Till the turn of the century, Sony seemed invincible. Ever since the launch of the Trinitron, it had been synonymous with quality and innovation (remember those Walkman days?). Even today, it is a huge group, the fifth largest media conglomerate with revenues of around USD 78 billion. Sadly, revenues are declining – electronics sales (minus phones and gaming) stand at half of the peak of seven years.

Sure, Sony has had success in gaming with PlayStation; however, the company is in trouble in the rest of its businesses. My take on some of the possible reasons:

1. A group that is as large and as dispersed as Sony (PS, Computers, Consumer Electronics, Cameras and Handicams, Sony Pictures, Sony BMG, Sony phones etc.) leaves itself open to attack from all sides. Samsung and LG have taken a march in consumer electronics, Apple is the undisputed king of MP3 players and tablets, there are too many digital camera brands sniping at them, Microsoft and Nintendo are fierce competitors in game consoles and the less said of phones the better…the list goes on. When a group becomes too diversified, it also becomes unwieldy to manage.

2. While I admire Sony for trying to establish its own standards in the market, many a times these have boomeranged. We all know the well-known case of how the superior Betamax lost out to the industry standard VHS format. If you were to do a cursory search of fora discussing Sony, a majority of them are likely to be bashing Sony for being too closed and proprietary. Even Blu-ray seems to be going the Betamax way.

3. Sony’s success in gaming is well documented; yet it has lost out to Apple and others on computers and related products. Even the Vaio couldn’t stem the damage although it started promisingly.

As a composite group, Sony is still very large. Yet, if one were to break down the group into separate divisions, you will find that each is under attack and not perceived as the ‘leader’ in that category. That is the biggest flaw of highly diversified companies – they appear huge but are hollow inside. And a key reason for that is that Sony has missed out on coming out with new products fast enough. I would not say that Sony has reached the stage of a balloon about to burst but it does seem to be losing some of its sheen.

Of course, Sony is trying hard to turn around. But, according to Kenichiro Yoshia, the new Sony CFO, the entire company had been slow to respond to consumer trends, as financial and entertainment arms continued to provide stable profits. Restructuring only occurred as electronics sales began to falter. Turning Sony into a more cost-effective company comes first, and only then can the company focus on its smartphone imaging and games strategy, said the CFO. “Since we’re in a very difficult situation … we must not get the priorities mixed up.”

As an ardent fan of Sony, I do hope it finds some of its lost glory. It is always sad to see a company so committed to quality and innovation in such discomfort.

Visual courtesy : https://www.flickr.com/photos/andromega/