When compared to the likes of Nintendo and Apple, Sony is now a consumer electronics basket case, after the Company yesterday admitted that key brands including their Sony Bravia TV’s, Playstation gaming consoles, Cybershot Digital Camera’s, Vaio notebooks and PC’s as well as their Handycam digital cameras were all bleeding billions in losses.
This is not an isolated situation caused by the economic downturn, because products like the Sony Playstation and the Bravia LCD TV range which was launched in 2005 have never made a profit.
Only hours before the release of yesterday’s financial results where Sony announced over $2 Billion in consumer electronic losses, Sony Australia tried to intimidate SmartHouse & ChannelNews by threatening us with legal action.
At the same time their PR department tried to run a smear campaign by telling media organisations that they had banned us because they did not like what we were writing about their Japanese brand which is wallowing in losses and is now trying to raise billions in capital to survive a brutal consumer electronics war with the likes of Samsung, Panasonic, LG Apple and Nintendo.
For example Sony has literally hundreds of products and despite this they cannot make a cent in profits because of poor management, over capitalisation of investment in new products, poor manufacturing processes and a vast array of tired products that consumers are starting to walk away from in droves.
On the other hand Apple and Nintendo are making billions in profits from just 4 products and a handful of software and applications. They include the Apple iPhone, iPod and the Nintendo Wii and DSi handheld.
Sony is today a fading flagship. Their products are no longer “Made In Japan” instead Sony is desperately cutting low cost manufacturing deals for everything including their Bravia TV’s which by majority are made in China, Korea and Taiwan.
Their Sony Playstation’s, as well their loss making Vaio notebooks as well as their Cybershot Digital Camera’s and Handycam video cameras collectively contributed to over $2.4 Billion in losses.
One of Sony’s core problems is that for many years they have been great engineers and designers but lousy software developers. They have tipped billions into design, R&D and manufacturing but little into software development as a result Companies like Apple were able to come along and steal the Walkman market, at the same time Nintendo who three years ago Sony had written off as a threat, walked in the gaming market and overnight took the gaming market from right under Sony’s noses.
Nintendo then rubbed Sony into the gaming industry quagmire, by literally milking billions out of the market, and while Sony struggled to make a single cent, from their Playstation offering despite the PS3 having a Blu ray player and despite the fact that in Australia Sony chose to give away tens of thousands of consoles in an effort to sell more Bravia LCD TV’s Nintendo was making profits from every single gaming console and handled device as well as their popular range of software. They appealed to the masses, the mums and dads, kids and grandparents, while Sony was still trying to attract the gaming enthusiast.
So does Sony have a future? No one knows, because Companies like Apple, Nintendo, Samsung, Panasonic and LG are all tipping billions into new making sure they don’t
Then you have the likes of Cisco who are new kids on the consumer electronics block. They are set to launch several new consumer products including content and software that will hurt the likes of Sony who are also trying to make a big play in the content market.
Then finally if not least, there is dear old Microsoft, who through discounting and new gaming software, as well as their Xbox Live Network has been steadily taking share away from Sony.
In the Digital Camera market Sony is being beaten up by not only the traditional camera players including Canon. Nikon and Pentax but the likes of Samsung and Panasonic who I believe will get even stronger over the next 12 months.
All that Sony can do now is concentrate on ripping costs out of their manufacturing processes and hope to god that someone actually walks through the door with a bright idea for a product, that actually delivers a profit.