Sony is bleeding money - business strategy discussion
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Deleted member 11852
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In theory, being the owner of movie and TV content should put Sony in a prime position to leverage their own content on their own service however distribution rights are often with third parties and such agreements are probably due to run for years more. Even if when (re)negotiating these in future, Sony include provision to give preferential or optional delivery through their interactive TV service that'll only reduce the content's exclusive value in any given region, meaning they'll likely get less for it. Unless their interactive TV service has a massive user base in which to underwrite and augment those loses, I can't see how their bottom line will be any better.
Given this question mark over Sony being able to leverage their own content, this basically puts them on equal footing with everybody else trying to sell a TV service. I'm not sure what they intend to do better than the competition to make this successful.
That is what Sony were supposed to do with PS3. Not only did they drop the ball, they jumped on it and burst it and flattened it and threw it out with the trash. Numpties. 
Silent_Buddha
Legend
That appears to be what they are doing. They are in the process of withdrawing from the smartphone market. It appears their plan is to transition that business segment into providing camera sensors to other smartphone manufacturers. For the short term they will still sell Xperia smartphones but are ending all development of smartphones for the Chinese market as well as reducing the number of Xperia phones that are sold to the rest of the world. They are also going to try to expand that (providing image sensors) into the automotive and wearables market.
They'll also be reducing their investment in TV's by reducing their TV lineup.
On the bright side, they've upped their forecast for the games and networking division by 24% for 2018.
Other things they are doing to try to regain profitability or at least minimize losses for the current Fiscal Year are to not give out dividends for the first time in the history of the company. That's a fairly drastic move showing that the management of Sony while hopeful for the future, don't see themselves as having much time remaining to turn things around.
They also won't be renewing their FIFA contract. They would like to renew it, but do not think their company is in a solid enough financial position to enter into another contract.
Also, an interesting bit I read. It may be possible that Sony Pictures is going to attempt to capitalize on the popularity of the PS4 and one of it's exclusive games by making a film about it. From this blurb...
Content based on Playstation video games helping to drive revenue growth for their Motion Pictures division? The Last of Us would be an obvious one. Perhaps Uncharted as well.
And more good news. Their credit rating from Fitch has improved from negative to stable although they still view Sony as being fragile and at risk. Haven't seen anything about other's upgrading Sony from "junk" or negative status to stable, although I expect most to follow suit as this is the best outlook Sony has had in years, despite the struggles with the Mobile Communications division.
Regards,
SB
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Deleted member 11852
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The current plan (WSJ) is only to reduce the number of handsets, mostly in the low-end market. This makes sense because the low-end market is predicated on razor-thin margins which require massive volumes to be profitable operationally. But this leaves them competing in the mid-range and higher-end markets which is owned (>95% of the profits) by Apple, Samsung and increasingly Xiaomi.
If Samsung can't hold on the their Android market share (this year they've lost market share to Apple and Xiaomi) then Sony have no chance at all unless they can produce premium handsets with massive appeal.
People say good things about Sony's high-end handsets, so they possibly should compete there (as long as they make money from them). Even if not a great profit driver, it'd be important for Sony's brand to be a name in a major sector that everyone uses and talks about. If Sony don't appear on TVs and mobiles, they'll fade as a name.
But would they really fade?
Sony could easily focus their energies on high end audio equipment, cameras - these days they are among the best on the market - Playstation and whatnot. And no one would think any less of them.
Apple has their hands in very few markets with very profitable products and look where they are.
I think that Sony does not need to have a presence in every single electronic market out there. The little 'shine' left in the Sony brand would increase a lot if they would just focus on a few products, high end markets, and of course Playstation and entertainment (movies etc). AND doing those properly!
http://www.forbes.com/sites/tonybra...s-market-share-but-apple-makes-all-the-money/
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I don't know that their audio is a strong brand any more. It's been a long time since I heard someone recommending and being enthusiastic about their Sony sound system. Their camera's are very good, but I dare say you'll see more Canon's than Sony's (although Sony video cameras are probably more common) and only a fraction of the populace has a dedicated camera whereas everyone has a phone.
The reason Apple does so well is their ecosystem. Prior to iPhone, they were a niche. Sony OTOH were a premium electronics company and innovator. Their name was everywhere and that drove the brand for products in competition. eg. In the early days of flat panels, people may have chosen Sony on the trust that it was a best quality TV. And then also chosen Sony for a video camera by association. Losing that, they'll become a niche name and struggle to break out into new markets should they get the chance.
If you think of how MS seemed breaking into consoles ("They're the people that make that buggy operating system that makes our life miserable at work. What on earth do they know about making games machines?!"), it'd certainly behoove Sony to sustain the premium brand image. They want to be launching new, innovative CE products to a market that says, "Sony? Aren't they the people that make movies and computer games?" Okay, they'd have to rebuild it somewhat, but their top-end phones have managed to do that well - they just have trouble marketing against the bigger named Samsung. Being a smaller player isn't going to help in marketing against bigger challengers.
Of course, maybe it just is too late for Sony? Maybe they have had their time in the sun and now, because they failed to innovate, the natural selection of business means they have to shrink or die completely?
The reason Apple does so well is their ecosystem. Prior to iPhone, they were a niche. Sony OTOH were a premium electronics company and innovator. Their name was everywhere and that drove the brand for products in competition. eg. In the early days of flat panels, people may have chosen Sony on the trust that it was a best quality TV. And then also chosen Sony for a video camera by association. Losing that, they'll become a niche name and struggle to break out into new markets should they get the chance.
If you think of how MS seemed breaking into consoles ("They're the people that make that buggy operating system that makes our life miserable at work. What on earth do they know about making games machines?!"), it'd certainly behoove Sony to sustain the premium brand image. They want to be launching new, innovative CE products to a market that says, "Sony? Aren't they the people that make movies and computer games?" Okay, they'd have to rebuild it somewhat, but their top-end phones have managed to do that well - they just have trouble marketing against the bigger named Samsung. Being a smaller player isn't going to help in marketing against bigger challengers.
Of course, maybe it just is too late for Sony? Maybe they have had their time in the sun and now, because they failed to innovate, the natural selection of business means they have to shrink or die completely?
You, like Sony apparently, are still clinging on to "the days when..."
Sweetie, those days are gone and it really makes zero sense to keep producing products, making billions in losses for what seems like decades, and clinging on to old ideas.
Sony's problem is that their internal structure and decision making powers are stuck in the 80's.
Sony makes a TON of money from camera and especially camera sensors, which power the vast majority of all cameras, from high-end Nikon and Sony DSLRs (and God knows how many other brands) to every smartphone out there, from iPhone to Samsung handsets and everything in between. No one even knows that, and that's MENTAL. That's one example of Sony not leveraging on their complete dominance in one market to get good PR and make people think that they are, in fact, a pretty damn good hardware company.
Instead they keep pushing a dead horse, pushing out loss-making and not very innovative products which serve no real purpose other than their convincing themselves of their own belief that they need to be in that market, just because they have been in that market for decades.
My views might be radical and yes, I'm not sure they should really exit the TV business. But as far as mobiles go, I'm sorry but they either streamline their costs and figure out a way to make profits from Android - something that no one can do except Samsung, and even then theirs are going down too - or just get the hell out of that money pit which only makes money to Google and not the companies producing the handsets themselves.
In the end, if I knew how to run a company like Sony, I would be much richer than I am, so really what do I know??
LB
Sweetie, those days are gone and it really makes zero sense to keep producing products, making billions in losses for what seems like decades, and clinging on to old ideas.
Sony's problem is that their internal structure and decision making powers are stuck in the 80's.
Sony makes a TON of money from camera and especially camera sensors, which power the vast majority of all cameras, from high-end Nikon and Sony DSLRs (and God knows how many other brands) to every smartphone out there, from iPhone to Samsung handsets and everything in between. No one even knows that, and that's MENTAL. That's one example of Sony not leveraging on their complete dominance in one market to get good PR and make people think that they are, in fact, a pretty damn good hardware company.
Instead they keep pushing a dead horse, pushing out loss-making and not very innovative products which serve no real purpose other than their convincing themselves of their own belief that they need to be in that market, just because they have been in that market for decades.
My views might be radical and yes, I'm not sure they should really exit the TV business. But as far as mobiles go, I'm sorry but they either streamline their costs and figure out a way to make profits from Android - something that no one can do except Samsung, and even then theirs are going down too - or just get the hell out of that money pit which only makes money to Google and not the companies producing the handsets themselves.
In the end, if I knew how to run a company like Sony, I would be much richer than I am, so really what do I know??
LB
itsmydamnation
Veteran
momentum takes time, in my opinion sony have had the best android package on both phone and tablet in the highend for the last 2 generations, there aesthetics and physical design leave samsung and apple for dead. But rome wasn't built in a day and sony needs to build brand recognition for a new generation and you aren't going to do that running away from the mobile market. Culling the low end makes sense, they also need to get on contract with a big carrier in the US.
Sure, but I'm not advocating making losses. I'm saying running phones even not hugely profitable, as long as not a loss maker, is a good idea and it helps maintain Sony's legacy brand.
No-one cares about component manufacturers. If Qualcomm were to release TVs, no consumer is going to make the connection with their Snapdragon powered handset and think it might be a good brand. Even if Sony imaging sensors are in the iPhone, it's Apple's Awesome iPhone Camera that's great for photography.
Sony need to be on the outside of the products as a significant name, unless they literally can't compete any more.
Sony's content platform. That's what they should have been working on for the past decade and we've ALL said as much!
That assumes opportunities are 100% proportional to ability. It's certainly possible you could be the best CEO for Sony ever, but you aren't moving in the right circles nor have the right personal history to make it happen. Heck, many a gormless, incompetent CEO makes truck loads of cash while being idiots, and then get sacked with massive lay-off bonuses to get a job as a (useless) CEO in another multinational. Unless we're to believe that they are the pinnacle of human business nonce and no-one among 7 billion human beings has the capacity to do it better, I think it safe to say that plenty of smarter and more capable people don't get the jobs they should have.
The only thing I don't like about Sony relying on the console business increasingly is things can change fast from one generation to the next. You make a mistake launching your next platform and you sink the company. That's probably already true for them in a lot of ways, but sounds like it will be even more so in the future.
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Deleted member 11852
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They've been in that space for a long time and are insignificant.
You have to go back 12 years if you want to describe Apple as niche, unless you lived on a planet where iPods weren't sold
Sony however have not been a market leader, except in markets invisible to the consumer like professional broadcasting equipment, since the 90s. They seem real reluctant to egress the AV market, though. I would be sorry to see them stop making high-end TVs.
Sony are mostly to blame for brand deterioration. They used to be a premium brand then embraced cheap/affordable products.
They were insignificant. Sony turned their handsets around and have a desirable premium handset, regularly making top ten lists (and good positions in those lists) with the Xperia.
I forgot iPod, but even then, Apple's niche was computers for designers who couldn't handle two buttons (despite it being an easier and more convenient interface, something Apple eventually rectified), and, with addition of iPod, a portable music player that ousted Sony's Walkman. That's two markets - still niche and not making Apple the behemoth they are now. The reason they are now one of the premiere tech companies in the world was iPhone and the ecosystem they built around that making buckets of cash. None of Sony's run-away successes came with the same cash-printing mechanism as the App stores percentage cut to Apple.You have to go back 12 years if you want to describe Apple as niche, unless you lived on a planet where iPods weren't sold
Yep, although competition produced similarly quality for a lower price (Samsung) and Sony failed to compete. But they aren't going to be able to turn that brand deterioration around by abandoning CE products altogether. Either they find their old mojo and innovate and lead, or they pack up and shrink to a bit-part player. As Scott says, consoles aren't going to carry them forever.
Unfortunately there were two events that marked the deterioration of Sony's name. If they didnt make the mistakes they made they would have had their own ecosystem.
One was their slow entry into the HD panels. Their Trinitron line was simply amazing. But then everyone else jumped to flat HD panels and Sony came late. The once big name in the TV space became a secondary player. Other companies took over some of its goodwill. Samsung is now what Sony used to be.
Then it was the deterioration of Walkman. Sony did not reimagine its Walkman product line to meet with the needs of the digital age. Everyone was downloading music and videos digitally. Sony should have recognized this as the new Walkman market and the next redesign. Instead Apple took the opportunity with the Ipods until it was too late. The Walkman was dethroned. The Ipod ecosystem laid the base for the iPhone and all related product lines. The Walkman could have been the base for Sony's phone line up.
If Sony was a big player in those two areas they would have literally owned the living room and a huge portion of our everyday digital needs, which could have also enhanced its other markets including the Playstation. Their name would have been huge
One was their slow entry into the HD panels. Their Trinitron line was simply amazing. But then everyone else jumped to flat HD panels and Sony came late. The once big name in the TV space became a secondary player. Other companies took over some of its goodwill. Samsung is now what Sony used to be.
Then it was the deterioration of Walkman. Sony did not reimagine its Walkman product line to meet with the needs of the digital age. Everyone was downloading music and videos digitally. Sony should have recognized this as the new Walkman market and the next redesign. Instead Apple took the opportunity with the Ipods until it was too late. The Walkman was dethroned. The Ipod ecosystem laid the base for the iPhone and all related product lines. The Walkman could have been the base for Sony's phone line up.
If Sony was a big player in those two areas they would have literally owned the living room and a huge portion of our everyday digital needs, which could have also enhanced its other markets including the Playstation. Their name would have been huge
Apologies if this has been discussed earlier, did a search for handheld and nothing relevant seemed to be here. Just wondering, not now but near the end of the decade for example, would it be worth trying a successor to the vita? Maybe really try and tie it into the PS5? Say a dedicated machine that could be an additional screen to it and a remote-play thing, like an inventory screen, map overlay or something? Or maybe what The Division is doing, a co-op/help kinda thing:
Learn from what Nintendo has done with the tablet but it's a dedicated handheld too. Plus with the rate hardware's going, a large jump in performance with lower power consumption could be possible. Could a relatively middle of the road (but power focused) be a much better option? The Vita was ~£230/280 here which was quite a lot, so improvements on that would be welcome. Obviously it's not a decade ago, phones are taking the casual market but would a return to it with a twist be good business sense? Attempting to look so far into the future is obviously a bit optimistic but I was just wondering what your thoughts were. Also, what would you like fixed and added/removed from the vita to take into this hypothetical successor?
Learn from what Nintendo has done with the tablet but it's a dedicated handheld too. Plus with the rate hardware's going, a large jump in performance with lower power consumption could be possible. Could a relatively middle of the road (but power focused) be a much better option? The Vita was ~£230/280 here which was quite a lot, so improvements on that would be welcome. Obviously it's not a decade ago, phones are taking the casual market but would a return to it with a twist be good business sense? Attempting to look so far into the future is obviously a bit optimistic but I was just wondering what your thoughts were. Also, what would you like fixed and added/removed from the vita to take into this hypothetical successor?
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Deleted member 11852
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Market share or profits, Sony are/were irrelevant in the mobile (phones and tablet) space before they retreat some. Dropping out of the low/mid-end markets may improve profit margins but is unlikely to significantly improve their market share and thus their brand awareness. Perhaps they'll be a few people who like the Xperia so much they'll grab a more expensive model when the cheap ones disappear but I can't see that being a significant number given Sony's actual market share now.
You're really living up to the "uber troll" title today
You'd have to go back to before 1998 (the first iMac with USB) to find a Mac that couldn't handle a a two-button mouse. While they didn't ship them as standard (which was dumb) or even optional (dumber), all USB Macs will work with two, three or twenty button mice (like the Razor gaming mice) out of the box.If you look at Apple's revenue in 2006 (the last full financial year before the iPhone launched), you'll see they took $19Bn in revenue. iPods and iTMS were massive and disrupted the music industry. Apple were hardly scraping by. Not that Sony were a market leading in audio at the time. Aiwa, Pioneer, Technics were leading in that consumer space.
But the Electronic Stores are very small segment of Apple's profits. Around 6% of profits, and of the money taken from the two stores (iTMS/App) it's around a 50/50 split. Their real profits come from hardware where hardware sales have > 30% margins. Apple make more from iPhone than the entirely of Microsoft and Google combined. It's insane when you think about it but it's hardware and desirable, profitable hardware is where Sony need to be.
I can't see Sony abandoning large consumer markets but they need to focus on markets that are a) profitable and b) where they can differentiate themselves. The non-iOS phone/tablet space is dominated by Android which Google are developing rapidly and where the only real weakness is manufacturers not supporting Android OS upgrades. But Google are increasingly moving in a direction of platform conformity so (UI) differentiation is likely to lessen going forward so you can only deviate with the physical device.
TVs, I think, are are good market. I remember when Sony TVs - Trinitron - were premiere. Sony didn't make cheap/affordable devices. They could go back to the premium sets where you have better margins and where people who care about a decent picture will pay for it.
Stereo equipment seems be a rapidly declining market as people just get really good speakers and docks for their digital music players. Sony still make stellar cameras though but with mobile phones edging the need for decimated cameras out that market has limited scope for growth. DVD/Blu-ray/DVR recorders aren't likely to go away but, again, you're looking at a low-end cheap market.
There's still Sony BMG and Sony still have movie studios.
Silent_Buddha
Legend
They aren't only going to rely on the console business. The current plan (as much as they've revealed so far) is to focus on game consoles, movies, music, and camera sensors. Those are currently going to be the 4 pillars of the company.
They are de-emphasizing (downscaling or pulling out of) TVs, smartphones and other electronic devices that don't fit into the previous paragraph. The TV business has already been downscaled and spun off into a wholly owned subsidiary. They are stopping all R&D into phones for the Chinese market. Drastically cutting low end phone lines (the only smartphone segment that still has growth) as well as cutting some mid and high end phone lines.
Not much they can do about. Once flat panels hit, there wasn't much Sony could do to maintain a premium brand when TV's that cost less than half as much as premium TV's offer 90% of the quality. That wasn't the case with CRT based TVs. Especially when you started to get into larger screen sizes and vertically flat Trinitron TV's had a significant advantage over the all other TVs with vertically and horizontally curved screens. Not to mention quality controls when it came to alignment and all sorts of problems that could crop up on analog TV sets.
And that's what opened the door for companies like Samsung, LG, Vizio, etc. to shoot past Sony. Sony were still trying to make a living on premium TV's when there was little to distinguish a premium TV from far more affordable midrange TVs. So they lost massive marketshare. And after losing massive marketshare, the brand started to deteriorate. Especially among your average consumers.
Just look at how Pioneer failed in the premium market despite offering what was universally considered the best premium TV line in the world (the Kuro Plasma TV sets). You cannot remain relevant and profitable by offering only premium TVs because premium TVs no longer offer a massive Picture Quality advantage over mid-range or even budget TVs. You could do that with analog CRTs, but not with digital flat panels.
And hence, Samsung is now the biggest brand in TVs because they made cheap and affordable TVs. LG passed up Sony for the same reason. Vizio as well.
It remains to be seen if LG can revive the Premium TV market with their OLED TVs which actually do offer an incredibly massive advantage over LCD and a lesser but still large advantage over Plasma. But even if they don't, they are still the 2nd largest TV brand in the world because they have cheap and affordable TVs that offer 90% of the quality of TVs costing 2-4x as much, just like Samsung.
The problem here, and Sony even admits to it, is that there is little to no growth in the high end smartphone segment which they will continue to target for now. They expect their mobile communications division to continue to drop in sales, but they hope to be able to maintain enough margins that the division becomes profitable.
However, they are pulling out of the largest smartphone market (China) and evaluating how much they will commit to the second largest smartphone market (the US). They continue to do well in Europe, SEA, and Japan. 84% of their sales come from those 3 regions. Another 6% from the China and US (3% each), leaving 10% for the rest of the world.
They will cut other sales regions where they aren't doing as well. Presumably that means India (fast growing market but like China is predominantly low end devices), S. America, Central America, and Africa.
Almost all of the growth potential in smartphones currently is limited to the low end with a little bit in mid-range phones. The high end is actually seeing some shrinkage. IIRC, Samsung has actually lost sales in the high end in recent months. And not small losses either. Hence, why you see Microsoft targetting the low to mid range first with their new lines of phones. They still haven't announced an updated high end handset.
And that's the problem with going with Android phone. There is little to distinguish yourself from the competition if the competition can make a similar performing phone, cheaper. Hence the explosion in the low end market. Samsung and Apple divy up the vast majority of the high end market. Apple doesn't go after the low end, while Samsung does. Which is why Samsung is the largest handset maker in the world. But they are likely to be passed up by one of the Chinese manufacturer's in the future.
With Google wanting to provide a more unified experience on Android, Sony (and others) may find it increasingly difficult to differentiate their Android headset from a competitor's Android headset. Especially if the competitor is cheaper.
Regards,
SB
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Would it really hurt them to just keep a single high and android phone out there? Keep it simple though, go with stock android so Sony will have no software related costs and updates could be handled by google. Use the most current stock high end internal hardware, so the latest quallcomm and adreno chips which means no r&d costs on Sony's end, just use the best of what's offered as is. Instead just focus on the case design since looks really do matter for a phone, and leverage their sensor division to have the best mobile camera available. Seems like that would be little cost to them since software, internal hardware and sensors are served up by others and the only "mobile" related costs would be case design to make it look current and hip. That would at least keep the Sony brand name visible to the young folk out there because otherwise with young people using the other stuff Sony offers less and less every day they could risk becoming unknown in the not too far future. I swear it seems to me like all the 20ish people I meet and work with basically have a laptop, phone and nothing more, those two devices just about do everything for them so there has to be some value in staying in the phone space at least.
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