While Samsung Rises, Sony Falls

7 Feb

We’ve written a lot about the remarkable rise of Asian powerhouse Samsung Electronics, most recently just last week. But we’ve also reported on the decline of another Asian powerhouse (former??), Sony, and asked this question about nine months ago: What’s Ahead for Sony? Does the Future Include Electronics?

Well, we’ve now gotten an answer from Sony, with its announcement that it would be exiting the PC business (by selling this division) and spinning off its television business. Yes, the company that created the breakthrough Vaio PC and the Trinitron TV is moving away from these businesses after years of disappointing results. What do YOU think Sony should do next?

Here are excerpts from Sony’s Press February 6, 2014 release:

“Sony has been aggressively implementing a reform strategy across its electronics business. In the imaging, game, and mobile businesses that Sony identified as the three core businesses that would drive the growth of its electronics business, Sony has made significant progress in executing this strategy. Sony has launched high value-added products that bring together the best of Sony’s technological strengths and introduced new market-leading platforms and business models. At the same time, Sony identified PCs and TVs as businesses for which profitability improvement would be a key priority and implemented various reform measures. The reforms executed within the TV business have significantly enhanced its operational structure and product competitiveness. However, Sony now anticipates its target of returning the TV and PC businesses to profitability will not be achieved within the fiscal year ending March 31, 2014.”

“Sony and Japan Industrial Partners Inc. (“JIP”) today concluded a memorandum of understanding confirming the parties’ intent for Sony to sell to JIP Sony’s PC business currently operated under the Vaio brand. As a part of the business transfer to JIP, Sony will cease planning, design and development of PC products. Manufacturing and sales will also be discontinued after the Spring 2014 lineup to be launched globally.”

“Sony has been engaged in various cost reduction initiatives for the TV business. These initiatives include enhancing LCD panel-related cost efficiency and rationalizing R&D expenses, while also strengthening product competitiveness and operational efficiency in order to improve marginal profit ratio. Due to these measures, losses from the TV business,  are now anticipated to be reduced to about 25 billion yen [$25 million] in FY13.” As a result: “First, Sony will shift its product mix and focus on increasing the proportion of sales from high-end models. Sony plans to reinforce the company’s leading position in the 4K market by strengthening its product lineup while also bolstering its 2K models with wide color range and image-enhancing technologies. In emerging markets, Sony will aim to harness market expansion by developing and launching models tailored to specific local needs. Second, Sony will accelerate and broaden its on-going cost reduction and operational improvement measures, focusing attention across all functions relevant to the TV business. In addition, to help transform this business into a more efficient and dynamic organization, optimized for the current competitive business environment and fully accountable for its operations, Sony has decided to split out the TV business and operate it as a wholly-owned subsidiary. The targeted time frame for this transition is July 2014.”

Take a look at this Wall Street Journal chart to see Sony’s operating profit trends by sector.
 

 

3 Responses to “While Samsung Rises, Sony Falls”

  1. Rachel Trotta February 9, 2014 at 6:02 pm #

    I have a Sony Vaio laptop and this makes me very sad to hear! I absolutely love it, I wouldn’t trade it for a Mac any day. I was hoping to purchase another in a few years once this one became outdated but doesn’t look like that will be happening. I can appreciate the decision though considering from the chart it is very clear they were losing money. Sony is a good company in my experience and I hope they are able to bounce back from these losses!

  2. theroyalbengalitiger February 10, 2014 at 1:03 pm #

    I do not know if I would say that Sony is falling. I agree with your previous article that Sony is definitely lagging behind Samsung as far as electronics goes but I think that future of electronics is changing. Sony may be shifting its focus into products which are the future. There is a huge possibility (at least in my mind) that integrated electronic systems (Eg the XBox One or the PS4) where you can do multiple things are the future so who is to say that the PS5 or whatever Microsoft/Nintendo releases in the near future will not have a TV screen which will start becoming the TV of the future.

    Drawing from our class discussions on Blackberry, I think Samsung could have a similar fall in the future if they limit themselves to products that have already matured in the production cycle.

Trackbacks/Pingbacks

  1. Is Sony in a Temporary or Permanent Decline? | Evans on Marketing - May 21, 2014

    […] Sony used to truly be iconic — both the company and its products. It was innovative across several product lines. Sony was a global consumer electronics leader. But, over the lat several years, Sony has fallen on hard times (as we noted before). […]

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Follow

Get every new post delivered to your Inbox.

Join 1,004 other followers

%d bloggers like this: