The rise and fall of Sony

The Japanese electronics brand that once dominated that hearts and minds (not to mention wallets) of consumers is not quite as prolific these days as it was back then.

After striking it rich with products such as the Walkman portable cassette player and Trinitron analogue TV, Sony tried its hand with its PlayStation console to great success. However, recent years have not been as kind to the company and its subsequent products.

After striking it rich with products such as the Walkman portable cassette player and Trinitron analogue TV, Sony tried its hand with its PlayStation console to great success. However, recent years have not been as kind to the company and its subsequent products.

While O’Donovan feels that while it would be great if “every company could bring out the best product ever,” the unfortunate reality is that companies can not do that all the time. “I’ve been doing research for 15 years in the TV and set top box market within the home, and my colleagues have said for a number of years that there are very few hit products coming out now,” he said. A company that has recently been bucking that trend is Apple, who has been particularly successful with the iPod, the iPhone, and iPad. “But it has to be said that all of these products existed before,” O’Donovan said.

In Apple’s case, O’Donovan says that they were not new products as such, but Apple merely found a different way of approaching of how to bring them into the market. “All of them were based on the fact that they connected to iTunes software platform,” he said. “They have always been more of a software house than a hardware one, and an issue for a lot of the other companies, particularly the big consumer electronics vendors, is the lack of software development they have to support these products.”

Software

So when one looks at the success of Apple, O’Donovan feels it comes down to software. “If you look at the decline of some of these other companies, it is because they do not have a supporting software infrastructure or eco-system to support their hardware going forward,” he said. “If you don’t have a supporting infrastructure or eco-system around software, then that will become a big issue when attempting to push out a ‘hit product.’”

After years of neglect, O’Donovan feels that Sony is starting to rectify that. One area in which Sony found unlikely success is gaming through its PlayStation video game console and games. Following the PlayStation’s original debut in the mid-‘90s, Sony's gaming division, Sony Computer Entertainment, has grown to become the main bread winner at the company in recent years.

Rose has seen the PlayStation become a “very recognised and desired brand”, and games have become one of the key category pillars of focus for the organisation globally, along with digital imaging and mobile. “In Australia and New Zealand, PlayStation 3 outstripped the competition holding the number one console sales position for calendar year 2011 which was a solid achievement,” he said.

As to why PlayStation became such a big hit for Sony, Rose sees it coming down to providing a “complete UX”. “I think with PlayStation, Sony has been consistent in setting the benchmark for the best games experiences and have successfully continued to innovate in this area both from a software, hardware and also an online perspective,” Rose said. “Certainly the early vision of the PlayStation Network, of devices connected to content across a network, seeded the foundation for the Sony Entertainment Network.”

O’Donovan attributes the success of Sony Computer Entertainment to its attitude. “Sony as a company has always been about profit, but with the PlayStation they realised that if they wanted to keep their volume sales up, they had to eat into their profits by reducing the price of the hardware,” he said.

To highlight his point, O’Donovan points out how he once went to a Sony press meeting at a consumer electronics show a few years ago where Sony America’s chief executive of sales told dealers and the press that he did not care how many Sony TVs were sold but to look at the profit margins. “That is endemic of Sony, where they think they have a fantastic brand and will make profits, and will not drop prices to compete with Samsung and LG,” he said. “And that is what has led them to huge losses.”

PC World asks about Sony’s performance down under

Although Sony has publicly announced that it will lose US$6.4 billion this year globally, how is Sony performing in Australia compared to other markets?

Sony’s Carl Rose: Firstly, it’s important to understand that the entire consumer electronics industry in Australia is, on average, 19 per cent down on where it was last year in dollar value terms. So, I’m certainly not going to say it’s been an easy year. However, while we don’t disclose our local sales results or our ranking between countries, I’m pleased that Sony A/NZ is a profitable organisation. Also, according to GfK, our sales value market share actually grew during FY11 from 14.7 per cent to 15.5 percent. We’ve had growth in most of our categories including Bravia LCD TVs, Hi-Fi systems, digital still camera and headphones.

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Patrick Budmar

Patrick Budmar

PC World
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