Apple to Acquire Sony, EA?! Get the F Outta Here...

[London Geezer]

Sony didn't try the same - they sold very expensive hardware at a loss, versus Apple selling at considerable profit and locking their consumers into iTunes for the media and apps. The real reason Apple have taken off is because they provided a vaguely open software platform that anyone could develop for with a little investment, and launched the whole app scene. They have no need for PlayStation or Sony. they can carry on with their existing momentum, using their money to secure deals etc.

Sorry, what i really meant was that Sony effectively priced themselves out of the market. Something Apple would be be prone in doing. Only the console market is very different to the markets Apple has been very succesful with, which is why i think it would not work.

Still, Apple does have, what, $50B in the bank? they're going to have to spend that somehow or they'll stagnate.

 

[London Geezer]

There's no way Apple buys Sony. They'd be inheriting an absolutely massive, and completely different, corporate culture. No way would it would. I could see Apple buying a small division of Sony, if there were a particular product they wanted, but what would that be? I can't think of anything.

Incorporating Apple TV on the Bravia and Playstation line? I can see that making sense.
An "iPSPhone"? That's more unlikely.
Sony has so many different divisions, Apple can just pick and choose what they think would improve their business. Movies, music, hardware (perhaps making the iphone and ipod sound better thanks to Sony's know-how, among other things?)
The list is endless, and negates the need to outright buy Sony.

 

[TheChefO]

Apple is in the content delivery business.

ipads, ipods, iphones, itv(appletv)

All of which focus on delivering content of some kind to the user. Music, movies, apps, tv shows etc.

Apple hasn't been interested much in the content creators, but more in the delivery medium. They've found a nice niche in human interaction and charge a premium for it.

The one area they have failed, is in the home.

One could argue that ipad sales are making inroads there, but I would counter that ipad is still a personal device and is more likely to replace a magazine/newspaper than a TV.

AppleTV would obviously like to fill this void, but Apple failed in its previous attempt to dominate the livingroom with the first version of this product.

Granted, the hype surrounding Apple these days is greater than it was then, but I still think the product doesn't offer enough for most people to want to purchase.

So, Apple still needs some way to get into the livingroom of the typical family.

Apart from some dramatic venture such as robotic butlers or buying every tv manufacturer on the market, I'd say their best bet is go with a business which has a proven track record of entering livingrooms by the tens of millions.

Gaming

Wii has shown there is a huge interest in gaming outside of the typical hardcore gamer we think of traditionally. Reports of grandmothers and wives were reportedly not only interested in gaming, they were buying the Wii in droves.

Playstation2 proved the gaming landscape stretched well beyond 100million gamers last gen.

The other interesting aspect of gaming is the audience that grew up with gaming is getting older, but younger kids are always going to be interested in games. Some of the population will indeed grow tired of gaming, but some will not and therefore the market is ever expanding as long as the price is viable.

Apple could very well decide to try their hand at putting together a gaming box on their own as MS did with xbox1, but I'm sure they also saw that mistakes can lead to huge losses and it isn't cheap to build a brand in the gaming world.

One thing I'm sure of is that Apple will not acquire EA as a standalone move. They aren't in the content creation biz. If they acquire EA, it will be as a foundation for 1st party titles.

And with that, I say, "Welcome to the gaming biz, Apple".

 

[Shifty Geezer]

Apart from some dramatic venture such as robotic butlers or buying every tv manufacturer on the market, I'd say their best bet is go with a business which has a proven track record of entering livingrooms by the tens of millions.

Gaming

Compare sales of games consoles to sales of VCRs and PVRs, and I think you'll see the best way to sell people media boxes is to offer a media box. Disguise your media box as a gaming console will only put off a section of the public who aren't into games, whereas most people are into media. And buying the whole of Sony just for PlayStation isn't worth it. The value of PS in establishing an Apple living room presence isn't going to offset the huge burden of having to manage this giant corporation. Apple could make a new iDevice, iPud given Pod and Pad are taken, and have it as a TV-attached Apple computer running iOS on which everyone can use their existing apps. Then fund some games and services with that spare $50 billion burning a hole in their pocket, and they're done. It could be cheap (though being apple, won't be!) and be classed as a consumer electronics device, a lifestyle device, rather than a games console, having little stigma even if those who shun consoles are rather hypocritically playing casual titles.

 

[TheChefO]

...I think you'll see the best way to sell people media boxes is to offer a media box...

True, nothing tops a cable box, but good luck getting cable companies to buy off on using AppleTV AND relinquishing control of the user experience.

I wouldn't rule out a buyout of a cable company, but that's what it would take to pull off what your suggesting.

Any other avenue would be a loss leader as they would have to undercut the cable cos supplier of STB, AND pay the cable co for potential lost profits by taking control of the user access point.


As to the notion of buying Sony just for Playstation not being worth it, I agree. In fact, I never said otherwise.
Buying the Playstation brand FROM Sony on the other hand is a different matter.

Also, any stigma related to a gaming device has mostly been tempered by the success of the Wii. What little stigma may be left could be tempered by the sheer "cool factor" of Apple these days. Any stigma that is left will eventually go away as gamers continue to grow up and into the marketplace.

Ten years ago, the stigma may have existed enough to try and avoid this space in anything other than a niche market, but as it is today, I don't think it's much of a concern.

In much the same way that the stigma of social networking via sites like myspace have now been mostly eliminated with facebook.

Sure there are still those that will not join such sites (myself included) but they are few and far between.


Getting back to your "lifestyle device" idea, I think that's EXACTLY what it would be as soon as Apple puts their logo on it.

 

[Shifty Geezer]

As to the notion of buying Sony just for Playstation not being worth it, I agree. In fact, I never said otherwise.
Buying the Playstation brand FROM Sony on the other hand is a different matter.

Surely Sony sellnig their PS brand is as likely as Sony selling itself entirely?

 

[TheChefO]

Surely Sony sellnig their PS brand is as likely as Sony selling itself entirely?

Sony has lost how much on ps3 so far this gen?

I'm sure that in the current economic environment and without Kutaragi there anymore, that Sony HQ would be willing to let go of the Playstation brand for the right price.

 

[AlphaWolf]

I still don't see why Apple would want it. Apple has a pretty well known brand of their own, perhaps they'd just leverage that if they wanted to get into the living room.

 

[corduroygt]

Sony has lost how much on ps3 so far this gen?

I'm sure that in the current economic environment and without Kutaragi there anymore, that Sony HQ would be willing to let go of the Playstation brand for the right price.

Their biggest software venture is Playstation, and the money you call "lost" is actually "invested." Without Playstation, they really don't have anything over their CE competitors. Software business is very profitable, hardware not so much.

 

[Shifty Geezer]

Sony has lost how much on ps3 so far this gen?

I'm sure that in the current economic environment and without Kutaragi there anymore, that Sony HQ would be willing to let go of the Playstation brand for the right price.

And with that lump of cash what will Sony be? Where will they go? They'll become Samsung's little brother with no differentiation. PlayStation gives them a means to be bigger, consolidating their media and entertainments into CE devices and becoming an all-in-one entertainment solution provider - what they should have been doing all this gen but keep fumbling about with.

 

[TheChefO]

And with that lump of cash what will Sony be? Where will they go? They'll become Samsung's little brother with no differentiation. PlayStation gives them a means to be bigger, consolidating their media and entertainments into CE devices and becoming an all-in-one entertainment solution provider - what they should have been doing all this gen but keep fumbling about with.

We shall see.

I'd think with a company the size of Sony and the rich history they have along with the talented engineers that they would be able to put that money to use in expanding other areas of CE. There is more than just videogames you know.


AlphaWolf: You may be right and Apple may just fully invest into their own venture in the videogames business as MS did back in 2001. But it won't be cheap and getting developer support won't be easy. I do remember they toyed with the idea of a gaming box back in the late 90's if I recall (I think it was called the Pippen).

One thing is certain, Apple has the money to move into the gaming space one way or another. And if they do, it will become a lot more competitive space.

 

[Silent_Buddha]

One interesting thing to note in all of this is that the iPhone now makes up roughly 50% of revenue for Apple.

So when thinking of possible aquisitions it's useful to first consider whether they are going to [a] try to strengthen that with additional services and/or better software (games) quality or strengthen their computing initiatives or [c] diversify into other areas.

Sony doesn't really fit into the first one. Sony-Ericsson (I'm sure I spelled that wrong. ) might possibly complement the iPhone in lower tiers, but that doesn't seem very Apple like. To produce a low cost basic appliance. So that rules out [a]. And Sony's computing division doesn't really compare favorably to the Apple lineup unless Apple wanted to get into making Windows PCs and I just don't see that happening. So that rules out .

Which leaves [c]. But, aquiring something like Sony only really makes sense if you think Apple is going to try one of the most ambitious diversification initiatives I can think of. Even MS launching the Xbox into the teeth of Sony's console dominance wouldn't be as ambitious or as risky, IMO. As the Xbox was just an extension of their core business. After all the first gen Xbox was basically a PC in a box with games software that was similar to develope as doing it on PC.

Buying Sony however, would get Apple into a whole LOT of areas with which they have little to no experience. Buying part of Sony is only feasible if Sony is in desperate trouble and needs to sell off divisions in order to stay solvent. And Sony isn't really in that position at the moment. PS3 is out of the question also as it's one of their divisions that's currently on the upswing pretty much making that off limits unless the whole company goes.

Really, I just don't see any scenario where an aquisition of Sony makes much sense for Apple.

Regards,
SB

 

[NathansFortune]

I don't know where this rumour came from but it really makes no sense. Sony would be way too expensive for Apple to even bother looking at (probably around 3x Sony's $35bn market cap.). I don't see Apple wanting to go into mainstream consumer products (TVs etc...). It would be like HP Compaq on steroids and neither company would do too well out of it which leads me back to the first point, Sony investors would have to be offered an absolutely huge premium.

Also, looking at the estimates, Sony are ahead of their internal targets to reach the 5% net profit margin that Stringer has talked about, once they reach anything near 5% (on $80bn revenue) Sony will be even more expensive. Some analysts reckon with good business practices and more aggressive marketing Sony could reach 10-12% margins, I can't see any company selling up when they are so close to being that profitable.

If Apple were really looking at buying Sony they missed the boat 2 years ago, they could have got in when the board was wavering and Stringer was down and nearly out, but now with Stringer's plan bearing the sweets fruits of profit, I can't see it.

 

[I.S.T.]

And with that lump of cash what will Sony be? Where will they go? They'll become Samsung's little brother with no differentiation. PlayStation gives them a means to be bigger, consolidating their media and entertainments into CE devices and becoming an all-in-one entertainment solution provider - what they should have been doing all this gen but keep fumbling about with.

You forget, Sony has Columbia Pictures and Sony BMG. Both are successful businesses. Not Playstation sized(Recall the years when the PS2 made up most of Sony's profits), but still more than what Samsung's got.