Not long ago, it would have been unthinkable to consider whether or not Sony has a future in consumer electronics. For decades, Sony was viewed by many as THE consumer electronics company. After all, these are some of the consumer electronics innovations introduced by Sony: the world’s first transistor TV, the Trinitron® color television, the Walkman® portable stereo, the world’s first CD player, the first 8mm camcorder, the MiniDisc™ (MD) player, and Sony PlayStation®. But, Sony recently has been surpassed as a consumer electronics leader by companies such as Apple and Samsung.
The Sony of 2013 is much more involved in fields outside of electronics, which has led some analysts to suggest that the firm spin off its consumer electronics business. Consider these observations of Hiroko Tabuchi, writing for the New York Times:
“Sony is best known as a consumer electronics company, and it loses money on almost every gadget it sells. Sony has made money making Hollywood movies and selling music. That profitable part of the business is what Daniel S. Loeb, an American investor and manager of the hedge fund Third Point, wants Sony to spin off to raise cash to resuscitate its electronics business. But as Mr. Loeb pressures Sony executives to do more to revive the company’s ailing electronics arm, some analysts are asking, Why bother? Sony, it is suggested, might be better off just selling insurance. Or just making movies and music. But not electronics.”
“A new report from the investment banking firm Jefferies delivered a harsh assessment. ‘Electronics is its Achilles’ heel and, in our view, it is worth zero,’ wrote Atul Goyal, consumer technology analyst for Jefferies. ‘In our view, it needs to exit most electronics markets.’ It so happens that Sony’s most successful business is selling insurance. While it doesn’t run this business in the U.S. or Europe, Sony makes a lot of money writing policies in Japan. Life insurance has been its biggest moneymaker, earning 933 billion yen ($9.07 billion) in operating profit in the 10 years that ended in March. Sony’s film and music divisions, which produced hits like the Spider-Man movies and Zero Dark Thirty and recorded musicians like the cellist Yo-Yo Ma and the electronic music duo Daft Punk, have contributed $7 billion to the bottom line over the last decade.”
Click the image to read more from Tabuchi.
Photo by Itsuo Inouye/Associated Press