Sir Howard Stringer, the head of Sony, unveiled senior management changes and restructuring moves yesterday, aimed at ridding the Japanese group of its “old guard” and preparing it for the grim realities of a global consumer slump.
The changes were capped by a dramatic demotion for Ryoji Chubachi, Sony's president and the decision to place more control in the hands of Sir Howard. The British-born chief executive said that the decision to roll Mr Chubachi's former role into his own removed an unnecessary layer of bureaucracy.
The reshuffle involved the promotion of four relatively young executives. Sir Howard praised the quartet's “courage”, hinting at the setbacks he has faced in trying to impose real change on Sony's operating ethos.
The injection of fresh blood sent a signal that Sir Howard had belatedly taken “step one in the right direction”, David Gibson, an electronics analyst at Macquarie, said. Step two, he added, would be the long-overdue closure of underperforming businesses. Amid fierce competition in areas such as LCD televisions and digital cameras, Sir Howard said yesterday that his ambition was to build “products people will yearn for at prices they can afford” — an increasingly tough proposition, with consumer spending crumbling about his ears.
Sony's Japanese rivals, such as Panasonic, have suffered even worse financial torment. Pioneer said recently that it was dropping out of television production, while Sony itself is expected to make an operating loss of 260 billion yen (£1.9 billion) in the current financial year ending in March. Although the restructuring plans do not appear to call for any further job cuts and are expected to deliver only about $500 million (£350 million) more cost savings beyond the $2.5 billion announced already this year, the moves mark the company's most serious attempt to unify structurally the sprawling and diverse mixture of businesses under the Sony brand. This is an aim that Sir Howard has been describing as vital since taking over as chief executive in 2005.
The realignment will involve the creation of a “networked” division that will bring under the control of one manager the group's PlayStation games business, the Vaio laptop business and the handheld products under the Walkman brand. That division will be run by Kaz Hirai, the chief executive of Sony Computer Entertainment and an ally of Sir Howard.
Other changes include the creation of a division to oversee the complex supply chain of components and outsourced services used across the electronics division; this could lead to the outsourcing of many components that Sony builds for itself. The existing system is reputed to be a source of wild inefficiencies and duplications.
The group's huge electronics division — formerly headed by Mr Chubachi — is the side of the business that has been hit hardest by the downturn. The position of president will be filled by Sir Howard, who will take on the role in addition to those of chairman and chief executive.
The change comes amid warnings by analysts and large investors that Sony's battle for survival, which has been made many times harder by global economic crisis and the strong yen, depends on more power being concentrated in the hands of its first non-Japanese leader.
I was seriously scratching my head on how they would incorporate A/V into the Playstation brand. 
