Why Sony Hasn’t Got A Leg To Stand On


A few weeks ago we asked Sony Australia management for an interview, we wanted the faceless people at Sony Australia to explain where they are going after the recent axing of several senior management and what is their current product strategy. They refused the interview opportunity which was not surprising considering the poor performance of the local operation.

We wanted Sony management how they aim to compete in the Australian market when they have no really unique products up against the likes of Apple, Google and Samsung, we also wanted to identify their for the local subsidary.

2013 was a really bad year for Sony Australia, they lost their CEO, CFO and up to 50 staff. They are currently battling with the Australian Taxation Office over $53 million in tax and penalties that the Company was hit with for failing to declare taxes spanning 2005 to 2008 and 2010 – the total extra tax for these year that the tax office claim Sony failed to declare was $32.7?million. Interest adds another $17.7 million and penalties $3.3 million.

During the last five years Sony has failed to deliver any unique marketing campaigns or a product that the Japanese Company can seriously compete with in a rapidly changing consumer electronics marketplace. 

There recent big idea was to give away a PS4 with a TV during the World Cup, they ran the same promotion back during the 2010 World Cup when Carl Rose the now dumped CEO was at the helm. 

They also ran the same promotion in the last quarter 2011 and 2012 and it did nothing to lift their overall sales of TV’s.

Unlike their competitors Sony has nothing unique, the Company is heading toward its sixth annual net loss in seven years and there is every chance that Sony will never recover. It was only two months ago that the Company announced that they were quitting the PC market. Then they announced that they were also quitting the OLED TV market a technology that four years ago Sony was bragging about claiming that they “would dominate” with this technology.   

Unlike Google, Apple, Samsung or LG Sony does not have the people or the skill set to deliver a product that consumers actually want to buy in the millions. They don’t have an iPad or iPhone, or a Galaxy S5.

There TV’s are “me too” and they now lack the brand clout or the products that made the Company famous. 

What Sony does have is arrogant management who still believe that the Sony brand actually means something to consumers. 

When Sony was famous and in demand Apple and Samsung were struggling to make a name for themselves now the tables are turned and despite tipping around $5 Billion into Research and Development during the past 12 months which is up 4% on what they spent the year prior the Company has failed to come up with a single hit product.
Even in the games area where their PS4 console is actually making money the Company is struggling to make money from their own games .

Sony heavily invests into its own first-party studios to develop games for the PlayStation 4, PlayStation 3 and PS Vita but the only problem is that 70% of those games are unprofitable. 

Right now Sony Computer Science Laboratories (CSL) is desperately trying to deliver a product that will actually make money for the Company. What they are working on according to Company executives is a portable computer that can bend like gummi candy, glasses that annotate the objects the wearer is looking at, and a refrigerator with facial recognition capabilities that only opens for a smile. (Just what I wanted). 

Researcher Ken Endo is testing prototype prosthetic legs, powered by a rechargeable battery the size of a matchbox, that he hopes will one day propel a person faster than natural limbs. The Blade Runner devices are not for the “mass market” according to Sony executives. 

The PlayStation games division has been one of the few financial bright spots for Sony due to the success of the PS4. While the company as a whole produced a net loss of approximately $1.26 billion for its 2014 fiscal year ending March 1, 2014, the Game division saw its sales surge 38.5 percent to $9.5 billion.

The days of hits like their 1979 Walkman are nowhere on the horizon for Sony. 

According to BusinessWeek the Company is investing money in SmartSkin, a dining table that turns into a touchscreen to display family photos or allow cooks to take recipe notes; the table was the brainchild of CSL Tokyo’s deputy director, Jun Rekimoto, who first conceived it in 2001.

 “Sony CSL is developing technologies to be used in the future world,” says Yoko Honjo, a spokeswoman for the research arm. 

According to senior Sony management the Company believes that they can get a marketplace advantage with their new SmartBand, a wristband that Sony started selling earlier this year, yet despite being on sale for several months Sony is refusing to say how many they have sold. 

Within a week of the PS4 console going on sale the Company was banging out press releases telling the world how well they were doing. As for the SmartBand, not a murmur. 

Daniel Matte, an analyst at market researcher Canalys claims that the product was rushed and that its aggressive monitoring may be a turnoff to consumers worried about their electronic privacy. “I’m not sure it’s showing the direction the market is going,” Matte says. “The key is not to provide tracking but to provide insights and analysis of the data, giving users actionable advice.” Canalys estimates that Fitbit accounted for about half of the world’s 2.7 million digital wristbands shipped in the first quarter. 

Atul Goyal, an analyst at Jefferies Securities told BusinessWeek that given the return on investment, “Sony’s R&D appears rather inefficient.” He cites the company’s development of a so-called smart wig, which vibrates to alert wearers to check their GPS for new driving directions, as a particularly egregious example, adding, “We don’t know how many such seemingly irrelevant projects are being funded and for how long.” Says Shoji, the company spokeswoman, “R&D results cannot be measured easily. One technology can be applied to many products.”
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