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Industry Insider: Sony Sinking
 
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Industry Insider
Kurtis

Mar. 8, 2005
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Industry Insider: Sony Sinking

Sony is in deep trouble. If it hadn't been obvious to you over the last year it sure is obvious now with their elevating a foreigner to CEO, Howard Stringer. Now having worked for and with Japanese companies, hiring a non-Japanese to do anything with a lot of responsibility is rare, but to run the whole company? Almost unheard of. (Nissan hired an executive from Renault, but that was because he was a shareholder and Nissan was close to bankruptcy. And he lived in Japan. And he knew the automobile business.)

Stringer, a capable fellow in the music side of the business has no experience with consumer products or high technology. And inside reports say he won't even be living in Japan. How's that going to work? Many of the Sony execs don't even speak English. How would you like to be reporting to someone who you can't communicate with and who doesn't even live in the same country? Sony missed all of the trends because they weren't communicating with their customers. Now they won't be communicating with each other.

Since Japanese business people often take a long time to develop close relationships with Westerners, my take is they promoted Stringer because they knew him and someone they knew was better than anyone they didn't. Looks like a very desperate move, one that makes HP hiring Carly seem brilliant, even now.

But it's been clear Sony has been in deep trouble for a long time. The company that used to lead the electronics industry in innovation has really screwed up over the years. And I'm not even counting Beta. Remember the MD, the mini-disc? It was a smaller CD format and ushered in an array of small CD players that could record and play back. But it never caught on. But in a recent visit to Japan they are still trying to sell it ......... 10 years after it was introduced.

Look at TVs. Sony led the world with gorgeous, high quality TVs, specifically the Trinitron using CRT technology. But they completely missed the LCD and flat panel technologies. Completely missed them! Amazing, isn't it? A computer executive I know who was buying Trinitron monitors for his company from Sony tried to tell them that LCD monitors would be replacing the Trinitrons, but Sony refused to believe it. Their arrogance caused them to miss the entire flat panel phenomena.

From leading in the TV business and selling their TVs at a premium, Sony fell behind and is still playing catch up. They had to buy into Samsung's LCD business to get product. Samsung is their biggest competitor. And playing catch up means they can no longer command the premium prices they once did.

Sony also missed the most popular electronic product of all time, the cell phone. Again they had to join with another company, Ericsson, to get in the business, but they trail badly a half-dozen other companies.

And, of course, their biggest miss was the digital version of the Walkman, the MP3 player. They never figured it out. As late as a few months ago they were trying to peddle their proprietary format music player, which was dead on arrival. And what's the future of Sony? It will be a long while before they will recover, if they can. Expect massive layoffs, closing of facilities, and maybe even moving their headquarters to the US. Perhaps Cupertino.

 

20 User Comments
1 - Posted by Thaw_Out on March 8, 2005 - 9:07 pm

I stopped buying Sony items around 5 years ago.

Sony has been living off of their "brand name", and have stopped making quality products many years ago. They sell products based on their brand name and not on quality anymore, and that is why I stopped buying from them myself.

2 - Posted by Guest on March 8, 2005 - 10:13 pm

As long as noobs keep buying the PS2. It won't matter. There's their profit!
The PS3 will hopefully put Sony back as the leader in the console market.

3 - Posted by Guest on March 8, 2005 - 10:44 pm

Back from where?

4 - Posted by Guest on March 9, 2005 - 2:40 am

Missed the LCD's? last time I checks the hs94p and hs74p were the first desktop panels to feature the "x-brite" (or x-black for you europeans) technology that sony themselves pioneered. Very nice monitors that benQ and other manufacturers are now cloning. Sony's digital walkman also features mp3 support and has a battery life and form factor that definitely bests ipod, the only downside is the typical sony price. For an industry insider article seems a little outside... or blind.

5 - Posted by Guest on March 9, 2005 - 3:37 am

I agree. What about the PSP, SACD, Vaio laptops, digital cameras, handycams, PS2...need I go on? Sony has many many arms and expecting every one of them to fire and then to forecast doom and gloom when some don't is in my view a perfect example of tunnel vision.

6 - Posted by Guest on March 9, 2005 - 3:43 am

The MD is popular enough in Japan to sustain new developments and keep selling them. Their new HDMD format is a great product. Almost all Japanese high school and uni students I know (and I know alot, I lived in Japan and studied there for 2 years and currently assist Japanese students studying in Australia) own a MD recorder and many also own MD stereos, the perfect compliment to the MD player. I myself got one 3 years ago and its the best thing ever, excellant battery life, good quality sound, sturdy design and all the features a MP3 player has. When I'm next in Japan I'll be getting a new one and a small stereo to go with it, because its just that good.

7 - Posted by Guest on March 9, 2005 - 7:14 am

I havent realy noticed Sony for a while and this arcticle seems to explain why.
"Sony's digital walkman also features mp3 support and has a battery life and form factor that definitely bests ipod"
This comment misses the fact that the Ipod kills Sonys many times to 1 in terms of sales. Who cares who has the better stuff, this acticle is about Sony not making money.

The PSP at the moment may take off but has already been flawed with numious problems like battery life, stupid button placment and that "If your button breaks its because you arnt playing it gently enogh" speach. The Nintendos new handheld already has a headstart, not to mention the 98% market share Nintendo already owns in the handheld market.

MDs are dead in most parts of the world. They didnt catch on. Once again it doesnt matter if MD's are good, they dont sell. Sony cant make money if they dont sell stuff.

PS2 is about the only thing Sony has going for it atm. Be intresting if Nintendo or Micwosoft outsell the PS3.

8 - Posted by Rich on March 9, 2005 - 8:35 am

I think sony TV's and monitors are still top notch. They have failed to connect with the protable digital music market big and bad.

9 - Posted by Industry Insider on March 9, 2005 - 10:39 am

LCDs? While Sony claims to have invented the X-Brite LCDs found on their TR and newer notebooks, that technology actually comes from Sharp. That's why you see it on so many other notebooks.

Cameras?
Sony has done well with cameras early on, but they've lost the lead to Kodak and are falling in market share.

Laptops?
In laptops they're a distant player in the US and in Japan their laptops are 7th behind NEC, Fujitsu, Dell, and others. The Japanese deride Vaio notebooks as only bought by females and not taken seriously as business machines. Their reliability is also not up to their usual standards, one reason why the best-selling TR series was dropped. Their best hope right now is their game business, but they're depending on game sales for profits as they are selling the hardware near cost.
II

10 - Posted by handrail on March 9, 2005 - 10:53 am

yeah, that damn MP3 walkman was a bad idea. the execution of the hardware was pretty good, but proprietary music format??? i hate iPods for the same reason, but then again Apple has always been about proprietary software and hardware.

there are too many companies that make good, standard format players. viva la little guy!

11 - Posted by Kurtis on March 9, 2005 - 10:58 am

Rich, when it comes to their monitors (aside from Trinitron), I think the point was that they aren't actually developing the technology themselves and are relying on technology developed by other technologies such as Sharp.

and I think anything that is proprietary and geared towards the general consumer is a bad idea. we need products to adhere to standards rather than try to lock consumers into a specific brand in order to get more profits. if you have a good product, people will buy it, you shouldn't have to trap them into buying your other stuff.

12 - Posted by Thaw_Out on March 9, 2005 - 11:28 am

That is what I was trying to say myself, that Sony is selling stuff off of their "brand name" and not developing high quality technology themselves anymore.

They just stamp their "brand name" on all these different type of products, and you never know what you are buying anymore when you get a Sony product. I would never buy a sony item, whether it is a DVD Writer, CD Writer, VCR, Camcorder, Television or any other item. I was referring to *ALL* sony products being sold based on brand name only.

Like Kurtis said, you may buy a product that has a Sony name, but in reality you might be getting something made by Sharp. This is just one example. Since they put their brand names on products made by dozens of other companies.

13 - Posted by Kurtis on March 9, 2005 - 12:34 pm

I wouldn't mind it so much that they use other companies' technology if they didn't charge so damn much for their medicore products. I got an Athlon64 laptop that has better specs than a Sony I was looking at, and I got it for like $500 less. Pretty ridiculous.

14 - Posted by Thaw_Out on March 9, 2005 - 12:39 pm

Like I said, I stopped buying Sony products myself years ago.

I don't like the way they take a cheaper brand then stamp their "brand" on it. After rebadging the product to their brand name, then they double the price. Smart buyers should avoid Sony.

For televisions and monitors, I would always go with Samsung before buying Sony.

15 - Posted by PennyManDeux on March 9, 2005 - 12:53 pm

Sony used to be THE name in electronics. Like many others I would always look to Sony before any other company. Over the years though, Sony has slowly slipped out of my mind. They are constantly trying to innovate by producing awesome yet pointless gadgets that maybe 10 rich people will buy, but they aren't innovating for the general consumer.

16 - Posted by Guest on March 9, 2005 - 8:01 pm

This is crazy. They're only 7th in laptops in Asia. They're not the best in cameras, but they're decent. The PS2 is doing well. I'm not sure in the USA but in many palces worldwide they're phones are highly regarded. Let's not forget about Sony Pictures and Sony Music...how can the thought that a company this diverse is going to go under? It's fine if they were bottom dwellers in all departments but that is simply not the case.

17 - Posted by Guest on March 9, 2005 - 11:45 pm

Sony is a huge and very diverse company.My take on this is that sometime ago they've spread their investments too thin and too wide , so they under-developed many of their lines of products , they missed out on some imporatant technological know-hows and inventions.
IMHO they should cut back their range of products , focus on what they do best and what sells best.

18 - Posted by Industry Insider on March 10, 2005 - 12:23 am

While I don't expect the company to go away, Sony has been losing leadership on so many fronts and are in danger of becoming just one of many "middling" companies.

Why do you think they have failed in so many areas? Could it be their arrogance ...... or something else?

19 - Posted by J2T on March 15, 2005 - 9:22 am

Exactly my thoughts, I really don't even consider any Sony products anymore, I have heard too many stories of shoddy products from them. Unfortunately my wife still thinks that Sony=better products. Its just not true anymore. I guess that is why I am more interested in seeing the Nintendo DS stomp the PSP into the ground. :twisted:

20 - Posted by blackjet on April 13, 2005 - 2:32 pm

maybe this is just bad luck but iv never had anything but very poor customer service from sony, with hefty repair bills to boot. i think the article is right in general, the "brand" is getting less popular. Would anyone for example by Sony CDRW's over a cheaper brand with the belief that they are of better quality?

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