COMMENT: Sony Australia whose parent Company is wallowing under a mountain of losses and product failures has now resorted to the mass sacking of staff in Australia in an effort to cut costs while also admitting that they are trying to protect their competitive position.
At the other end of town competitors like Samsung and Panasonic are investing millions into the hiring of staff in an effort to expand their Australian operations at the expense of Sony.
Today’s retrenchments come as the Australian operation of the once mighty Japanese Consumer Electronics Company struggles to hold onto market share in several markets including the highly competitive TV flat panel display market where during the past 12 months the Company has resorted to giving away millions of dollars worth of Sony PS3 consoles and Blu ray players in an effort to boost sales of the Bravia LCD TV range.
They are also struggling in the gaming market where the PS3 which is some $110 dollars dearer than the same product in the USA is wallowing in the #3 slot with both Microsoft and Nintendo with their Wii console taking market share away from Sony Computer Entertainment.
Now Sony is under pressure from video-game publishers to cut the price of the PlayStation 3 console or risk seeing more development funds shift to Nintendo’s Wii.
While Panasonic Australia is claiming that they have had “the best year ever” in Australia, two weeks out from the end of the Japanese financial year Samsung is hiring senior staff in an effort to expand both their consumer electronics operations and their IT and commercial Pro AV divisions.
And while Panasonic and Samsung recognise that the market is tough in Australia due to the economic downturn they have also got a sniff of Sony’s problems and are now going after the ailing Japanese Company in an effort to rip market share away from them.
In the digital camera market both Panasonic and Samsung have recently launched new digital camera models with Panasonic now investing millions into the marketing of the new Lumix range.
And at a recent Panasonic digital camera event in Singapore the emphasis was more on taking share away from Sony than market leaders Canon or Nikon.
In Australia a Sony product is often more expensive than a lot of other brands for the simple reason that during the past 20 years the Company has invested millions into advertising and marketing to build a brand which consumers believed was worth the extra money.
Back then when Sony owned the CRT TV market and had products like the Walkman they by majority manufactured products in a Sony factory where quality could be controlled.
But now things are different because as Sony rack up billions in losses by the Quarter they have been forced to divest themselves of their factories sack tens of thousands of staff while turning to Chinese and Taiwanese Companies to manufacture their products.
They have also put on hold a deal with Sharp who is the largest manufacturer of LCD TV’s because of the value of the Yen to the US dollar. Instead those Bravia panels are being made in Taiwanese and Chinese factories. The Company is also talking to Seiko Epson about a joint manufacturing deal.
In export-driven Japan, firms such as Sony have been rapidly scaling back output and cutting jobs to cope with plummeting sales with one senior Sony executive at the recent CES show in Las Vegas admitting that product quality will suffer as Sony moves to third party manufacturing.
They also admitted that R&D expenditure had been tightened. Another big issue for Sony is that the Company has failed to deliver a killer product during the past decade. They lost the Walkman market to the Apple iPod. In the gaming market the simple Nintendo Wii is stripping market share away from Sony and at Xmas Nintendo had 52% of the entire gaming market.
In the mobile phone market Sony Ericsson has lost massive market share to the Apple iPhone with HTC now taking share away from them in the Smartphone market.
In a recent 98 word statement aimed at rationalising the sacking of 32 staff CEO Carl Rose admitted that Sony was undergoing a strategic shift in direction in an effort to protect their competitive position in the local market.
This statement smacks of an admission that Sony domestically could be in trouble and that the sackings are more about cutting costs ahead of some tough competition from the likes of Samsung and LG who have a pricing advantage over Sony due to them being Korean Companies who are not under as much cross rate currency pressure as Sony.