For Sony's new CEO, a big challenge is in your living room
- — 02 February, 2012 01:59
Sony's new CEO faces a myriad of problems - stemming massive losses, snatching the momentum back from deep-pocketed rivals, unifying his firm's diffuse businesses across the globe - but one of his main priorities is your living room.
The Tokyo-based firm said Kazuo Hirai, currently head of its consumer products division, will lead the company from April. And Hirai, who was widely expected to succeed current CEO Howard Stringer, has long made it clear that Sony must turn around its television business.
When Sony revised its earning forecast in November, saying it expected to lose ¥90 billion ($US1.2 billion) after projecting a profit in July, Hirai said that TVs were a major factor and the management team felt "a strong sense of crisis."
"I will be the leader as we implement a profit turnaround plan for the TV business and urgently try to return to profitability," he said.
But things look even worse. On Thursday, Sony said it now expects to lose nearly $US3 billion in the current fiscal year through March, over double its target from just three months ago, as it books expenses related to the sale of its share in its LCD joint venture with Samsung and the effect of flooding in Thailand.
The dire forecast came as Sony piled on a number of one-time expenses, including a tax charge related to its Sony Ericsson mobile phone venture, which it is currently turning into a fully-owned subsidiary, and the strong yen.
It means Sony will now record a fourth-straight year of losses.
The company has announced a turnaround plan that includes focusing on profits over the number of sets it sells, slashing its sales target for next fiscal year to 20 million sets from 40 million. The plan includes a shift to manufacturing fewer LCD panels in-house, and in December the company announced it was selling its stake in an LCD manufacturing joint venture with the Korean company, to avoid the "responsibility or costs that come with operating a factory."
Local media have questioned whether Sony can succeed in TVs if it outsources such key components, and whether its resources might be better invested in areas where it still has clear superiority, such as digital imaging. The company's success was built on developing technologies its rivals couldn't match and charging premium prices, but it hasn't had a definite advantage in televisions since its Trinitron line, first introduced in 1968.
Still, Hirai has been firm that the company will not abandon TVs, calling them a "fundamental platform" in a Tokyo interview last year, and a crucial part of a four-screen strategy that also includes smartphones, tablets and laptops.
The incoming CEO has made it clear that he will continue Stringer's efforts to leverage Sony's consumer electronics and PlayStation consoles with its broad media holdings, which include Columbia Pictures and Sony Music Entertainment.
During Sony's opening presentation at the massive Consumer Electronics Show in Las Vegas last month, the company stressed its media holdings, bringing actor Will Smith on stage to promote the third Men In Black movie, as well as pop star Kelly Clarkson.
Despite its struggles, Sony also remains familiar to consumers. A study by research agency Millward Brown last year placed Sony in the top 100 global brands, although at number 85 it was several spots behind rival Samsung.
And Hirai does have experience in such ventures. He became a standout executive within the company by turning around the its PlayStation business and building out its online entertainment platforms.
His international background will also help. Outgoing and fluent in English, he spent much of his childhood outside of Japan and attended Tokyo's American School before attending International Christian University, known for its emphasis on international studies and foreign languages.