COMMENT: As we predicted, Sony has made yet another billion dollar loss, with the Company struggling to not only make a profit but find direction in a brutal consumer electronics market, which is now dominated, by the likes of Apple and Samsung and new kids on the block like Google and Vizio who are now licensing their LED TV technology to Sony.
So what is the future for Sony, who is one of the most arrogant Companies on the block?
In the consumer space, Sony is doing a lousy job of competing in the flat panel TV market, portable music and PC market, the home theatre and digital camera and camcorder markets as well as the gaming market all markets where they are losing money according to their latest financial report.
Slashing costs, sacking people and moving to cheap third party manufacturers, is not the answer, nor will it help them, get back on top as a leading brand.
What is needed is innovation and new product’s that their competitors don’t have.
Five years ago Samsung was struggling to get traction in the consumer electronics market. They lacked the credibility that the Sony brand name delivered; they did not have products like Trinitron TV’s, the Walkman or owned patents like Blu ray.
Last week reported $3.5 billion in profits for the quarter, and are #1 in the TV market in Australia and other markets around the world.
Apple, who were struggling to hold their own in the PC market In 2004, just after the iPod had been launched, made a profit of $106 million for the year, Vs the $1.67 Billion quarterly profit announced last week.
In 2004 Sony were starting to realise that they were in trouble, profits had slumped 96% to just $202 million, they were losing momentum to rivals who had been quicker to ride the digital boom, then the arrogance of the then Japanese management kicked in when the Company said that the iPod was a “passing fad”.
Five years on it is Samsung and Apple who are delivering the big profits, even Panasonic who made a $5 billion loss last year have managed to turn their woes around, but not Sony.
Today Sony is fast becoming a “me to brand” and their actions in Australia, where they have initiated big price drops as opposed to years of price gouging off the strength of their brand is an indication that they have nothing left to fight their battles.
Gone is the innovation of the Walkman. Their Bravia TV brand is nothing more than a third party product made by low cost manufacturers. Several Bravia TV models, also have licensed LCD TV technology from other brands.
In the camera and camcorder market brands like the Panasonic Lumix are taking market share away from Sony who in the last quarter reported big loses and falling market share in this division.
Also taking share are traditional camera brands like Nikon and Canon.
On Friday Sony said that sales in the consumer electronics business had decreased by 36.5% year-on-year. Products that contributed to a decrease in sales include Bravia LCD televisions, which were affected by intensified price competition, a decrease in unit sales for the game business, which were affected by price declines as a result of cost saving efforts, and Cyber-shot compact digital cameras, which were affected by a decrease in unit sales.
Sony will return to profits, this will be achieved by cost cutting, moving to third party manufacturers and the sale of me to products.
But will they be the Sony of old?
I doubt it unless they can invent a new product or deliver a superior product to their competitors.
They also claim that they have an edge with 3D TV because of their content, but so do their competitors including Samsung, LG and Panasonic who have all shown 3D TV’s in recent weeks and in Panasonic’s case a 3D single lens camera which makes the shooting of 3D movies a lot easier.
Last year Sony was saying that they would lead from the front in the OLED TV market, but this fell in a heap this year when they failed to deliver a 27″ OLED TV despite months of promises.
They also believe that they have a content edge with Sony Pictures which reported a 30.4% decline in revenue last quarter and Sony Music. But this is a fallacy as the 6 other main Hollywood studios are lining up with their competitors to deliver Internet based content to TV’s Blu ray players, gaming consoles and other devices.
When 4Square Media first started writing about Sony’s woes the arrogance of Sony Australia kicked in. Firstly they threatened us.
Jenny Geddes the head of Sony Communication’s demanded that stories about their problems be pulled down from our web sites. Geddes, who use to work on the Microsoft account, resorted to screaming down the phone, demanding that we obey her wishes.
When this failed to work, Carl Rose at Sony Australia and Michael Ephraim the CEO of Sony Computer Entertainment chose to stop supplying us with press releases and banned us from their press events.
Geddes also attempted to discredit myself and 4Square Media by issuing blatantly false statement to marketing and tech industry web sites.
Then when this strategy failed and we kept breaking Sony stories about faulty products, price gouging and a move to third party manufacturers they called in their lawyers in an effort to intimidate us.
Only hours before announcing billion dollar losses in May 2009, the embattled Sony Australia who has 4 in house PR staff headed by Geddes, tried to muzzle us with a legal letter from their solicitors.
This also failed because there was no substance to their claims, what we were reporting was accurate and could not be challenged in a court of law.
Today Sony is a basket case, who, if they are to be successful going forward, have to first beat the likes of Samsung and Apple, temper their arrogance and start delivering products that consumer’s can only buy from Sony.
They need an iPod or an iPhone or a TV technology that delivers better performance than their competitors. We don’t need any more Sony proprietary technology or products made by third party vendors and branded Sony.
The market loves true innovation, It’s a simple formula but a hard one to execute on.