Monday, April 21, 2014
Opinion: Sony, Change Or Die

Opinion: Sony, Change Or Die

These are serious times.

In the early days, when the electronics industry’s innovation was happening, many Japanese companies were known for producing poor quality products. Sony decided that needed to change, so the firm set out to reshape the world’s perception of its nations main export by becoming the company to create high-quality electronics – it did just that and for a long time, dominated the market, and had become a topnotch brand. In essence, if you wanted quality, you wanted Sony.

Then the Walkman happened, and its success propelled the company to even greater heights. The portable music player had become a universal phenomenon, everybody had one, or so it seemed. For those who are too young to know what I’m talking about, the Walkman was what the iPod or iPhone is today. So Sony ruled electronics: from TVs to Stereos and everything in-between. The high, however, didn’t stop there.

PlayStation came on the scene, after Nintendo refused the technology from Sony, as the two firms couldn’t come to an agreement on how revenues would be shared. PSone was birthed, and long story short, it became one of the most successful consoles of all time, bested only by its younger, sibling PS2.

Then something happened. The company had become heady and arrogant. The big players in Japan had thought, and still do today, that their company was untouchable. They thought no one could replicate their successes and ignored, even up to this day, the daunting challenges ahead. The company failed to reorganize when competitors like Samsung started biting at its heels, it failed to innovate when Apple crashed its party, and failed to build on the success of PS2 when Microsoft released the Xbox 360.

You must realize that Sony dominated, at one point, the aforementioned three markets: TVs and Stereos, Portable Music Players and Video Games. You also must realize, nervously, that Sony’s lost its position in all three. But why? The firm believes, stubbornly, that it’s still king in these departments! Sony’s living a lie, and its arrogant Japanese executives are killing the beloved but failing company.

I read an article in Inc Magazine that shed some light on the difficulty Sir Howard Stringer faced when he became boss. He said he didn’t realize how deeply rooted Sony’s stubborn behaviors were – especially in Japan. There, he wasn’t boss at all, he had to work hard to change the company’s work ethic and its stupid culture of segregation. Sony had engineers working on new technology who weren’t allowed to communicate with other departments because of irrelevant, old reasons. Stringer succeeded to a certain extent in changing the culture, leading former PlayStation boss who now holds Stringer’s position, Kaz Hirai, to mesh the entire PlayStation team. Can you believe PlayStation used to be a segregated group?

Sony needs to let loose of its old glory and become a light, lean company. Its TV business is dying because its products are way more expensive than the likes of Samsung and LG. To become competitive the firm must find ways to lower cost while keeping quality at high levels. It could also employ a new advertising strategy and rebranding, just as it did when it changed the perception of Japanese products. The Make.Believe tagline isn’t being effective, if it was, the results would have shown in the firm’s bottom line. Try something new that would correspond with your new pricing, branding and structure. You’re light and lean now, let your advertising motto reflect that.

Yesterday, Standard & Poor’s lowered Sony’s credit rating from A- to BBB+, citing the likelihood of a strong recovery in Sony’s earnings as low, due to a massive erosion of prices, falling demand, and harsh competition in Sony’s mainstay businesses.

“We base the downgrade on our view that severe circumstances in Sony’s mainstay electronics businesses make a strong recovery in earnings unlikely. We base the negative outlook on the long-term corporate credit rating on our expectation that we could lower the ratings further if we see no meaningful sign of a recovery in Sony’s earnings within six to 12 months.”

Kaz Hirai said recently, “We really need to buckle down and be realistic. I don’t think everybody is on board, but I think people are coming around to the idea that if we don’t turn this around, we could be sitting in some serious trouble.”

Maybe Hirai’s the right man for the Job, then. Maybe with Stringer being American, it was hard for the Japanese founders and board members to understand the impact of what’s taking place. Maybe, just maybe, Sony will change. Because it’s either that, or die.

About Ernice Gilbert

Ernice Gilbert here. Founder and Editor-In-Chief of Gamesthirst. Thanks for stopping by, make yourself at home!
  • smoge

    They are changing; PlayStation is becoming the head of the Sony brand and didnt they just roll out SEN, let’s see where they are going with that.

  • http://www.gamesthirst.com Ernice Gilbert

    @Smoge: They’re changing too slow. Sony really needs to recognize what’s happening with them and act accordingly. They’re not doing so fast enough.

  • os1019

    It is the nature of the beast everything runs it’s course… Atari, Nintendo though they are still around they are far from being the power player they once was. Sega etc etc… Maybe it is time for that to happen Sony. For our sakes I hope that they can turn it around but that is me being wishful from a business POV it is highly unlikely…

  • CaribbeanCLANK

    Sony is still a good company and the Playstation brand is still one of the best in the video game industry. NOBODY….makes exclusive content like Sony does….and I hope that NEVER changes.

  • nick

    playstations changing but i fear its too little too late.
    and as for their other divisions they were dead in the water years ago!
    ive got allot of faith in kaz, however im not so sure he can resurrect a sinking ship.
    especially after this!
    http://au.ps3.ign.com/articles/121/1218351p1.html

  • Surge

    If Sony does not turn around I think they would try to start selling off divisions in an effort to stay afloat. PlayStation could be sold to Samsung or something of the sort…

  • http://www.gamesthirst.com Ernice Gilbert

    “PlayStation could be sold to Samsung or something of the sort…” Terrible idea.