Eighteen months ago when we first identified that Sony Australia was in trouble, their chief PR spin doctor, Jenny Geddes, did what most sloppy trades people do, she attempted to hide the fact by banning SmartHouse and ChannelNews from having access to anything to do with Sony.
Her primary objective was to close down any negative debate that may impact on their precious Sony brand, which back then was still seen as a premium brand.
She then attempted to use her PR skills to try and discredit 4Square Media because we were highlighting constant “price gouging” by Sony. We also tipped that Sony was in trouble both globally and locally.
Earlier today, we exclusively revealed that Sony Australia sales have slumped $201 Million during the last financial year, while profits of $49 Million in 2009 have turned into losses of $6 million at March 2010.
At the same time Samsung Australia has seen sales grow from $1.2 Billion in 2008 to $1.6 Billion in 2009/2010 financial year.
Now as Sony bleeds revenue, sacks staff and profits evaporate, the Japanese company is discounting their once premium brand in an effort to remain competitive, an issue we alluded to 18 months ago.
At the same time arch rival Samsung, who has systematically stripped market share away from Sony during the past 12 months, is now moving to take the premium end of the market once owned by Sony by launching high end $10,000 TVs. This will be followed shortly by a new range of high end home entertainment gear.
In the PC market Sony, with their Vaio notebook range, is not making headway against Samsung who after an absence of three years returned 18 months ago to the PC market with a new range of notebooks, printers, storage devices and commercial display screens.
In just 18 months and up against a brand that has been in the Australian market for several years, Samsung is significantly outselling Sony who still believes that their Vaio notebooks are worth a premium price despite the fact that they are not designed or even made by Sony anymore. Also hurting Sony in the PC market is Apple, who is ironically the brand that Sony would like to be.
Sony’s biggest battering has come in the TV market where LG, Panasonic and Samsung have stripped market share away from the Japanese brand.
Both retailers and consumers have deserted the Sony brand in droves, and at one stage Sony witnessed a plunge in TV market share from 33 percent to 14 percent. Now they are back in second place to Samsung who have over 30 percent Vs Sony who has around 22 percent.
What the consumer is waking up to is that the Sony Bravia TV is no longer a made-in-Japan product. Neither are the components in the TV made by Sony. Wistron is the #7 largest LCD TV OEM makers in the world and a large percentage of their TV production is thanks to Sony, who outsources 80 percent of their LCD TV production to the Chinese company who has plants in China, Mexico and the Czech Republic.
At one stage Samsung and Sony were good friends. They even had a joint venture TV manufacturing business. Recently Executive Deputy President of Sony, Hiroshi Yoshioka, said “Samsung was a competitor “and that Sony had previous difficulties dealing with them as they stripped market share away from the Japanese company, who globally has become a consumer electronics “basket case” due to poor marketing decisions and high manufacturing overheads.
In the digital camera market consumers are moving away from camcorders where Sony once dominated. Instead they are using Smartphones to shoot video. Even the new Sony Bloggie handheld Full HD camcorder is suffering from poor sales due to consumer resistance.
Under pressure at Sony Australia is CEO Carl Rose, a 24 year Sony veteran, who was brought back to Australia in 2007 in an effort to lift sales.
After riding off the back of the work done by his predecessor, initiatives implemented by Rose during 2008/2009 year appear to have gone pear-shaped resulting in the company reporting record losses and a 22 percent fall in sales in 2010.
Rose who claims that he has a “ferocious appetite for competition” appears to have met his match in other local competitors. The question now is will he last at the helm of Sony Australia.
In late 2007 Rose bragged “I’m proud to say we’ve seen Sony returning to global leadership in technology and innovation, and returning to number one in Australia. We’re right back in the game.”
The only problem was that by then, Sony globally was hitting a brick wall at 200 kilometres an hour. Sales were set to plummet in 2008 and 2009 resulting in the company losing billions, sacking over 25,000 employees and closing over 19 major manufacturing plants around the world.
Rose, who claims that his greatest challenge is finding the right balance between strategy and execution, appears to need a refresher course or a spell at Samsung where he can get a sniff of what real success is all about.
As at March 2010, which is the end of the Japanese Financial year, Sony struggled to make a mere US$289 million dollar profit for the quarter, arch rival Samsung Electronics meanwhile delivered a whopping US$3.6 billion for the quarter.
Samsung’s profit was 83 per cent higher than the$1.94 Billion it earned in the April to June period of 2009.
Right now Sony Australia is attempting to marry the PS3 and their Bravia TV in an effort to compete in the IPTV market. They see content as a means by which they can claw back lost profits. The only problem is that brands like Google Apple and the likes of Panasonic, LG and Samsung are planning to take Sony on in what will be a bruising encounter.
Investments made by Sony 23 years ago when they purchased CBS coupled with investment into movie and TV production are all part of Sony’s new strategy, the only problem is that Sony is bleeding cash and their once strong brand is a pittance of its past self.
Brands like Google, Apple and Samsung are now seen as the new smart kids on the block, while Sony is fast being relegated to the bottom end of the market where buying a cheap Sony is still seen as a bargain.