RCM
04-12-2012, 10:57 AM
I wonder how this is going to effect Sony's strategy for PS4.
"Promising change and announcing a string of goals, Sony’s chief executive, Kazuo Hirai, laid out a revival plan for the struggling electronics and entertainment company, including a focus away from its unprofitable television business and a plan to cut 10,000 jobs.
Sony is headed for its fourth consecutive year of losses, battered on all sides by nimbler rivals and putting pressure on Mr. Hirai, who took charge at Sony this month, to chart a turnaround.
“The time for Sony to change is now,” Mr. Hirai said during a news conference Thursday, his first since he succeeded Howard Stringer as the company’s chief. “Sony will change.”
Once the epitome of Japanese innovation and technological prowess — as maker of the Walkman music players and Trinitron televisions — Sony has rapidly lost ground to American stalwarts like Apple and electronics manufacturers from South Korea and China.
Unable to focus, it now makes a bloated and bewildering lineup of gadgets, from handycams to car stereos.
Sony and other Japanese exporters have also been hamstrung by the persistent strength of the yen, which is hovering near an all-time high against the American dollar and has made Japanese goods more expensive for consumers outside of Japan.
To rebuild Sony’s electronics business, Mr. Hirai said he would concentrate on three main businesses: mobile devices, including smartphones and tablets; cameras and camcorders; and games.
Sony will focus especially on its Xperia line of smartphones, which Mr. Hirai said was fast becoming a hub in the technology ecosystem. He said he would make Sony a leader in the mobile field and triple sales in that business in three years to 1.8 trillion yen, or $22 billion. Sony recently regained full control of its mobile strategy, last year buying out Ericsson’s half of their cellphone joint venture for $1.5 billion.
Sony will redouble efforts to integrate its Xperia smartphones with Sony tablets, personal computers and game consoles, Mr. Hirai said, allowing users to gain access to content seamlessly across devices — a long-trumpeted but so far largely elusive strategy.
The company will also better leverage its vast catalog of music, movies and games to differentiate Sony gear, Mr. Hirai said. But infighting and concerns about piracy have hindered the company’s content business, and Sony has not been able to replicate the success of the Apple iTunes online music and movie store. Sony has said it intends to expand its popular PlayStation game network to offer music and video, replacing the disjointed lineup of content delivery platforms it now operates.
Meanwhile, Sony will invest in its video game business to keep up with the fast-growing market for casual and downloadable games, Mr. Hirai said. Here, he hoped to increase sales to 1 trillion yen by the end of March 2015 from slightly more than 800 billion yen, and to more than double operating profit, he said.
Mr. Hirai gave similarly bold goals for Sony’s digital imaging business, which includes digital cameras and handycams, saying the company aimed to increase sales to 1.5 trillion yen in three years, from a bit more than 1 trillion yen, and to more than triple operating profit.
Missing from that core lineup was Sony’s once-formidable television business, which trails the South Korean manufacturers Samsung and LG and has lost money for the last eight years.
Though Mr. Hirai said that Sony would not drop TVs, he said a 60 percent reduction in fixed costs was planned in that business in a bid to bring it back to profit. He declined to say whether Sony would close any factories.
Sony also declined to give specifics on where the 10,000 jobs would be cut, saying only that 3,000 would come from a small chemical business that is being spun off. The larger cuts represent about 6 percent of its global work force. The company said it would take a restructuring charge of 75 billion yen in the current financial year, which ends next March.
Mr. Hirai said Sony would also seek growth in businesses in the medical field and was scouting for acquisitions and investments. Sony has emerged as one suitor for the disgraced medical equipment maker, Olympus, which has been embroiled in an accounting fraud.
Over all, Sony aimed to achieve total group sales of ¥8.5 trillion with an operating margin of more than 5 percent over the next three financial years, he said.
Sony and other Japanese exporters have been hamstrung by the persistent strength of the yen, which has is hovering near an all-time high against the U.S. dollar and has made Japanese goods more expensive for consumers outside of Japan.
The weak global economic backdrop also continues to prompt many consumers to delay purchases of nonessential goods like cars and game consoles, or to look harder for cheaper variants.
Sony’s troubles also highlight problems that are specific to the Japanese consumer electronics sector, however.
Once leaders in the world of portable music players, televisions and camcorders, companies like Sony, Sharp, Panasonic and Toshiba have seen their edge in product development eroded and market share diminished by rising competition.
Many of the manufacturers have been slow to gain traction in the growing smartphone and tablet computer market, analysts say. A recent research note from Cantor Fitzgerald, for example, said Sony’s pipeline was characterized by a “lack of innovative, revolutionary (rather than evolutionary) products.”
At the same time, South Korean manufacturers like Samsung have emerged as major competitors capable of delivering cutting-edge products and have achieved brand recognition and customer acceptance to match.
Japanese consumer electronics manufacturers “have lost their technology leadership in many areas,” Steve Durose, head of Asia Pacific TMT ratings at Fitch Ratings, noted in a recent industry commentary.
“Ten years ago, these companies were major technology innovators, the creators or leading developers of many electronic products and trend-setting devices such as televisions, digital cameras, portable music players and games consoles,” Mr. Durose said. “Today, however, the number of products remaining where they can boast undisputed global leadership has narrowed significantly, having being usurped or equaled by the likes of Apple and Samsung Electronics.”
Underlining this point, Samsung announced last week an operating profit of 5.8 trillion won, or $5.1 billion, for the first three months of this year. The profit, almost double the amount recorded for the first quarter of 2011, was buoyed by booming sales of its Galaxy smartphones.
“We are increasingly concerned that Sony will not be able to generate meaningful profit in its electronics business,” Jeff Loff, an analyst at Macquarie in Tokyo, commented in a research note Tuesday. Sony’s operating profit target for the current financial year of ¥180 billion, he added, was below Macquarie’s forecast of ¥208 billion."
SOURCE: The New York Times
"Promising change and announcing a string of goals, Sony’s chief executive, Kazuo Hirai, laid out a revival plan for the struggling electronics and entertainment company, including a focus away from its unprofitable television business and a plan to cut 10,000 jobs.
Sony is headed for its fourth consecutive year of losses, battered on all sides by nimbler rivals and putting pressure on Mr. Hirai, who took charge at Sony this month, to chart a turnaround.
“The time for Sony to change is now,” Mr. Hirai said during a news conference Thursday, his first since he succeeded Howard Stringer as the company’s chief. “Sony will change.”
Once the epitome of Japanese innovation and technological prowess — as maker of the Walkman music players and Trinitron televisions — Sony has rapidly lost ground to American stalwarts like Apple and electronics manufacturers from South Korea and China.
Unable to focus, it now makes a bloated and bewildering lineup of gadgets, from handycams to car stereos.
Sony and other Japanese exporters have also been hamstrung by the persistent strength of the yen, which is hovering near an all-time high against the American dollar and has made Japanese goods more expensive for consumers outside of Japan.
To rebuild Sony’s electronics business, Mr. Hirai said he would concentrate on three main businesses: mobile devices, including smartphones and tablets; cameras and camcorders; and games.
Sony will focus especially on its Xperia line of smartphones, which Mr. Hirai said was fast becoming a hub in the technology ecosystem. He said he would make Sony a leader in the mobile field and triple sales in that business in three years to 1.8 trillion yen, or $22 billion. Sony recently regained full control of its mobile strategy, last year buying out Ericsson’s half of their cellphone joint venture for $1.5 billion.
Sony will redouble efforts to integrate its Xperia smartphones with Sony tablets, personal computers and game consoles, Mr. Hirai said, allowing users to gain access to content seamlessly across devices — a long-trumpeted but so far largely elusive strategy.
The company will also better leverage its vast catalog of music, movies and games to differentiate Sony gear, Mr. Hirai said. But infighting and concerns about piracy have hindered the company’s content business, and Sony has not been able to replicate the success of the Apple iTunes online music and movie store. Sony has said it intends to expand its popular PlayStation game network to offer music and video, replacing the disjointed lineup of content delivery platforms it now operates.
Meanwhile, Sony will invest in its video game business to keep up with the fast-growing market for casual and downloadable games, Mr. Hirai said. Here, he hoped to increase sales to 1 trillion yen by the end of March 2015 from slightly more than 800 billion yen, and to more than double operating profit, he said.
Mr. Hirai gave similarly bold goals for Sony’s digital imaging business, which includes digital cameras and handycams, saying the company aimed to increase sales to 1.5 trillion yen in three years, from a bit more than 1 trillion yen, and to more than triple operating profit.
Missing from that core lineup was Sony’s once-formidable television business, which trails the South Korean manufacturers Samsung and LG and has lost money for the last eight years.
Though Mr. Hirai said that Sony would not drop TVs, he said a 60 percent reduction in fixed costs was planned in that business in a bid to bring it back to profit. He declined to say whether Sony would close any factories.
Sony also declined to give specifics on where the 10,000 jobs would be cut, saying only that 3,000 would come from a small chemical business that is being spun off. The larger cuts represent about 6 percent of its global work force. The company said it would take a restructuring charge of 75 billion yen in the current financial year, which ends next March.
Mr. Hirai said Sony would also seek growth in businesses in the medical field and was scouting for acquisitions and investments. Sony has emerged as one suitor for the disgraced medical equipment maker, Olympus, which has been embroiled in an accounting fraud.
Over all, Sony aimed to achieve total group sales of ¥8.5 trillion with an operating margin of more than 5 percent over the next three financial years, he said.
Sony and other Japanese exporters have been hamstrung by the persistent strength of the yen, which has is hovering near an all-time high against the U.S. dollar and has made Japanese goods more expensive for consumers outside of Japan.
The weak global economic backdrop also continues to prompt many consumers to delay purchases of nonessential goods like cars and game consoles, or to look harder for cheaper variants.
Sony’s troubles also highlight problems that are specific to the Japanese consumer electronics sector, however.
Once leaders in the world of portable music players, televisions and camcorders, companies like Sony, Sharp, Panasonic and Toshiba have seen their edge in product development eroded and market share diminished by rising competition.
Many of the manufacturers have been slow to gain traction in the growing smartphone and tablet computer market, analysts say. A recent research note from Cantor Fitzgerald, for example, said Sony’s pipeline was characterized by a “lack of innovative, revolutionary (rather than evolutionary) products.”
At the same time, South Korean manufacturers like Samsung have emerged as major competitors capable of delivering cutting-edge products and have achieved brand recognition and customer acceptance to match.
Japanese consumer electronics manufacturers “have lost their technology leadership in many areas,” Steve Durose, head of Asia Pacific TMT ratings at Fitch Ratings, noted in a recent industry commentary.
“Ten years ago, these companies were major technology innovators, the creators or leading developers of many electronic products and trend-setting devices such as televisions, digital cameras, portable music players and games consoles,” Mr. Durose said. “Today, however, the number of products remaining where they can boast undisputed global leadership has narrowed significantly, having being usurped or equaled by the likes of Apple and Samsung Electronics.”
Underlining this point, Samsung announced last week an operating profit of 5.8 trillion won, or $5.1 billion, for the first three months of this year. The profit, almost double the amount recorded for the first quarter of 2011, was buoyed by booming sales of its Galaxy smartphones.
“We are increasingly concerned that Sony will not be able to generate meaningful profit in its electronics business,” Jeff Loff, an analyst at Macquarie in Tokyo, commented in a research note Tuesday. Sony’s operating profit target for the current financial year of ¥180 billion, he added, was below Macquarie’s forecast of ¥208 billion."
SOURCE: The New York Times