NEW YORK -- It’s painful for me to watch the downfall of Sony Corp. -- once one of the best known and most admired consumer brands in the global market.
The brand taught every Japanese person to hold his head high with pride in his country, technology and products. Besides being the nation’s best-known brand, Sony symbolized for the world Japan’s economic success in the 1980’s.
What’s even more painful is to hear new CEO, Kazuo Hirai, at its first press conference vowing to “change and revive Sony.”
Kazuo Hirai (left) and Howard Stringer
The transformation of Sony was the goal Nobuyuki Idei established when he became Sony’s CEO in 1999. Howard Stringer, the first non-Japanese to head the Japan’s iconic company, was also explicitly asked to bring big changes to Sony when he took over in 2005.
So, how many Sony CEOs does it take to screw in a lightbulb?
I read a recent press report in which Mr. Hirai described his strategic goal as teaching the company's 168,000 employees that past successes in manufacturing must be replaced by selling the harder-to-quantify "user experience."
As much as Hirai’s comment represents the so-called “common sense” of the current, post-industrial (and post-manufacturing) trends in the West, I had to stop and think a minute.
Just to be clear, it’s not like Sony suddenly woke up one day and figured out that the market economy has moved from hands-on hardware manufacturing to the creation of intangible software development. Even in the 1990’s, Sony was ahead of other consumer electronics companies in Japan in identifying the importance of the networked “services”that go into their hardware, and understanding the significance of “platforms” for its hardware and software. Sony developed a new gaming console, PlayStation, invested big in game developers and software, and added a huge new segment to its business.
So what happened?
Two things come to mind.
For a long time, Sony, or the Japanese electronics industry at large for that matter, could not bear thinking about going “asset-lite,” let alone getting out of the “manufacturing” electronics business all together.
Even today, society still regards the art of manufacturing as a source of pride, value and respect that can only come from hand-crafted goods. To tell people that “manufacturing” goods is an economic dead-end is a hard message to sell.
Sony in the early 2000’s was clearly torn – whether to continue in semiconductor development and manufacturing. To its credit, Sony had a success story to tell for a while with its CELL processor, developed together with Toshiba and IBM. Unfortunately, it only helped prolong the illusion – especially Ken Kutaragi’s -- that Sony might still have a shot at becoming an independent chip designer.
Flat-panel display technology was another example of a critical make-or-buy decision Sony had to make. Despite dabbling with a variety of flat panel display technologies on its own, Sony was never able to repeat the success it created with the Trinitron picture tube.
Meanwhile, Samsung’s fanatical focus and massive investment in LCD volume production dwarfed efforts by every TV vendor on the planet
Seriously, who’s making money making TV sets these days? Besides Samsung, that is?
Sony, left without any of its LCD manufacturing skills, swallowed its pride and forged an alliance with rival Samsung several years ago to create an LCD panel-making joint venture. The JV wasn’t a bad idea when flat panels were hard to procure, but a new glut meant Sony was paying more to buy screens from its own venture than on the open market. To cut costs, both Stringer and Hirai had to abandon the LCD venture last December.
So, what’s left for Sony? Critical software that’s supposed to make Sony’s TVs smarter is being developed by Google TV; Sony has no flat panels of its own. In television, once synonymous with the company’s name, Sony has lost control of its destiny.
I am not saying that had Sony stuck whole-hog to manufacturing, things would be all rosy. Life ain’t so simple. And nobody ever made a buck on sentimental attachments to past glories. Yet, having been neither here nor there (their inability to pick a lane) has probably cost Sony.
Another thing that came to mind when I pondered Sony’s downward spiral was the unfortunate fact that Sony has continued to live and breathe the Japanese culture.
Two years ago, after having visited Samsung in Korea for the first time and reunited with Jong Yong Yun, the former vice chairman and CEO of Samsung Electronics for a follow-up interview in Seoul
, I made a quick stop at Tokyo on the way back to the United States.
The first thing I wanted to check then was how well Samsung TV sets were doing in Akihabara – Japan’s biggest electronics bazaar. To my shock, I found out that not a single Samsung TV is being sold in Japan — at a time when the global market was flooded with Samsung TVs.
From Samsung’s point of view, perhaps, as long as every Sony TV is using Samsung’s panel, there wasn’t much point in raising a stink about this de facto boycott in the Japanese market.
And yet, I couldn’t help thinking then – and more so today – how unfortunate this is for Japan. The average Japanese consumer has little notion of who Samsung is, and what it means for the future of Japan’s electronics industry. No wonder it’s been difficult for Sony’s various CEOs to light a fire within their own company. They’re all living in a pre-millennial time capsule, from which no one can see the big revolution —right in their backyard — that’s been passing them by for 15 years.Related Stories:
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