For a long time, I've believed that diversifying one's business is a good thing. You hedge the bets by not putting all eggs in one basket.
But if we are to believe Third Point's position, Sony's strategy of having software and hardware businesses under one roof is suddenly falling out of fashion -- all in the name of "accountability."
Of course, Sony wasn't alone to harbor the dream of owning both entertainment and hardware businesses. Panasonic was the owner of Universal Studios, then known as the Music Corporation of America, since acquiring the company in 1990 but sold it to Seagram in 1995.
Seagram's head, Edgar Bronfman Jr., then, got in film entertainment through MCA and Universal Pictures. However, the new entertainment conglomerate he created had a brief life.
Acquiring an entertainment business is one thing. Running it effectively -- especially alongside some other business like hardware -- is entirely another. It's easier said than done.
In that respect, Sony deserves a lot of credit for having stuck it out with its movie/entertainment business long enough to learn the trade and build a solid relationship with the entertainment industry.
"Samsung and LG could buy their way into the entertainment industry" by making various marketing deals, said Doherty. "But they are still a decade behind Sony."
Doherty, who is taking a long view on Sony, sees the intrinsic value in Sony's ability to "communicate with the entertainment business and communicate with its audience." He believes that it will in the end help Sony build "a new platform that will generate new revenue streams."
Of course, what's described by Doherty as Sony's value is something intangible.
But let's face it: What will save Sony isn't a single hit product, not even two hit products.
It has to come from a new platform or a new business model that "builds audience and creates new revenue streams" -- just like what audio cassette tapes, CDs, and DVDs have done so for both hardware and software businesses," explained Doherty. "Sony knows how to develop audience models. People are still looking to Sony to pull this off."
To Doherty, that's the magic of Sony. Splitting the company in two is a sure way to kill that magic. Well, call me a softy. I agree with Doherty on this one.