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May 28th 2013 10:12 am

Should Sony stop making electronics?

Yesterday the New York Times published an article that mentioned that not only are sales down for Sony's electronics division, but that it's lost $8.5 billion over the past ten years. To anyone who pays even the slightest bit of attention to the market this isn't surprising at all. What is surprising is that 63% of Sony's operating profit comes from their financial division -- life insurance alone accounted for $9.07 billion in profit for Sony over the past decade. Sony also operates an online bank. And these businesses only operate in Japan, not in the United States or Europe.

Additionally, Sony's entertainment divisions (film and music) have added $7 billion to their coffers in that time.

When one division is a proven money pit, held up only by other divisions which are much more profitable, conventional wisdom would be to downscale or shut down that division. Outside of gaming, Sony isn't a player in the electronics world anymore -- just take a look at our gdgt Zeitgeist for 2012, where Sony had no gadgets in the top ten, but three in the bottom: gdgt.com­/showcase­/gdgt­-zeitgeist­-2012­-best­-and­-wor... (the Tablet P was in fact the lowest-scoring product of the year, and still maintains one of the bottom five scores in our database as a whole).

Anyone who remembers the '80s remembers the dominance that Sony had over the electronics market back then -- they were strongly associated with the rising Japanese economy, and the brand name 'Sony' meant cool, reliable, expensive, and innovative. This is the company that invented the Walkman, after all. Unfortunately the economic bubble that buoyed them burst in the '90s, and over the past decade Sony has faced more intense competition from companies in Korea and China, like Samsung and LG, who beat Sony on that one thing that really matters in an economic downturn -- price.

To cut costs Sony has moved its manufacturing overseas, though unfortunately that has also led to a drop in quality. There's also a lack of innovation, something that becomes apparent when you look at how they failed to beat the iPod in a product category they pretty much invented (portable media players) or how for what little we know about the PlayStation 4 and the Xbox One, they both have pretty similar features (like their multimedia player capabilities, or installing while you play, or letting your friends play your game remotely). The name "Sony" just doesn't have the same cachet anymore.

Taking all this into consideration, perhaps Sony should stop manufacturing most of their consumer electronics. I'm not saying they should bow out of the business completely; if you take a look at the gdgt Scores for Sony products (gdgt.com­/sony/, sort by score), you'll see that there are two product categories where they still do really well, gaming (PlayStation) and cameras, taking up nine of our current top ten scores for them. (In contrast, the bottom ten is a mixed bag of categories, and their post-Ericsson phones tend to be rather middle-of-the-road.) It may be hard for Sony to let go of the business that they started with and continues to define who they are, but perhaps a good compromise would be to focus their efforts on the categories where the Sony name can still mean something and build from there.


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This is a great topic, and I want to provide a possible alternate solution.

I have loved Sony growing up (RIP MiniDisc) and at this time, all that I own from them is an abandoned Sony X10 and the Playstations 1-3

I still believe Sony is capable of making great hardware. They make some of the best cameras in smartphones (even Apple uses them!) and have a great design to them.

The thing is, they can't make solid software anymore. I have given up faith. Their custom Android builds have problems, and the support is no longer there to back it up. This doesn't necessarily go just for mobile phones. They have created proprietary formats and gone all-in on them, sometimes winning and sometimes losing. Remember Memory Stick Pro Duos? UMD? ATRAC files?

I think Sony could take a lesson from BlackBerry here (yes I actually said that). BlackBerry needed to make their OS better and fast, so they snapped up QNX to make the platform from the BlackBerry Playbook and BlackBerry OS 10. Both are undisputedly better than the software running on older BlackBerry devices. If Sony could delegate the software side of their devices to a company that specializes in software, the combination of killer hardware and great software could push them back into power.

However if they refuse to do this, their electronics division will probably keep losing money until its killed.
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I really think Sony should stop making portable media players as well -- which of course means I am calling for the death of the Walkman product line. Thing about that is, Sony has been focusing a lot on Walkman software for their phones (https:­/­/play.google.com­/store­/apps­/details­?id­=com....). They really should put more resources into building out apps and making them the very best music apps, available for all Android devices. "Walkman" is a beloved brand, but it doesn't mean anything in a practical sense anymore. I think working on software, even if they have to farm it out, would definitely strengthen them as a whole and let them rebuild in the places where they're strongest.
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As a former owner of tons of Sony products, from the Walkman era through several Vaios, it is sad to see how the company has lost its way when it comes to electronics. I think retrenching and focusing on a handful of profitable sectors, like cameras and consoles, makes a lot of sense, though I'd add home audio and video to those sectors. Sony still makes cutting-edge home entertainment products (such as its new 4K TVs), even if nobody is buying them. if the company can get over its obsession with pricing these at unsustainable margins, they may be able to compete with Samsung and regain a foothold in a market they helped to create.
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I could see them rebuilding out of three pillars, with every new product part of, or an extension to, one of the three:
  • Sony Imaging (cameras, camcorders)
  • Sony Gaming (PlayStation console, handhelds, and phone apps)
  • Sony Home Theater (televisions, Blu-ray)
Any new product should be angled as an extension to these pillars, building them up rather than trying to continue a dying business or restart a dead one.
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Sony dropped the ball by not innovating in the mp3 player market fast enough. They were synonymous in the portable music player market thanks to the Walkman, but this made them believe that whatever format they put out next would mesmerize everyone. Minidiscs bombed because they were not really better than CDs, and hard drive mp3 players were right around the corner. In format, Sony stuck with their ATRAC format long after everyone had agreed MP3 was the next big thing. And so, when we all went crazy for iPods, Sony was trying to tell us we didn't know what we wanted and that their stuff was cooler. Bad call (especially since it wasn't).

If I were Sony, at this point I would drop everything that isn't a camera, Playstation or Blu-Ray player. Sony's cameras are still great, and they're even greater now that they have dropped using JUST the proprietary memory formats and embraced SD. We don't really need VAIO computers, especially when they feel like just another computer and are over-expensive for what they bring to the party. We don't need Sony phones, as the Sony Ericsson years left "meh" associated with their products.

Stick with what can still bring a "WOW" factor associated with it. That also means only putting out three or four Blu-Ray players instead of ten or eleven that are all basically the same except for one extra button or feature.

One of the reasons Apple increased their footprint in the electronics space was a few great products instead of a lot of mediocre ones. Remember this, Sony. I'd rather you not become a memory while COBY remains on the market.
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Don't forget Betamax. Though I didn't mention home theater in my original post, I admit that I find it unlikely for Sony to drop Blu-ray players from their lineup since it's a format war they actually WON.
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Looking at my gdgt HAVE list, I realize they only sony products I have now are headphones. I guess that says something.

I agree with @marc, they still have weight in the home audio / video sectors. Those headphones, I trust I'm getting solid headphones (for cheap) from them. And 5 years ago (when big flat screens where just starting to get popular), a Sony Bravia (gdgt.com­/sony­/bravia/) was the TV to have. The new x900 (gdgt.com­/sony­/bravia­/x900­-series­/uhdtv/) is gorgeous.

@ianny, maybe I'm an exception to the Sony Ericsson bad association, I loved my Sony Ericsson w810 (gdgt.com­/sony­-ericsson­/w810/) from the feature phone era; great audio + the battery life was amazing - I was getting a week to a week and a half on a charge! Looking back they actually did an okay job on that software (for the time) too. I do think it was smart to drop "Ericsson" from the brand though.

They generated a lot of hype when Sony announced the Xperia Z (gdgt.com­/sony­/xperia­/z/) at CES 2013, possibly because there just wasn't really any other phones announced at CES that year. It's a sexy looking phone, but they just didn't get it out quick enough and they aren't marketing it enough (it's not available on any of the US carrier's websites). They just can't compete in this market when Samsung and LG are putting out 10 phones to every 1 sony makes.

Building laptops is a category I believe they do need to exit. Although every couple years one of them is really nice, they are plagued with hardware issues (track pads, hinge issues, etc) and driver issues. I know @patrickmckenna ran into issues with his (gdgt.com­/sony­/vaio­/vpcf1390x/) . Only 2 of their laptops got a gdgt score >80.

Stay in home audio / video (headphones, tv's, ps4) and cameras. Exit Laptop, smartphone, and portable media markets.
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I think there was a point in time when you spent money on a brand like Sony because of confidence in the brand name. As time as moved on and products have become cheaper to manufacture, I think the brand of Sony has lost a lot of it's clout when it came to this consumer confidence. I remember when shopping for a HDTV in 2007 Sony TV's were on average $500 more, if not $700 more, than competing TVs. This was right when Vizio was picking up steam too so there was a low entry to the market with a company that was succeeding with the budget line.

While this was going on it didn't help that Sony made some terrible products (I think they might be the lowest ranking company on the site) or made great products that never got the proper support (Vita).

I don't think Sony will ever go away I just think they need to reshift focus to where they are doing well (cameras and gaming), high profit margin categories (headphones) and categories where they can still do well (cellphones). In all of these categories they make hardware that works well and looks good. I think with cellphones they are missing a big opportunity because they can make a nice looking phone and have a good camera division, they just haven't gotten them to work together well enough yet; it probably also doesn't help that they have limited release here in the US.
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Sony knows hardware (though definitely not software). They know quality design, reliability and how to move product by reducing prices over time. Samsung is lost in many categories, think the Galaxy Tab, audio equipment, and cameras.

You point out a few truly bad products that came from experimental categories. The tablet P was a new product. It's not like they took a proven product and ruined it. I love it when big companies take chances on innovative product designs. The problem with Sony is that they simply make too many different products. The new management has helped the company improve and it will take some time to pound sense into these people who think the Sony Dash had good software, discontinuing the S-Air audio products was a good idea for a new platform of wireless and pushing 3DTVs into living rooms when there is simply little content.

They need to restrict the number of different models in a given category that they make. They don't need 20 different tv models where 5 or 6 are enough and likely indistinguishable currently. Fewer cameras, speakers, phones, and tablets. Their phones and tablets remind me a lot of Motorola. They seem good and flashy, but you still don't buy them because they are not the best, nor do they seem built to outlast competition.

Don't turn your back on Sony just because they make weird products from time to time. If you do that you have to include Samsung and LG, since they make dumbass products as well.

Also, this is a lame conversation. Look around your home and tell me that you don't own anything with the name Sony on it. I hope it stays that way because they make good products, even though they also make dumb ones.
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I never said I didn't own or wouldn't buy a Sony product. I own a Sony camera and PlayStation consoles -- the two categories I pointed out Sony does really, really well. They're great products. I don't think they should stop making them. I also have a work VAIO, which isn't.... great. It's nothing special. They could stop making laptops and I don't think anything would really be lost.

The point of the post is that Sony is losing a lot of money making mediocre electronics, and pretty much everyone here agrees that Sony needs to scale down and refocus their business. Not everyone agrees on what they should focus on, but that's fine, that's why it's a discussion.
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Sony will remain a presence in producing Movies, Music, and Video Games/Consoles... other than that, all bets are off...

They are constantly overpriced compared to comparable HDTV models from Samsung, Panasonic and most others. They simply can't be a good value against their competitors any more...
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I dont think sony should. They are making some really good phones and tvs at the moment, they just need to be recognised by the mass market. A phone that wipes the floor with a popular fruit, a tv that is so crisp....sony should go nowhere....they just need a bit of a better marketing strategy!
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My opinion is that Sony should really focus on Playstation, Cameras and mobile areas, but could invest a little more on the mobile area by adversiting the Xperia brand because there is little to no marketing at all.

I think the Z line has a nice look, the hardware is overall good and so is their Android customization, but they could aim to lower their price because it is too far from competition. They could also make CDMA versions of their phones and get into the US market (for Sprint, Verizon, etc).
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