The Sony Disaster

After six years as boss of Sony, and the sacking of around 30,000 people, Sir Howard Stringer’s legacy is still a forecast loss of $1.2bn for the financial year to the end of next March.

What’s Sony been doing in the last six years?

It has seen its PlayStation eclipsed in the market by the Nintendo Wii.

It has seen its market-leading position in TVs massively eclipsed by Samsung.

It has seen its portable music business eclipsed by Apple.

It has seen its e-reader eclipsed by Amazon.

It took a year and a half to produce a tablet to compete with the iPad.

So what’s Sony been doing in the last six years?

When Sir Akio Morita was boss you knew what Sony was doing. It launched:

Japan’s first transistor radio;

Thee world’s first consumer-affordable video tape recorder;

The first CCD-based consumer video camera;

The first portable music-player.

It’s all about products, products and products. It’s not about cutting, slashing, burning and divesting.

The moral of this story is obvious: balance-sheet bean-counters shouldn’t lead consumer electronics companies.


Comments

33 comments

  1. I agree [Anonymous] if, after six years of re-org-ing you’re still re-structuring, it’s time to go. Sir Howard’s had six; NXP has had five, the re-orgs go on and on and on.

  2. Some bean counters can make a career out of perpetual restructuring and reorganization. Sir Howard seems to have fallen into the malaise.

  3. Oh Yes indeed, Another Anonymous, Steve Jobs prided himself on doing zero market research claiming that customers didn’t know what they wanted until he showed them what they wanted. Arrogant or what? Fortunately for Apple he was usually, though not always, right.

  4. Am I the only one that sees a parallel between Sony’s “the market will take what we will give them” and Apple’s “we will decide what consumers can see/play on their Aplle products”

  5. Whilst all the preceding commenters make good points, I think the biggest nail in Sony’s coffin was their LCD projection TVs, made from 2002 to 2007. I lost count of the number of disgusted customers who told me they would never buy another Sony product after the debacle that was this faulty design. At first Sony pretended there was no fault; then, as the complaints escalated, they belatedly tried to mollify customers, but their attitude was just so arrogant that many customers tossed the product and are lost to Sony for ever.

  6. Fascinating stuff, Rupert, thanks. That puts a different perspective on it – the warring tribes syndrome.

  7. Sony may have done better with more beancounting, not less, if the counters of beans had done something about the internecine warfare that certainly used to be the hallmark of the company (and may still be, I just don’t have anything to do with Sony any more).
    Minidisc was wonderful. It would have been even more wonderful if it could have been used as a data storage medium – but the minidisc people (I’m told) would hear of no such thing. If I remember correctly, you could get a data minidisc – not an ordinary minidisc, oh no, it had some arbitrary incompatibility built into the media – but the only people who could get a licence for it were Yamaha and Tascam, and that purely because they were building it into an audio editing device.

  8. OMG Mike, I hadn’t thought of that.

  9. Do you mean TSMC or Foxconn ? Either way I thought we were almost there 🙂

  10. Yes indeed, [Anonymous] that’s how it’s always been and, hopefully, that’s how it always will be unless the forces of anti-capitalism put all manufacturing activity under the Central State Committee For Industrial Manufacturing.

  11. In ten years time we will probably be seeing the same words but written about Apple.

  12. Lighten up, Anon.

  13. “As a Welshman, Sir Howard, probably thinks sexy means something soft and woolly – that’s Sony’s problem”
    Aaah, casual racism. Lovely. Completely removes all authority from any points you’ve made. What a shame.

  14. Don’t forget the Sony spent most of the first 10 years of the new millenium spectacularly alienating its customer base. There was the CD rootkit. Removing the OtherOS option from PS3. Zero security with customer data on their networks. I think a lot of people are just fed of the arrogant way corporate Sony behaves. For those people it doesnt matter how good the products are.

  15. (anonymous) (David)
    British managers for foreign companies do seem to struggle. Having seen this in action i would suggest that language comes into it. It creates a barrier that stifles free speech and interaction.

  16. Regretfully [Anonymous] I tend to agree with you. British managers, when appointed to run foreign companies, tend to become ruthless exponents of the numbers school of management. I’ve seen it happen too many times for it to be a coincidence. I wonder if it’s that they feel too insecure to put their balls on the line in pursuit of an expansionist strategy.

  17. I think the moral of the story is don’t appoint a British manager! They seem to have the knack of destroying anything innovative.

  18. @MikeB
    I’m not after a fight but Sony really didn’t get it! Sure MP3 is crap sound quality and is fundamentally offensive to all Audiophiles, or for that matter, anyone with ears. BUT it is what most people want! and consumer electronics is about supplying what the consumer wants…
    I can’t reveal too many details, of meetings with upper level Sony management, but I can assure you that they considered MP3 to be a passing fad in 1998. I tried hard to convince them that memory price declines and ADSL would guarantee that some form of web available “Apple store” would be the way of the future, for all music and video, but they claimed that it would all be shutdown through legal channels within a year. (How naive (stupid) can you get).
    They also resisted the move to LCDTV, WHY!! they could have easily owned the majority of the market if they had pushed hard, instead they talked about strategic releases of LCDTV products into critical consumer segments but maintaining CRT for the majority HUH!
    Frankly, about 2003 it was way too painful to work with Sony, they wanted compatibility with completely dead standards like SCART (which used their chips) yet invested no real effort in emerging stuff like HDMI, DVI…It is still hard for me to believe that, at one stage, they had about 70% share of the consumer market YET they failed to pickup on ANY emerging trends. It is sort of the same thing that Nokia is going through at the moment, it still leaves me scratching my head and asking …..Symbian, Meego, Win7…HUH

  19. Last year upon closing a UK design centre which it admitted was better and cheaper that it’s european counterparts, ST was keen to remind people that it is a French Italian company and therefore protecting jobs in France & Italy !

  20. Just a small point – But PS3 isn’t really in the same market as the Wii – They appeal to very different demographics – with some overlap for sure.
    PS3’s only competition is the 360.

  21. I’m not so sure Sony missed the digital media world so much as misunderstood what the majority of people want. For instance Super-CD gave fabulous sound quality and mini-disc wasn’t too bad for its data rate but in fact what consumers wanted was crap sound quality in the smallest box possible. Now that storage is so cheap I do wonder why someone (Apple?) doesn’t start selling higher quality sound files for use on their players – a repeat of the buying CDs to replace vinyl scenario.

  22. Yes Robert, your remark that ‘they believed the world had to take what Sony delivered, like it or not’ is exactly what I came to feel when I was a keen consumer of Sony products. The second worst thing was their incomprehensible software, but the worst thing to me was their constant changing of their memory stick format so that the stick for one product generation wouldn’t work with the next generation or with any other product. It struck me as a mean-spirited and grasping attitude to customers. There’s a nice story in the Steve Jobs biog – on his return to Apple he got the top execs together and asked them: “What’s wrong with this company?” There are a few murmurs and then Jobs breaks in: “The products suck. There’s no sex in them anymore.” That’s Sony’s problem. But as a Welshman, Sir Howard, probably thinks sexy means something soft and woolly.

  23. Actually the Philips bean counters moved the financial headquarters to Amsterdam, since they didn’t like the down-to-earth atmosphere in Eindhoven. Guess it’s not easy to live on a cloud with engineers constantly reminding you you’re doing the wrong thing.

  24. I had a lot of interaction with Sony back in the 90’s and even early part of the 00’s. As a semi supplier it was a great company to work with back before 97 and a miserable company to work with after 2000.
    They were a very demanding customer but totally missed the emergence of the digital media world. after 97, at a corporate level they believed the world had to take what Sony delivered, like it or not. I was personally assured that Sony would bury MP3 technology and that minidisk was the future. Fortunately I didn’t listen to a word they said after that advice.
    It is strange to think that somewhere in the Sony corporate DNA their must of been good product engineers asking WTF…. I guess they all just shook their heads and eventually applied for jobs at Samsung….

  25. What is impressive about Sony is all the things David didn’t put in the achievements list. Philips and Sony together changed the world and why they didn’t carry on doing so is thanks to bean counters in Tokyo and Eindhoven.

  26. Mark, do you think any new and innovative ideas will pass through the bean filter?

  27. In the 80’s Sony was what Apple is today – a leader in consumer electronics. They made innovative, high quality stuff. Even in the early 2000’s Sony products seemed attractive; I loved their early Vaio PCs, especially the laptop I had with the magnesium case – so light.
    But at the moment, I can’t think of a single Sony product that is outstanding. That’s a terrible thing, and something Sir Howard ought to be strung up for. As a historian, he ought to contemplate why arts degrees make for disastrous technology company CEOs, and then fire himself.

  28. Well Mark, I had a Sony MP3, now i have an iPod; I had a Sony-Ericsson mobile phone, now I have an iPhone. For me, the Apple stuff is just so much easier to use. A products-oriented CEO would have figured out what was going wrong with their products and done something to rectify it.

  29. Much as I’m not a fan of the bean counters, is it purely down to their actions?
    On TV, Sony had a massive CRT manufacturing infrastructure and was trying to further innovate with ever better CRT displays whilst Samsung was building LCD fabs and rolling out flat panel TVs, then later Samsung led the way with exceptionally thin LED backlit TVs.
    Apple introduced a major change in the portable music player business model alongside a well designed and easy to use product.
    Similarly Amazon had a new business model for their ereader.
    Nintendo introduced a whole new audience to gaming, however PS3 is currently outselling the Wii and 3DS was something of a disaster, together causing Nintendo to make their first loss in 30 years. So on this one Nintendo’s recent record isn’t great either.

  30. Badly, I fear, Bonde, if the way ST-E dealt with its non-French employees is anything to go by.

  31. Good point, well made

  32. “balance-sheet bean-counters shouldn’t lead consumer electronics companies.”
    Or anything else.

  33. David, how do you think this bean counter-run circus will treat the farmers in south Sweden now that Ericsson has cashed out?

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