Sony’s Bread and Butter? It’s Not Electronics

http://www.nytimes.com/2013/05/28/business/global/sonys-bread-and-butter-its-not-electronics.html

by mxfh • 13 years ago

68 67 13 years ago

nytimes.com

MarkTanamil• 13 years ago

Oh Sony. What happened?

Oh well, my xperia z tablet should be arriving this week.

Don't let me down.

varjag• 13 years ago

I think they lost it after the big successes, and got this megalomaniac mindset that they could establish market standards at will. Their consumer segment losses due to insistence on things like minidisc or memory sticks must have been tremendous.

kalleboo15• 13 years ago

I think they had a lot of tunnel vision as well. In their local Japan market, they DID set the standards. You had MiniDisc players integrated in cars, etc. They just didn't have the international perspective required.

sspiff• 13 years ago

I don't fully understand what brought Sony down. They have a strong synergy between their markets (content production and consumption, for instance), and their electronic products are still high quality, well designed pieces of consumer electronics, both on the engineering side as on the product design side.

They're a company that has tried weird, new kinds of devices, like head-mounted 3D displays, tablets and ultra-portables. Sure, their attempts at these things didn't create high-volume markets, but at least it shows to me that the company is trying hard to innovate, with strong, more traditional products to back it up.

I find it a bit saddening how Sony fails to sell enough of its products.

jpswade• 13 years ago

While Japanese companies were working on products that will sell more of their motors or components, American companies were working on a virtual ecosystem.

There's absolutely no synergy between Sony's departments and that's also a massive problem.

com2kid• 13 years ago

> They have a strong synergy between their markets (content production and consumption, for instance),

In theory they could have a strong synergy, but as the article alludes to, they never really exploited the possibilities. Corporate infighting to maintain fiefdoms and current profits will quickly destroy any attempt to grow into new markets that require paradigm shifts.

yardie2• 13 years ago

You can innovate in the lab all you want but if no one is buying your product because it doesn't answer the right problems is it that innovative. I thought the AIBO robot was interesting but not thousands of dollars fabulous, you can get a proper, pedigreed dog for that price.

They have a nasty habit of bringing things to market to fast and then not properly supporting it. Then when the consumers walk away they blame everything else but themselves.

gambiting• 13 years ago

Or to give a slightly cheaper example: Sony Tablet S and P. Both were experiments,as in - tablets with a very unusual form factor, released to see if the market will accept them. And while the Tablet P was a failure, Tablet S sold quite well - and what Sony did? Abandoned it. The only available update to Android 4.0 leaves all users with slow system on an otherwise nice device, but worst of all - it has a locked bootloader,so you can't even put a custom rom of a newer version. A cool device released quickly, and just as quickly abandoned.

antimagic3• 13 years ago

AIBO was a big missed opportunity. The unit cost was too high, and the software not advanced enough. But those things can't have been having a huge effect on their R&D budget. They could have kept the same mechanical design, but increased CPU/memory each year, with corresponding work on the AI for minimal pain, reducing the price and improving the utility each year. If that work had continued constantly, we would have some truly remarkable AI pets available by now, which would make the ultimate toy for young children that live in apartments. That same technology could then have been applied to home automation robots. Instead we have Roomba.

technoslut2• 13 years ago

Sony had more than one problem. The biggest problem is their brand name has suffered for years with lackluster and not very well-thought out products.

They're starting to turn it around but it may be too late - much like Nokia and HTC.

Nursie• 13 years ago

Their stuff generally looks good, but the likes of Samsung managed to make product every bit as good (or better) and at better prices, generally.

Also some of us still have a bitter taste in our mouths from the various rootkits and hacker lawsuits, so wouldn't touch them with a bargepole. I'm under no illusion we're a serious market force though.

kalleboo15• 13 years ago

They're mostly competing in commodity markets - TV, stereo, Android phones, etc. And in those markets right now, the only thing people care about is price, availability and marketing. "how many inches TV can I get for $X?" "what high-end smartphone will my operator give me for free?". Sony have failed at those things. I'm in Bangkok right now, and the city is PLASTERED with Samsung adverts. For phones, smartTVs, everything. I also see Samsung or Apple phones in every hand. Sony has also failed at marketing.

nakedrobot2• 13 years ago

The issue is a simple one. What brought Sony down is the thing that brings down all huge companies: they failed to adapt.

All Sony's great successes were in hardware. Mechanical hardware. The walkman, etc. were all mechanical devices, without any software. Sony was the king of beautiful mechanical electronics. Before the computer age took hold.

The iPod, etc. are software devices. Yes, they also have beautiful industrial design, but Sony is capable of that. But Sony is not capable of software.

By the way, Nokia is going down for the same reason.

Luc• 13 years ago

> By the way, Nokia is going down for the same reason.

Nokia is actually in a situation similar to Sony - it owns part of Nokia Siemens Networks, which is now a major cash cow. Selling handsets could become a sideshow for Nokia.

http://online.wsj.com/article/SB1000142412788732350100457839...

josh2600• 13 years ago

I think Nokia would like to spin off NSN while their brand of IMS technology is still in fashion.

The big networking vendors used to compete generationally like companies in other fields (think GE and Lockheed with Jet Engines). This is still the case and two of the dominant vendors, NSN and Ericsson, have great current generation products.

The question is: will the next be the same as the last one, or will the next network be different?

From my knowledge of the industry, I can tell you that the client demands are changing and now would be the best time to unload NSN, at the height of their value cycle.

If you're pessimistic about NSN's long-term network strategy, sell. If You believe they've got it figured out, why would you sell your cash cow?

Disclaimer: I work at 2600hz, the cloud telecom company. We work with a number of infrastructure companies to design cloud telecom applications and deploy them on things like aws.

nivla2• 13 years ago

>By the way, Nokia is going down for the same reason.

Given that Nokia was able to adapt enough to come up with Nokia Maps [1] (Decent mapping app with free offline maps), Nokia Music, Intuitive camera apps; I must disagree with that statement.

[1] http://here.com/

[2] http://www.nokia.com/us-en/support/product/nokia-music/

joezydeco• 13 years ago

Nokia bought NAVTEQ. Is Maps because of adapt Nokia engineering or because of this acquisition?

kalleboo15• 13 years ago

Exactly. Nokia have been innovating, they adopted Windows Phone which is great. But they've still flopped in the marketplace. It's far more complex than "their software isn't good".

Steko• 13 years ago

I think Sony's pathologies are somewhat different (although software is clearly a weakness). What makes for blockbuster consumer friendly technologies is often fundamentally opposed to what makes big content happy. As the influence of big content grew at Sony, they began to get veto power on future platforms.

The old Sony had gone to the Supreme Court to fight for consumers right to record tv shows. The new Sony bet big on the profit maximizing MD platform while mp3 friendly CD-R's and later iPods ate their lunch. They even led the reactionary effort to save big content's profits with rootkits.

Sony's biggest bright spot in the 90's was the Playstation business but even here we see the same sorts of problems cropping up -- PS3 had to push Blue Ray, late to online gaming, the Hotz fiasco.

venomsnake• 13 years ago

Ps3 you surely mean that had to push blue ray. PS2 was DVD (and hard drive) only.

Interesting is that with all the rage of PS3 Sony haven't managed to move as much PS3 as the PS2. But PS2 was a hardware gem.

kalleboo15• 13 years ago

Samsung also have terrible software, but they're doing great. I agree their software is a huge weakness, but having great software clearly isn't instrumental for success.

Sony just don't have the profit margins they need in stuff like TV, audio, etc. They also have really weak marketing in the phone space (their phones are on par with Samsung in hardware, and have a less-molested version of Android, but nobody knows they exist).

Their complete loss in the music player space though can be largely attributed to owning a music publishing arm. DRM killed all their (pretty decent) digital music players.

simba-hiiipower3• 13 years ago

the issue here is clearly one of failing to adapt to change (as it so often is), but i’d characterize it as having more to do with a shift from isolated products (hardware and software) to connected ecosystems..

> By the way, Nokia is going down for the same reason.

true, but nokia seems to have realized this early-on and, in fact, has been adapting..

while heavily criticized, their decision to abandon in-house platform development in favour of windows phone for smart devices is increasingly looking to be a wise one. they clearly get that devices (no matter how great they are in terms of build quality and software features) aren’t being measured in the market in isolation. device-specific features are part of it, but how it plays with other devices and services plays a big (and increasingly important) role..

this is what sony doesn't seem to get.. they have their own systems powering playstation-branded products, windows pcs and tablets, android tablets and smartphones, and a bunch of other devices (cameras, tvs, ...) and none of them play well with one another. they like to tout their rebranded 'sony entertainment network' as unifying their devices and leveraging their media assets but i've yet to see it take shape in any meaningful way. i've long been a fan of sony products but this lack of integration among products (and an apparent lack of vision to do so in the future) pushed me away.

kalleboo15• 13 years ago

> i've long been a fan of sony products but this lack of integration among products (and an apparent lack of vision to do so in the future) pushed me away

They integrate using standard protocols (HDMI CEC, DLNA, etc) and have to adhere to those limitations. I guess the alternative is going the proprietary way like Apple, but then everyone gets up in arms as well. It's lose-lose.

ctdonath3• 13 years ago

Sony did try connected ecosystems. They did it early, did it proprietary, did it wrong, and customers went elsewhere. They tried gluing everything together with MemoryStick and ATRAC. Everything, and I mean everything, had a MS slot: TVs, pens (!), CD players...whether it made sense or not. Anything that did audio pressured users to adopt ATRAC, with grudging allowance for MP3. MS was too pricy for anyone else to adopt, so it lost out to CompactFlash & SD. ATRAC was just inferior. Once those fell, Sony had nothing tying products together, and the walled garden went to weeds.

They lost sight of why ecosystem components are linked. Having gotten severely burned, they were shy to adapt and rebuild the necessary cross-platform infrastructure.

ctdonath3• 13 years ago

As a former Sony fanboy, I'm eager to agree. They're stuck in a mindset of presenting users with a boxful of cool hardware, and baffled by the notion that users actually want an intuitive comprehensive UI/UX to go with it.

Three Sony anecdotes I hope someone can learn from & act on:

1. Every DVD/Bluray player has a "Play" button. Press Eject, insert disc, push tray in, wait for menu to appear...why then does pressing Play not do anything? Why must I hunt down the remote to press the unmarked "Enter" button to play the movie when there's a Play button on the device I'm in arm's reach of because I just stuck the disc in? Yes, I know there's some technical explanation - I don't care, I just stuck the disc in and want to make it play the movie now without further fiddling.

2. My disc player has WiFi built in (that so many Sony products claim such support, then require purchase of a separate device-specific adapter costing nearly as much as the device is another rant). Nearly every time it does a network operation, it pops up a "Network Operation Complete [OK]" message, requiring me to acknowledge the fact it did what I told it to - rather than going on and doing the obvious next step. Get on with the action already.

3. The slew of "apps" built in are...ugly. Worst offender by far was the promotion for Salt (movie released just as the device was on the market): here I've got a flagship product from the company, trying to show itself off with clips from a big-budget blockbuster movie they own all rights to, hardware capable of pristine 1080p, and they're running the video at...scaled-up VGA super-grainy low-bandwidth streaming? Eeeeewwwww.

I rant because these are representative of so many other in-kind idiocies I keep running into on otherwise very satisfying products, belying a chronic lack of concern for actual use of the products. Indeed, they're still in the mindset of the Walkman: insert tape, push play, no further interaction; that world ended long ago.

chestnut-tree• 13 years ago

"All Sony's great successes were in hardware. Mechanical hardware."

There's a similar conclusion from this BBC report titled "What happened to Japan's electronic giants?"

http://www.bbc.co.uk/news/world-asia-21992700

Interesting to read from the above link that Hitachi, also once known for it's consumer electronics products, is now focusing on heavy engineering as the core of its business (gas turbines, steam turbines, nuclear power plants, and high-speed trains).

dools• 13 years ago

Arrrrgh! Out of the miserable swamp of gigantic glowing touchscreen devices, the xperia mini pro came like a beacon of hope with it's ideally sized qwerty slider keyword and android upgradeable to ICS.

Nokia, my first love, has already collapsed hopelessly. Not you too, Sony! If nothing else just keep making fucking phones!!

fdr_cs• 13 years ago

I have to agree. I did love nokia devices (and they are still great, except for the OS) . Now Sony... :(

nhebb• 13 years ago

> “The problem is that the board is still absolutely focused on fixing electronics”

I hope they do. I see a board focused on fixing a problem less concerning than a board in denial. I have a feeling that, as their electronics preeminence waned, they were probably in denial for a long time. They have decades of engineering experience, and now that they've hit bottom, it would be a shame to see them throw it all away.

hansc• 13 years ago

Their previous CEO was a content guy from Hollywood; Maybe he focused mostly on the content and insurance stuff and forgot to lead the electronics division or just didn't have a compelling vision? I always wondered why they would take a Hollywood guy instead of more of a product guy.

Narretz• 13 years ago

Sony is losing a lot in the TV market, same as Panasonic. I am not sure you can "fix" the TV market, since the TV's role is still changing, and hardware innovations become less and less important, so there's no way to go back to the boom of early LCD. I personally would like to have a "dumb" instead of a "Smart" TV, basically just a huge display to which I can hook my PC or whatever box I want. But it'll take some years in which the big guys will desperately try to keep the old ways alive.

e: previous version of this comment said Sony's Imaging division was quite healthy, while they are losing money too. But as mirrorless is a new market, I guess it's worth to lose money to establish a good market position.

antimagic3• 13 years ago

Yes, exactly. I would be much happier if Sony, Samsung et al focused on making screens with low-latency, better sound, better image treatment etc instead of trying to hook me up to YouTube with a poorly designed widget that I would never touch in a million years.

Latency on screens today is high enough, even in gaming mode, that even the slightest extra latency can kill some applications. I'm working on a karaoke game at the moment, and that latency is absolutely killing me.

kalleboo15• 13 years ago

> I would be much happier

I think us (techies) are still in the minority here. My parents love having YouTube on their TV. With all the junk I've bought them during christmas visits, they have a bunch of ways of watching YouTube on their TV: on the Sony Blu-ray/surround system, on the AppleTV, on their iPhones/iPads via AirPlay, or on their MacBooks with AirPlay or an HDMI cable. They've ended up gravitating toward the surround system menus, since it needs the least amount of "fiddling". If the TV had it built in I'm sure they'd love that.

gradstudent2• 13 years ago

Would you really buy a separate Roku or whatever if your TV had one already built in? Moreover, what if you could program your TV as easily as your Roku? This seems, to me at least, a pretty compelling proposition. Stick a PC in my TV as soon as possible, please!

technoslut2• 13 years ago

I'd prefer the box. It's cheaper to replace than a TV which would allow me to upgrade the hardware more frequently for new features. The new Xbox has shown that a box can take over typical functional like the channel guide and changing stations.

Terretta• 13 years ago

> Would you really buy a separate Roku or whatever if your TV had one already built in?

Yes, because the TV is a couple years old and doesn't run today's apps, even though it has the right number of pixels which haven't changed in a decade.

> Stick a PC in my TV as soon as possible, please!

No. Because the pace of development in screens is notably less than the pace of development in devices, and the cost of building (a probably underpowered) PC into the TV would end up being a significant portion of the purchase price without much benefit.

AirPlay changes the equation. Use whatever latest personal device you have, tap a button to see it on the TV.

It's redundant to have multiple apps with multiple UIs and preferences scattered across multiple devices, when the tech exists today to have a primary personal device that you could look at anywhere.

TVs need to get out of the app business, just display HDMI + AirPlay (works from Android using Twonky Beam, iMedia Share, PlayTo, etc.), and focus back on visual quality.

adaml_623• 13 years ago

"That profitable part of the business is what Daniel S. Loeb, an American investor and manager of the hedge fund Third Point, wants Sony to spin off to raise cash to resuscitate its electronics business."

I find this quite interesting. We have a business that is supplying goods and paying it's employees. Let's chop it into one part that will survive and make me money and another part which will most likely die meaning all the employees are fired.

I can understand the logic from one point of view but I'm not really sure the decision would benefit anyone other than a small number of investors (not all of them!) and ... I guess the lawyers and bankers always get their cut.

kalleboo15• 13 years ago

> I find this quite interesting. We have a business that is supplying goods and paying it's employees. Let's chop it into one part that will survive and make me money and another part which will most likely die meaning all the employees are fired.

This is the american corporate/MBA logic. Japanese business culture is to keep it around and try to develop it. It springs from the same reasoning where Japanese business hire their engineers right out of college and people have their job/position in one company for life.

Ma8ee• 13 years ago

On the other hand, keeping the bleeding part alive with money from another part of the company means that the prices in the electronics market will be artificially low, which makes it harder for all other makers of electronics. Maybe it's better that some electronics makers disappear from the market and let the remaining ones make a little bit more money, freeing some more resources for developing new innovative gadgets (or, admittedly, just making the owners wallets fatter), and maybe hire back some good engineers.

tl;dr: Keeping operations that can't live by themselves alive with external funding distorts the market, whether it is the government or the corporations that do it.

ctdonath3• 13 years ago

It's exactly what happened to General Electric: anything it wasn't #1 or #2 in its industry got cut. Now it's name is officially GE, and focuses on financial "products".

wavefunction• 13 years ago

Sony's electronics division has always been hampered by custom media formats, restrictive DRM (a side-effect of their media empire), and expensive licensing schemes. They're an ecology of one, which doesn't make for much of a market.

They did it to themselves.

nathan_long• 13 years ago

Sony is into electronics, movie/music production, and insurance?

Reminds me of the Onion story: "Yamaha CEO Pleased With Current Production Of Jet Skis, Alto Saxophones, Snowmobiles, Power Generators, Scooters, Golf Carts"

Quote: "At the Yamaha Corporation we're focused on one thing and one thing alone—quality sound chips, ceiling brackets, editing software, race-kart engines, sport boats, flugelhorns, ATVs, sequencers, outboard motors, conference systems, golf clubs, projectors, MIDI controllers, lamp cartridges, portable recorders, subwoofers, component systems, and motorcycles."

http://www.theonion.com/articles/yamaha-ceo-pleased-with-cur...

kalleboo15• 13 years ago

Samsung does the same (they even make cars, and run a chain of gas stations) and they're doing great in many fields.

speeder3• 13 years ago

You forgot Samsung engineering (make buildings), Samsung military engineering (make military warships), Samsung... I think Samsung manufactures everything you can imagine.

speeder3• 13 years ago

Yamaha got to that, because they decided to manufacture stuff that use their music instrument factories idle time.

It is just a case of extreme sinergy seeking.

For example: The same factory makes wheels and drums. Also, originally the motorcicle structure was made in the piano factory (this happened when they invented a model of a lightweight metal piano, and someone on the company realized they could use the same material to make motorcicles).

Yamaha focus is musical instruments, and then use their musical instrument tech to make other unrelated stuff... Yes, very weird model... but it works it seems....

lnanek2• 13 years ago

IBM did this a long time ago. They analyzed the company, saw services were where they made all the money, and went all out after that. They sold their printer division, their laptop division, their storage division. The laptops, the ThinkPad line, actually had a really good name for themselves and some businesses and consumers that only bought them. It took some serious balls to get rid of it. I guess that's the position Sony is in now. It would be good for the company to drop the unprofitable electronics division, but it's probably more than they are capable of doing.

speeder3• 13 years ago

I see this as very depressing, when not even Sony executives understand where their money came from...

Yes, Sony electronics give a loss, but it is NEEDED.

Why it is needed? Well, because this is how Sony pushes to their bread and butter clients buy the other stuff.

Sony is profitable making movies, music, and selling equipment for those, Sony Vegas is profitable, Sony 3D cameras are profitable, Sony Blu-Ray recorders are profitable.

Now, why Sony would need to sell Blu-Ray recorders, if they did not pushed for Blu-Ray with the PS3 sold at loss?

Sony eletronics business, was always about pushing technology that results in content producers needing to pay Sony through their nose to make the content that match Sony consumer tech.

If you split Sony, you will get a electronics division that gives loss, and a movie and music division that cannot push the market to where they want anymore, resulting in the failure of both.

I don't understand much of insurance business, so of course I won't comment on that.

kalleboo15• 13 years ago

> I don't understand much of insurance business, so of course I won't comment on that.

If people don't drop a large TV on their feet, they have no need for insurance.

robomartin2• 13 years ago

Contrary to popular belief Sony's electronics products while perceived as being "superior" or "top of the line", rarely are. Sure, they have a few SKU's here and there that might be notable. However, the rest of the lineup is filled yawn-inspiring cookie-cutter products.

From the outside it sure seems like they keep making the wrong product decisions.

I never knew Sony even had an insurance arm. Profitable too. It sure seems like they ought to make a swift exit from electronics and focus on insurance.

kalleboo15• 13 years ago

Their competitors are also yawn-inspiring, but still profitable.

robomartin2• 13 years ago

Perhaps the message is that hyper-commoditized products isn't the best place to be. The brand means just about nothing to those who understand the marketplace. I am sure there are folks who still buy Sony TV's and amplifiers thinking they are the best. That just proves branding can go a long way. I quit buying Sony a very long time ago. I can't even remember the last time I thought Sony when shopping for a consumer-electronics product.

fieldforceapp• 13 years ago

Living in Japan for 10 years, Sony was always perceived as closer to the Virgin Group -- Sony offered a series of consumer friendly services all wrapped within a unique marketing spin of 'fun, hip, young.' Only some of those services were electronics related. Their insurance product was marketed at young women, IIRC, and had good differentiation. Not unlike Virgin Bank I guess, something UK readers might know something about but which hasn't hit the States, and likely won't.

Sony's goals aren't the same as Apple or Microsoft and that seems to have confused the author: Sony sees diversification as a core competency and might be better off compared to say GE, rather than just a consumer electronics company:

http://online.wsj.com/article/SB1000142412788732397500457849...

Sony’s Bread and Butter? It’s Not Electronics

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