestyle you want to create Sony”, says Shingo Tamura, a former engineer who left Sony in 2006.
Hirai, who must present his long-term strategy on 22 May, has promised to rebuild the troubled electronic arm of the company on three pillars: games, image technology and mobile devices.
“Sometimes in Sony zigzagged toward the great innovations, and sometimes simply failed”, Hirai said at an event in January in Las Vegas. “But Sony’s failure is not really an end. It’s a reason. It’s a reason to keep trying”.
The company declined to comment for this article.
In its new console, the PlayStation 4, is doing well. Until early April, the company had sold more than seven million units in its first five months on the market, surpassing sales of the new console Xbox One, Microsoft.
Sony also has hopes for their portable music players, HD, which sells under the name Walkman and its 4K TVs that offer higher quality image. Other devices such as motion sensors that can be attached to tennis rackets, seek to rebuild the brand Sony.
The problem is that so far none of the areas of growth seems able to revive the company’s earnings. The 4K TVs, for example, represent less than 10% of global TV sales, and it is difficult for niche products have a major impact on a company with about $ 75,000 million in annual revenue.
Less than two weeks ago, Sony forecast a loss of 130,000 million yen (U.S. $ 1,300 million) for the fiscal year that ended in March, a radical change compared to a profit of 30,000 million yen had initially anticipated. The problems in the area of electronics again exceeded gains movies and music.
Even the PlayStation is the goose that lays the golden eggs used to be, because consumers today spend more time playing with their cell-phones. Sony’s goal of selling 20 million units of the PlayStation for the fiscal year just ended is less than 45% six years ago.
Sony said in February it would sell its PC business and spun off its TV business as a separate division, though controlled by Sony. The company included much of the costs of this restructuring on the numbers for the fiscal year just ended, so some investors say the worst may be over.
“I do not know when it will reach its next flagship product or when restructuring will end, but at least on the right track”, said Arnout Van Rijn, chief investment officer at Robeco Hong Kong, the fund has invested in shares of Sony for almost a decade. “So far it has taken them a disappointingly long time, but eventually appreciate” the results.
A viable mobile business seems to be a prerequisite for success in the field of electronics, because the cellular functions previously performed grouped products such as Sony PlayStation, Walkman and Cyber-shot cameras.
In 2012, the year they took the reins Hirai, Sony advanced towards its goal to establish itself as the No. 3 in smartphones behind Samsung and Apple. Sony’s involvement in the global market rose to 4.3% this year, according to research firm IDC. Last year, this share dropped to 3.8% and Sony dropped to sixth. Although their Xperia phones have re-ceived favorable reviews, consumers do not have enough reasons to change your iPhone or Galaxy phones.
Sony says it will not seek market volume and not fall into a price war in smartphones, although less expensive models launched in emerging markets.
The company has succeeded in getting its place sensors on iPhones and other cell, which strengthens one of the three pillars of growth Hirai: business images. However, it has competition. Samsung, which previously used Sony sensors for their phones now use other own.
Many questions about the future of Sony focus on its identity as a consumer electronics company. Today, much of their profit comes from various businesses, such as movies, music, and the division of banking and life insurance in Japan. To add to the confusion, in April the company announced an investment of $ 2 million for a real estate brokerage in Japan.
Some analysts say that Sony should follow the example of fellow Panasonic Corp. and leave the business of television sets and other electronic essentials that are today dominated by China and South Korea. Others point out that the key is to combine Sony’s expertise in hardware with new software and services, including television service in the cloud that the company plans to launch this year in the U.S.
“Sure it’s nice to have an audio and video getting better, but if not part of an ecosystem, no purpose. It is destined to become a commodity”, said Koichiro Tsujino, a former Sony executive who left the company in 2006 to go to Google Inc. and now heads the Japanese Internet company Alex Corp.
Sony comes up with good ideas, but they always fail in their execution. They’ve always tried to set the rules instead of listening to the consumer. Hopefully they’ve learned their lesson.