Sony is bleeding money - business strategy discussion

[Shifty Geezer]

They used to have sleek ID. But now, everyone can use Gorilla glass with metals with IPS or AMOLED screens. Sony's products no longer stand out the way they used to. I don't think they declined so much as everyone else caught up or making slick designs became achievable for more competitors.

That's exactly it IMO. In sony's glory days there wasn't that much RnD overall, and they came out with innovative products. Now RnD is everywhere and no-one is really leading exclusively on hardware. Sony have some ideas like their backwards photo sensors which have great low-light performance, but there's not a lot of break-out technology for them. Or anyone else. The differentiator will be software. It'll be the user experience, and the software that drives the displays and cameras, and the services available.

 

[NavNucST3]

Software has been a problem for them since Apple ate their Walkman lunch years ago. They hired some Apple guy to head their software efforts but haven't heard what came out of it.

Has any Japanese company produced software with good UX?

But it can't only be software. Or how else do you explain their decline in TVs? Their TVs always looked better in the showroom and enough people paid the premium for the Trinitron or XBS.

They used to have sleek ID. But now, everyone can use Gorilla glass with metals with IPS or AMOLED screens. Sony's products no longer stand out the way they used to. I don't think they declined so much as everyone else caught up or making slick designs became achievable for more competitors.

The NEX EVIL cameras and the Vita are sleek but their designs alone won't make a lot of sales.

They seem to dip from the same technology pool as everyone else. For instance, before flat panels took over TVs, they had exclusive things like SXRD and bought into some other exotic display technologies. Of course commoditization and the fast price drops in flat panels probably killed development of these alternate technologies.

So they end up using the same techs and components as everyone else and packaging them together, which is what the Vita is, using ARM and SGX silicon that everyone else can get. One of the few proprietary bits is the memory card format, which is going to antagonize a lot of people rather than attract them.

People decided bigger was better than "better technology" and since "everyone" can make a large screen now I do think its the software and services that will differentiate and/or determine the winners. Recognizing that business units can certainly do their own thing, but in the console space, how do you let your competitor come to market with a music and video service before you do when you own entire studios and/or enough stake in some that you can call shots. I think the company needs to do some serious soul searching and really determine what they want to be.


EDIT: LOL, I think we are all on the same page.

 

[ERP]

how do you let your competitor come to market with a music and video service before you do when you own entire studios and/or enough stake in some that you can call shots.

This was more about what Microsoft does well than what Sony doesn't.
Microsoft doesn't do anything without a clear multiyear vision statement, the internal reward structure is focussed around delivering on that. That vision statement continues to evolve with the project.
What became the XBox live feature set for 360 was already specified in documents before the original XBox shipped, they couldn't get it all done on the original Xbox because they relied too heavily on developers to do it, so they took it out of devs hands on 360.

It sounds easy to do but in my experience very few companies can actually do it.

 

[Rangers]

That's exactly it IMO. In sony's glory days there wasn't that much RnD overall, and they came out with innovative products. Now RnD is everywhere and no-one is really leading exclusively on hardware. Sony have some ideas like their backwards photo sensors which have great low-light performance, but there's not a lot of break-out technology for them. Or anyone else. The differentiator will be software. It'll be the user experience, and the software that drives the displays and cameras, and the services available.

In defense of hardware, it's always kind of bothered me how people like to slag on hardware as useless, but what is the most successful company in the world? It's Apple, a hardware company through and through.

I would also point out in phones, that I follow, I'd argue Samsung has partly succeeded on hardware. The Galaxy line does so well at least partly due to their super Amoled displays (that nobody else seems to have, although recently the latest Droid is said to have one, which I found a little odd, guess Samsung licenses them?).

Owning a superamoled phone myself, I can say it can be one of those things that once you have it, you refuse to go without it. I'm fairly locked into Samsung now because I really dont want to go back to poor LCD displays.

And they keep a blistering pace, Galaxy Nexus is a hardware beast, and rumored Galaxy S 3 even more, quad core 2 ghz, 720P, superamoled II, 1.5 GB RAM, these are all first and foremost monster hardware specs that set the pace. But especially the super Amoled displays have differentiated Samsung phones, and nobody else has them (except again that recent Droid being the first exception).

Anyways just trying to make the point that I think hardware consistently gets short thrift as to it's importance. Again, it's what Apple built it's whole empire on, really. You could say "user experience" but hardware was an integral, perhaps most integral, part of that. When I look at Macbook Air's in the store, I'm not impressed with the software, but rather how incredibly slick the hardware is. I dont like Apple, but I still say "wow, that's pretty neat".

But there's two sides, Vita is obviously great hardware, but I suspect it's entering a market where it wont matter.

 

[Rangers]

Did Sony shed any additional light on PS3/videogame profitability in their conference call? Carl B?

 

[ERP]

In defense of hardware, it's always kind of bothered me how people like to slag on hardware as useless, but what is the most successful company in the world? It's Apple, a hardware company through and through.

Don't get me wrong, hardware isn't useless, but it's about so much more now. It's at best hard to differentiate on the hardware alone.
Apple was a hardware company and they certainly are still focussed there, but they are quickly transitioning to a software service company.

 

[RudeCurve]

That's exactly it IMO. In sony's glory days there wasn't that much RnD overall, and they came out with innovative products. Now RnD is everywhere and no-one is really leading exclusively on hardware. Sony have some ideas like their backwards photo sensors which have great low-light performance, but there's not a lot of break-out technology for them. Or anyone else. The differentiator will be software. It'll be the user experience, and the software that drives the displays and cameras, and the services available.

I think they did well in the camera business after acquiring Konica/Minolta and entering the DSLR market. They did introduce the innovative "mirrorless" technology and BSI CMOS sensors. Nikon actually uses some of SONY's sensors for their cameras. As for the TV division the same thing is happening that happened back when they withdrew from the computer LCD business. Too much competition from cheaper Chinese/Taiwan manufacturers flooding the market. LCD TV technology is at a point where even the cheap models offer good enough picture quality that most consumers don't see the need to spend more for the SONY name. With rumors that Apple will be entering the HDTV business with Siri, iCloud, AppleTV support, I think SONY sees the writing on the wall.

 

[patsu]

Software has been a problem for them since Apple ate their Walkman lunch years ago. They hired some Apple guy to head their software efforts but haven't heard what came out of it.

Has any Japanese company produced software with good UX?

But it can't only be software. Or how else do you explain their decline in TVs? Their TVs always looked better in the showroom and enough people paid the premium for the Trinitron or XBS.

It's complex. Not just one problem. Software alone won't differentiate Sony. I agree hardware is also very important. In fact, business model and network services may be equally important.

It also can't be fixed just by hiring a brilliant guy. He will need a good team. In the first place, I'm not sure the existing Sony board is good for them.

I think the trick is not to fix all the problems. Instead, just focus on 1-3 products and get them right. The rest will fall in place (Either die a natural death, or realign themselves).

EDIT: Dividing the TV division into 3 separate units may mean Kaz Hirai will cut the underperforming TV exec(s) after 2 quarters.

If I remember correctly, that ex-Apple guy bought and extended Gracenote. It's actually a pretty interesting business, with good potential. Hopefully Sony work with him to realize the full vision.

 

[NavNucST3]

This was more about what Microsoft does well than what Sony doesn't.
Microsoft doesn't do anything without a clear multiyear vision statement, the internal reward structure is focussed around delivering on that. That vision statement continues to evolve with the project.
What became the XBox live feature set for 360 was already specified in documents before the original XBox shipped, they couldn't get it all done on the original Xbox because they relied too heavily on developers to do it, so they took it out of devs hands on 360.

It sounds easy to do but in my experience very few companies can actually do it.

I actually had more in my "original" post that I removed where I was going into the aspects of how seemingly (or what should seemingly be) integrated business units are actually disparate. Recognizing that, at the same time, were I Sony Pictures or Music why wouldn't I want to be on numerous systems as it is simply another revenue/profit stream. This is why I'm so baffled about the rumored Netflix agreement that after so many views Sony pulls content...big media just doesn't get it...

My biggest problem with MSFT is that they do actually do a lot well but they have absolutely no clue how to market that and advertising is typically worse. I also think they are to afraid to use their gorilla status to move any portions of the industries they deal in, forward. Actually, outside of gaming my new "biggest problem" is how the business units are on a different cycle even though the stack is supposed to be integrated...(e.g. for BI, YTF do I still need VS2008 BIDS to create my business intelligence reports though we're VS2010 TFS now?)

In defense of hardware, it's always kind of bothered me how people like to slag on hardware as useless, but what is the most successful company in the world? It's Apple, a hardware company through and through.

I would also point out in phones, that I follow, I'd argue Samsung has partly succeeded on hardware. The Galaxy line does so well at least partly due to their super Amoled displays (that nobody else seems to have, although recently the latest Droid is said to have one, which I found a little odd, guess Samsung licenses them?).

Owning a superamoled phone myself, I can say it can be one of those things that once you have it, you refuse to go without it. I'm fairly locked into Samsung now because I really dont want to go back to poor LCD displays.

And they keep a blistering pace, Galaxy Nexus is a hardware beast, and rumored Galaxy S 3 even more, quad core 2 ghz, 720P, superamoled II, 1.5 GB RAM, these are all first and foremost monster hardware specs that set the pace. But especially the super Amoled displays have differentiated Samsung phones, and nobody else has them (except again that recent Droid being the first exception).

Anyways just trying to make the point that I think hardware consistently gets short thrift as to it's importance. Again, it's what Apple built it's whole empire on, really. You could say "user experience" but hardware was an integral, perhaps most integral, part of that. When I look at Macbook Air's in the store, I'm not impressed with the software, but rather how incredibly slick the hardware is. I dont like Apple, but I still say "wow, that's pretty neat".

But there's two sides, Vita is obviously great hardware, but I suspect it's entering a market where it wont matter.

I have to be honest as someone that owns a whole helluva lot of Apple products, it will forever be the software for me. While I love the designs of much of the hardware and for the most part always have it doesn't really matter to me. Even for software I'm probably an anomaly, for me I just want something that gets out of my way or helps me do things, it is why I typically don't give a damn about browser wars...the frame around the content I want to access isn't really relevant to me. For OSes, yeah I still like OS X more than 7 but really at the end of the day I don't even really give a damn about the OSes, it is, "can it run content that I want to access?", "does it have (an) application that would make my work/personal life easier?" so if I feel that way about software imagine how I feel about hardware (I think this is what is forgotten in the console wars on gaming fora). I take no shame is saying I prefer the 360 to the PS3 because for the most part I don't give a damn about the hardware and in my "gets out of my way..." needs earlier PS3 firmware sure as hell didn't do that + I'm intimately more familiar with the 360 having owned is so much longer. This is also why the PC vs consoles is mostly lost on me, sure it will be great when I finally piece together this i5 2500 but what does it really get me, more fun?, probably not, better graphics? sure, but fun > graphics for me and that's with all media/gaming taking place on a 115" screen.

So I guess in short form I take the contrarian, hardware is nowhere near as important even in the case of Apple it is simply a way of showcasing the software.

My thoughts on UX design, I can't say that the UI/UX coming out of Korea is any better than Japan.

 

[dobwal]

Sony is still fundamentally a hardware company, and without a shift in focus they will continue to produce also ran products that compete with the defining products.
Apple was a hardware company, but they saw the writing on the wall and are shifting focus to become an online service company.

Apple is still a hardware company. Less than 10% of their revenue is generated from software and related online services.

Furthermore the vast majority of their software and online services are tied to their hardware products. Outside of itunes and quicktime, what other Apple software can be run on non-Apple hardware? Music brought through itunes can be played anywhere but the DRM on movies and tv shows brought through itunes is a major impediment for anyone who wants to watch their content outside of Apple ecosystem.

Most of Apple's online services act as an extra layer of profit generation for their hardware products. Kill Apple's hardware sales and their software business dies with it.

Its makes sense for Sony to follow Apple lead and create a similar ecosystem for its customers. The problem is Sony lacks compelling hardware in areas where intergration makes sense and where they have compelling hardware they've showed no signs of intergration. Sony's PC, consoles, tablets, handhelds, smartphones, cameras, dvd/bluray players, TVs and mp3 players should all be tightly bound into one neat ecosystem that allows seemless sharing of content and accessories across products.

Sony needs to get a handle on its manufacturing so that it can bring feature rich products at a price that is affordable and competitive. Look at Apple, while its Macs sell at a premium almost all of its high volume products are very price competitive. You can buy tablets for cheaper than an Ipad now, but in the past most the major competitors released tablets at prices higher than the Ipad. The same goes for the iphone, its priced similar to all other competitors.

Apple has no manufacturing capabilities, but Sony has its own semiconductors. Sony should be able to produce products cheaper than Apple. But it seems like Sony is in a situation where it still can't be cost competitive with other hardware manufacturers like Samsung. It needs to fix that, first and foremost then concentrate on producing quality highend products. Products that are sold at prices that are competitive even against products less feature rich and allow the additional revenue streams of its tightly bound ecosystem to drive additional profits.

PSS should be expanded upon through cannibalization of its fragmented software efforts and be the centerpiece software that ties all of Sony hardware together.

 

[RobertR1]

The software is providing the experience that people want which is driving them to buy the hardware. I don't think ERP means that Apply is selling x amount of Lion copies.

Apple seems to do a good job of delivering the user experience (software) and desirable aesthetics (hardware).

Sony is just "old." They are like the company who keeps making what they know and only adapt when it's absolutely necessary. The innovation and excitement (outside of diehards) just isn't there and continues to decrease. I'm only talking about the US since that's my experince.

The mindshare goes something like this:

TVs: Samsung and Vizio
Phones: Apple and Samsung
Game console: Microsoft
Handheld: Nintendo
PC: Apple or whoever is cheapest on the PC side
Cameras: Cannon, Nikon and Sony trailing

Here is a CE company that really takes a backseat to other competitors in every large category. They needs to do a LOT to change this around. Sony's corporate culture seems to be outdated. They seem to be a very disconnected company that stays aways from consumer interaction and almost operates in secrecy. That is just not working, in the US.

 

[patsu]

Software is a key enabler for better user experience. It alone won't and can't solve Sony's problems. ^_^
(e.g. How would they price the software _and_ hardware ? How do they differentiate the entire package ?).

For gaming, I think the casuals would think more about Nintendo and Apple (and may be Facebook ?) at this point, even in US. The hardcore people will still think of 360 and PS3 (Wii is out unfortunately).

 

[ERP]

But the software is a major part of what allows manufacturers to differentiate the entire package and by this I mean back end platform software in addition to on device software.
We'll see how the Dual screen android tablet does, but I suspect even with interesting industrial design it'll fall flat because it's just another android tablet and an expensive one at that.

Historically at CE companies software has been an after thought, I don't believe you can be competitive in the CE space with that attitude anymore.

The TV market has just reached a point where the technology can't provide enough of a value add to justify the price difference.
The Playstation market is still very much there, PSP was very successful in Japan and I think it's likely Vita will follow suit. There will be PS4, ad it'll move units.
As for the rest of the CE market phones/tablets/MP3 players etc. I think trying to do your differentiating software development and UX design in Japan is probably not the smartest idea.

 

[Shifty Geezer]

Apple is still a hardware company.

I disagree. I'm not sure Apple has ever been a hardware company. They buy components from other parties, not inventing any hardware tech themselves, and assemble them with considerable design and a software layer that grants their non-unique hardware with unique appeal. Their origins are PC components and other people's inventions with their own software layer. The Mac exists not because the hardware was special, but the software was (for artistic types who were confused by a mouse with more than one button ). Contrast the Mac with the Amiga, which was all about the hardware. The iPhone is only a runaway success because Apple combined other people's components with their own very slick interface and software layer. Okay, they brought out the right combination of parts very well executed, which counts towards being a hardware company, but they are very different to the big CE players who develop new technologies.

I'm not an Apple buff so I may be missing lots, but I cannot recall any hardware invented and used by Apple to great effect. In contrast, Sony's inventions were invented at Sony and produced. They owned the TV space for two decades because they invented the Trinitron technology, patented it, and had a technological advantage that no-one else could match. Now the hardware landscape has changed that the chances of anyone having a similar runaway tech is next to nil. Sony can't make a better GPU to drive their TVs then the existing companies, or a better display than the other display manufacturers will be able to. They can only piece together the same sorts of components, and the differentiation between buying a Sony TV or BRD player or mobile phone will be the software layer and services, which have the added advantage of being updateable, cheap to maintain, and can be used across devices so that a service can have a lifespan of 10 years while consumers are buying through 4 or 5 different devices that access that same service. The likes of boommoob1 who want to see amazing leading devices from Sony aren't seeing how things have changed IMO. Yes, Sony shoud have had their own pioneering tablets and digital Walkmen and whatnot, and they failed there (not really under Stringer's helm). Going forwards it looks too late for me. There's nowhere left to go, save incremental improvements in things like displays that Sony cannot dominate because there are just as capable rivals to them now.

 

[Scott_Arm]

Apple is a hardware company, just in a different sense. Industrial design is more important than specs and raw power. Simple things like the MagSafe power connector for the macbooks is what makes people take notice of their products over others. It's attention to detail that runs through the overall design of both the hardware and software. They seemed to find the right combination of usability, aesthetics and novelty to keep people interested. A lot of companies get the novelty part, but usability and aesthetics are out the window. Sony gets the tech, but the don't seem to put together the overall experience. Now that there are dominant players in most CE markets, it's pretty hard to grab that business back.

 

[NathansFortune]

But the software is a major part of what allows manufacturers to differentiate the entire package and by this I mean back end platform software in addition to on device software.
We'll see how the Dual screen android tablet does, but I suspect even with interesting industrial design it'll fall flat because it's just another android tablet and an expensive one at that.

Historically at CE companies software has been an after thought, I don't believe you can be competitive in the CE space with that attitude anymore.

The TV market has just reached a point where the technology can't provide enough of a value add to justify the price difference.
The Playstation market is still very much there, PSP was very successful in Japan and I think it's likely Vita will follow suit. There will be PS4, ad it'll move units.
As for the rest of the CE market phones/tablets/MP3 players etc. I think trying to do your differentiating software development and UX design in Japan is probably not the smartest idea.

The Sony Ericsson UX was designed in London and that was a pretty poor effort until the 2011 models. They had no Android in all of 2009, 2010 was stuck on 2.1 until October of this year. Even the units based outside of Japan haven't covered themselves in glory when it comes to software development.

I think Sony need to move all of their software development to SCE and base themselves in California around Silicon Valley somewhere so they can keep up with trends properly. If they had all of their software development done by a single unit for every device they could really attack the market with a united front and build their brand up again. Part of the reason Sony have been in so much crap lately is because their products don't stand out any more. They are just another CE like Toshiba or Panasonic. Historically Sony have been the leaders of the industry, but that mantle has fallen to Samsung and Apple now, Sony either have to adjust to this new environment or battle with Samsung and get their leadership back. The latter is more difficult but has much greater reward.

 

[Platon]

I disagree. I'm not sure Apple has ever been a hardware company. They buy components from other parties, not inventing any hardware tech themselves, and assemble them with considerable design and a software layer that grants their non-unique hardware with unique appeal.

I agree, never understood the hardware part of apple. I have been seeing them like a design/software company. You take what ever others have produced/researched/manufactured or whatever, put them together in a very well designed, aesthetically pleasing package and cover it with a layer a well functioning software that now will also interact cross talk between devices and have you in an "ecosystem"...

 

[rekator]

Apple invested a lot in hardware, Unibody case example, Magsafe, Batteries structure… They're got a lot of patents on a lot of different fields of hardware studies, may be more than Sony.
But yes Apple is not a "Hardware" company, like is not a "Software" company. It's a mix of both.

 

[Shifty Geezer]

I guess it depends on one's definitions, whether a 'hardware' company should be developing new hardware technologies or assembling hardware products. For the sake of this discussion though, Aplpe's hardware is nothing without their software, so I think that underlines that Sony need a strong software arm which is what they are lacking more than their hardware. Innovative hardware is now too hard to pull off, and any company could get lucky with the next big break.

I'm not sure Apple having lots of patents counts for much either. These days anyone can patent anything even if someone else invented it, and one can also patent obvious advancements of existing tech that everyone else would invent also.

 

[wco81]

Back in the day, they did develop things like Firewire and Nubus. They used to make a lot of proprietary things which failed to take off.

They also created things like unicode.

They obviously had the chops to develop both so that when the opportunity like the iPhone or before that the iPod presented itself, they could write the software. In hardware, they have been executing operationally better than anyone else, with the best supply chain and inventory management.

Remember with the original Nano, they "bet the company" by being up a big chunk of the global NAND capacity at the time. Not only did they get a blockbuster, they locked out potential competitors for a period. They may have also locked up component supply at lower costs with the iPad supply chain as well.

So it's not that they do one or the other and dabble in the other area.