With the recent report that Sony sold all of its S-LCD interests to Samsung in return for $939 million another flare has been shot, warning that the former king of electronics remains on a downward spiral that has no end in sight. A lack of innovation and misguided decisions (not to mention a few natural disasters) have eroded at the foundation of the company while competitors like Samsung and LG have overtaken the electronics giant in markets such as televisions and mobile phones. It wasn’t that long ago that Sony products were considered the creme de la creme of consumer electronics, the pinnacle for technophiles the world over. What factors have caused this the company’s slide into mediocrity? To answer that question, we need to take a look at Sony during its most successful period, the explosion of the ’80s and early ’90s.
It’s difficult to explain to people born after 1990 what kind of cultural impact Sony had during this time. Simply put, Sony was the Apple of its day, a company that released products that were the result of innovation being merged with everyday media consumption habits. When Sony unveiled the now-legendary Walkman in 1979, it fomented a revolution in the way people interacted with music. Buyers flocked in droves to retailers to get their hands on the device that would allow them to bring their music, in the form of analog cassette tapes, wherever they wanted. It was the must-have device of the decade, cementing the Sony brand in the mind of consumers as the name in electronics. Even when rival companies began churning out lower cost knockoffs, consumer demand for the Walkman remained high because consumers trusted the name. No matter the price, people would buy a device if it had the Sony name printed on it. Sony, not Apple, invented the extreme consumer dedication Cupertino now enjoys.
Following up on the Walkman craze of the ’80s, Sony once again changed the entire face of audio recording when it teamed up with Phillips to perfect the compact disc media format. CDs opened up a vast array of possibilities with the ability to give users a “master” copy of audio files as well as the convenience of being able to quickly select different tracks. The quality and amount of music that can be stored on a compact disc vastly outstripped the cassette tape, and once again thrust Sony into the forefront of media consumption innovation.
Unfortunately, the CD can be seen as the peak of Sony’s influence on the market. While it continued to develop new formats, such as the MiniDisc, none enjoyed the mass adoption that its previous efforts had enjoyed. (Sure, MiniDV and Blu-ray have done well, but only because of a lack of affordable alternative storage mediums. Flash media and streaming online content delivery are making these obsolete.) Sony became a nebulous company that fell prey to both its own avarice and the ability of its competitors to correctly gauge where consumers were going to look next for the next generation of media technology. Namely, the MP3.
If I had to point to a specific day in history that marked the decline of Sony as the worldwide leader in technology, it would be October 23, 2001. This was the date that Steve Jobs took the stage in his mock-turtlenecked glory and announced the next revolution in music, the iPod. In one fell swoop, Apple beat Sony to one of the most important technological advances this century. By giving consumers a device with instant purchasing power and the ability to listen to high quality audio files on the go, Cupertino completely changed the playing field for music consumption, a feat that Sony was no longer capable of.
In 2001, Sony had become a massive conglomerate of largely unrelated divisions. While on paper owning a movie company along with a music production business looks like it makes sense, for Sony it was a different matter. By acquiring several different companies, it created corporate bloat at its finest. Politics and bureaucracy crippled communication and formed factions between the different areas of the company, stifling innovation. Case in point is the fact that Sony was working on its own MP3 version of the Walkman, and would have beat Apple to the punch, except for the fact that some of the different labs inside Sony that were working on development had never even met in person. What was once a focused, innovative brand had become a quagmire of corporate red tape and politics.
Currently, Sony’s most profitable branch isn’t its electronics division, but its financial side. Simply put, the company makes more money selling life insurance than it does electronics. While not entirely unusual, this fact is an indicator of the three elements that Sony once possessed and is now missing: vision, innovation, and brand focus.
To regain any semblance of its former glory, Sony will have to take some decisive actions:
- Howard Stringer, Sony’s CEO, will need to be replaced with someone who understands current and future market trends, and be able to cast vision for capitalizing on the ever-changing playing field that Sony is part of.
- Take a hard look at the conglomerate that Sony has become and sell off those divisions that are neither profitable nor relevant to the vision mentioned above.
- Bring the sexy back to the Walkman brand. Sony has taken what can arguably called the most famous brand name in the history of electronics and slapped it onto any device that is portable. This title should be reserved for a flagship device that seeks to change the way that users consume media like the Walkman did. It should not be the catch-all category that it is now.
- Using the the flagship mentioned above, bring unity to the line of devices that allows a person to say “That’s a Sony” when they see it. A good example is the NEX line of digital cameras that Sony offers. One look is all it takes for a camera savvy consumer to know that the device that someone is holding is a mirrorless NEX camera. The lineup of Sony devices should be a progression of mouthwatering must-haves for the technophile, not a listing of total “meh.” The devices should build off each other in a way that not only makes sense but offers enhanced functionality for users.
- Speaking of enhanced functionality, Sony will need to strengthen the PS3 as a media platform to deliver paid content to customers. For the first time since its release, PS3 sales are neck and neck with the Xbox 360. The PS3 has a better media experience out of the box than the 360 does, so why hasn’t Sony been pushing that fact at every opportunity? Take care of the network hack issues, strengthen the choices of streaming content (which are already good to begin with) and enact an aggressive campaign to increase the residual income the device brings in. Having a Blu-ray player built into the system is great, but the format is going to eventually lose out to the ever increasing popularity of watching media online. If Sony wants to make even more of a splash, tie the new groundbreaking Walkman device into the PS3 in a way that is actually useful.
Watching the slow, painful decline that Sony has been experiencing over the past fifteen years has been akin to witnessing a loved gadget fade into obsolescence. As a former enthusiast for Sony products, I long for the days when buying a Trinitron television — even though it was more expensive than rest — guaranteed I was getting the best set on the market. For Sony to return to profitability it needs to find a visionary leader (it’s not Howard Stringer, believe me) that will “unite the clans” of Sony, thus enabling innovation to once again rule the day in the company. Until this happens, the future of Sony is very much in doubt — but if all else fails, it could always start selling cheap car insurance like Geico.