Sony to shed 16,000 jobs, increase prices in bid to bolster profitability (Updated)
by Thomas Ricker 
posted Dec 9th 2008 at 2:04AM
"Going forward, Sony intends to adjust product pricing to mitigate the impact of the appreciation of the yen."Sony is also delaying or at least curtailing some of its investments while planning to "downsize or withdraw from unprofitable or non-core businesses." All these moves are meant to cut operational costs by some $1.1 billion in operational efficiencies before the fiscal year closes on 31 March 2010.
Update: Yup, we were right. According to Reuters, Sony will "raise prices on some electronics products in Europe from the beginning of 2009." Also, Bloomberg reports that 8,000 contract workers from the electronics division will also be shed for a total of 16,000 personnel added to the world's unemployment roster.
Reader Comments (Page 1 of 2)
ejordan @ Dec 9th 2008 2:12AM
What is Sony's non-core business? Are they giving out loans like GMAC?
RoboDan @ Dec 9th 2008 2:45AM
Sony: Hey America! *KICK*
America: *was already down*
Bobby @ Dec 9th 2008 6:57AM
10 Sonys $1000000 each vs. 100000 Sonys $100 each
The choice is obvious
As far non-core business my guess that would be class A brothels for CEOs.
You know one with mirrors on the floors
Ken @ Dec 9th 2008 11:36AM
Raise prices during a recession... Sony strategery at it's finest
The Joker @ Dec 9th 2008 1:05PM
... and the award for most arrogant company goes to ..... SONY, yes ladies and gentlemen, Sony, for their unrivaled audacity of RAISING prices on discretionary consumer electronics while in a global economic recession.
Xghent @ Dec 9th 2008 2:21AM
This is great news. I've always thought Sony's products were way under priced!
PH0ENIX @ Dec 9th 2008 4:01AM
I guess Sony has a firm grasp on the concept of supply and demand. I mean, it's not like they can keep the Wii on the shelves right?
Oh wait...
Skazer @ Dec 9th 2008 8:15AM
Oh great, the Engadget economists and business majors are out in full force.
Poke4Christ @ Dec 9th 2008 9:05AM
No joke. Sony's prices are way over the top. Maybe these companies that are failing should take the money out of the insanley overpaid executive's pockets. Oh wait, they are the people in control of the company. Why would they do that?
who? @ Dec 9th 2008 2:22AM
No kidding.
Poom @ Dec 9th 2008 2:24AM
"Going forward, Sony intends to adjust product pricing to mitigate the impact of the appreciation of the yen." how does that imply price raises? That doesn't make any sense.
Dan @ Dec 9th 2008 2:29AM
Its pretty clear. Its that or lower prices in Japan. Choose the one you would rather do if you were Sony.
CT A @ Dec 9th 2008 2:29AM
The article is kind of one-sided since it only tells us about Sony's operations internationally.
Poom @ Dec 9th 2008 3:49AM
If the yen is appreciating, then they'd get more yens with the old price they had. Why increase the price??? That'd decrease quantity demanded.
Also, lowering the price in Japan makes even less sense since it'd make them less profitable. Remember, it's a japanese company.
Normal @ Dec 9th 2008 4:38AM
If the yen is appreciating, that means the yen is becoming more valuable in relation to other currencies. To keep the value the same across multiple currencies, they will either have to lower the price in yen or raise the price in other currencies.
Vianon @ Dec 9th 2008 5:49AM
Let's try to make it simple, I am a Japanese company and I make cookies, I sell them in the US 1 dollar a cookie, back in 2007 that meant 120 yens a cookie. But now it only means 95 yens a cookie, so in one year I lost 25 yens per cookie! Considering the fact that a PS3 is worth a shit load of cookie, it makes good sense for Sony to raise the prices in the US.
(Please refer to the last episode of The Office for more enlightened cookie-based metaphors)
sloan2s @ Dec 9th 2008 12:27PM
Michael: Imagine your parents give you money for a lemonade stand...
Hank: I know what a surplus is!
Poom @ Dec 9th 2008 6:56PM
Ahhh ok makes sense now. I was confused.
Oh and I watched that episode too. haha Michael.
Jordan @ Jan 22nd 2009 3:30AM
Yeah, well that is saying that people still want these Sony cookies for the double-stuffed price. Most people will see the super-cookie price and go get another cookie. Like a raisin cookie. Or a Samsung.
sortarius @ Dec 9th 2008 2:32AM
Well you just have to look at Sony's rather strange decision to scrap the profitable and popular Aibo in favour of the Rolly which Sony Australia have admitted will not be sold here due to an apparent (not surprisingly) lack of interest after their very own market research discovered. Clearly the people running Sony right now have lost touch with their customers seemingly only concerned with lining their own corporate pockets. Pride before a fall fellas.
Vianon @ Dec 9th 2008 7:41AM
You can't blame them for killing the Aibo, the little thing was starting to look pretty threatening. They were one update away from overpowering us!
commonyo2008 @ Dec 9th 2008 3:25PM
we need to merge the $ the euro and the yen into one and only currency so we can avoid this
CT A @ Dec 9th 2008 2:33AM
Let me clarify,
They're going to raise prices outside of Japan to make up for the strong Yen.
I'm guessing they will also adjust the prices in Japan as well and restructure.
Darwin @ Dec 9th 2008 3:48AM
That doesn't sound right. Firstly, a strong yen means Sony products are more expensive when sold outside of Japan. Mitigating this effect would necessitate lowering their prices.
A strong yen also should mean Sony would be able to buy more non-domestic components, which should improve their margins. Besides, a strong yen should otherwise have little impact on domestic pricing, much like a strong dollar has little effect on made-in-the-USA products.
chefgon_ign @ Dec 9th 2008 6:38AM
They are a Japanese company with lots of money invested in other countries like the US. As the Yen grows stronger, every dollar they have in SCEA declines in value in their homeland. Yen becoming stronger does not really make their Yens worth more domestically, it just makes their dollars worth less abroad.
Hence, they are losing money and must raise prices outside of Japan to keep their profit margins the same.
CT A @ Dec 9th 2008 2:34AM
@ Poom
ne01 @ Dec 9th 2008 2:34AM
If they were smart they would lower prices. It may not "mitigate the impact of the appreciation of the yen" as well, but it would better deal with other current economic realities (read: people not spending any money right now), and with the corresponding increase in volume of sales that lower prices would drive, would lead to greater profitability in the long run.
Daza @ Dec 9th 2008 3:16AM
In Australia at least Sony and Samsung were in a very competitive price war lasting a few months. Sony is just about to launch an entire series again and the prices are very competitive - equal to, if not cheaper than Samsung's equivalents. Perhaps with this news we will see the prices rise though? Retail business is very unpredictable, and with so many different markets in the world it's hard to tell what the effect will really be.
bo.3alooe @ Dec 9th 2008 2:48AM
sony fail
Dave Chappelle @ Dec 9th 2008 8:22AM
name fail.
well its official, this was one of the last BIG major companies that has felt the effects of the financial crisis.
Sony just has not been Sony in the last 10 years.
Platinum_Skeet @ Dec 9th 2008 1:31PM
Sony did one thing right... Created Blu-Ray but it might be too little too late because internet speeds are getting faster and HDD's are getting pretty vast. The movie industry is starting to get hit just like the record industry did in the late 90's early 00's. Overtime when everyone gets smart (and comfortable) to rip stream their movie collection. They probably won't feel that having the physical disc is necessary anymore. I know Sony will get out this rut their in but it'll probably take sometime because some of the decisions they made are going to have some long lasting effects within the company...
Rav @ Dec 9th 2008 2:53AM
Who cares? Sony have been arrogant and playing catch-up to other manufacturers for years, and that's coming from a position of utter dominance. Personally I couldn't give a hoot if Sony dies out, it's called natural selection.
ggg @ Dec 9th 2008 4:08AM
Enjoy your 3xDVD Star Ocean, and 7XDVD MGS4 (if it ever happens) Loser...
Chris @ Dec 9th 2008 9:32AM
Maybe that'll teach Hideo to not include hours and hours of pre-rendered cut scenes in all of his games like the days of PS1.
Grant @ Dec 9th 2008 2:56AM
Shit, that's what I always thought was the best idea to promote an increase in lackluster sales, jack up the price!
While were at it, let's reduce the availability of the all units too, lower supply means higher demand right?
Shit, people love Sony goods so much they'll get a second job to get them!
Right guys?
Right????....
.......guys?
Tejas Padekar @ Dec 9th 2008 4:35AM
Sure... but the second job will probably not be at Sony!
Static @ Dec 17th 2008 8:54AM
Lackluster sales?
Delusional much?
NPD
http://www.gamasutra.com/db_area/images/feature/3854/console-weekly-rates.png
And ints not even a question that the PS3 was outselling the 360 in the rest of the world. It took a pricecut to get the 360 numbers up and that was most likely a reaction to the fact that not only was the PS3 outselling the 360 in the rest of the world, for the first 7 months of this year the ps3 was also selling at a faster rate than the 360. They were losing ground so they reacted.
Only the most ardent of fanboys can look at the numbers for this year and pretend that the PS3 wasn't stepping on the 360.
tc @ Dec 9th 2008 2:58AM
crap, there goes my plans for buying a PS3
Phil @ Dec 9th 2008 5:50AM
Nope, the PS3 will not be affected by these potential increases.
go seki @ Dec 9th 2008 3:08AM
"Going forward" .. the dumbest phrase ever .. It must be exterminated!
ah-palin @ Dec 9th 2008 3:11AM
Funnily, scrapping jobs, pruning market-product combination etc ..is not called "going backward"....I hate PC
ah-palin @ Dec 9th 2008 3:09AM
Color.like no other. Is RED. as in bleeding.
Salman R @ Dec 9th 2008 3:31AM
Wow, good move SONY. Especially when the consumer demand is at its lowest.
Grimmir @ Dec 9th 2008 3:45AM
There must be a really nice bonus coming for the guy with the bright idea of firing 8000 people. Disgusting, really disgusting.
diamondandy @ Dec 9th 2008 5:15AM
At least it isn't over 9000 ;)
Technex @ Dec 9th 2008 3:46AM
Ahahahha, now no ones going to buy there products, well... Wait a second, not much change there...
Good, now all you need to do Sony is set fire to all of your factories and buildings.
PH0ENIX @ Dec 9th 2008 4:08AM
Not a bad idea. They'd probably get more money from the insurance company than consumers buying their crap.
Das Gluten @ Dec 9th 2008 6:21AM
I was really struggling to find a reason to buy a PS3, mostly because my 360 died and I wanted to play something while I waited for the fix. Now what could convince me, as an on-the-fence buyer to purchase one of these machines.... OH MY GOD! I KNOW! RAISE THE PRICE!
PaNiD @ Dec 9th 2008 4:26AM
No matter how gay my comment might seem, but this picture brings tear to my eyes.
people like him r losing their jobs everyday and all we care about is to somehow buy the latest gaming computers that play Doom,
no kidding
Mics @ Dec 9th 2008 4:49AM
Dear Thomas Ricker,
Please use spellcheck before posting. You've misspelled "Toshiba" as "Sony". Toshiba lost money on the format war. Sony, on the other hand, won the format war and is currently king of the console war too. You don't seriously expect us readers to believe that Sony's electronics division is bleeding money, do you? Of course not. Not with 2009 being the Year of the PS3, as it has also been for 2008 and 2007. The PS3 and Blu-ray - that's like a one-two punch to knock out the competition. That's a winning combination not seen since Shaq and Kobe. Well, Shaq and Kobe from 2000-2002 at least. Anyway, please get your facts right. Thank you.
Mike