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Splitting Sony Won't Restore Its Future

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junko.yoshida
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What new platform?
junko.yoshida   8/1/2013 7:29:16 PM
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Running both entertainment and hardware businesses together had been a dream long cherished by not just Akio Morita, co-founder of Sony, but by practically everyone in the CE business.

Many tried it but gave it up. Sony is the last man standing.

I just wonder, then, what new business models or platforms Sony can bring to the table to wow the consumer -- by leveraging its hardware + entertainment businesses.

Anyone cares to guess?

 

 

 

rick merritt
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Re: What new platform?
rick merritt   8/1/2013 8:15:50 PM
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Apple and Amazon found opposite models of content and systems. Apple makes $ selling devices and for Amazon the Kindle is a loss leader for content sales.

Sony seems to be in a no-man's zone between the two where the content/device links are weak.

junko.yoshida
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Re: What new platform?
junko.yoshida   8/1/2013 9:42:31 PM
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The fortune Apple created for its hardware business (iPod, etc) originates from Steve Job's successful efforts brokering a deal with the music industry. Without Job's understanding of the entertainment industry, Apple's new revenue streams for its hardware wouldn't have been created.

Tom Murphy
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Re: What new platform?
Tom Murphy   8/1/2013 9:51:20 PM
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True, Junko. But Jobs was also wise enough not to produce entertainment. He chose to broker it.  Even when he joined the Disney board, there was no talk of merging Apple and Disney.

Tom Murphy
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Re: What new platform?
Tom Murphy   8/1/2013 9:44:35 PM
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I'll take that challenge, Junko.  I'm not always in favor of splitting companies, but here are four reasons I think it make sense:

1. The entertainment business is much riskier than electronics (really!), but it also has the potential of much greater short-term rewards in today's market.  But if you were going to "subsidize" the electronics business with proceeds from a hit movie, you leave the electronics division vulernable to a quick downturn when the next dud hits the theatres. That's no way to run a CE manufacturing business.

2. Sony can't limit distribution of its entertainment products to its own devices without undercutting the revenue of the entertainment products. What's the point of that? And what's the point of having both unless you could do that?

3. The electonics business should be able to stand and compete on its own -- plain and simple. Sony's a great and innovative company that can play against any company in the world when it comes to CE; it has proven that repeatedly. Separating it from the entertainment group will lead to more stability and push it to innovate.

4. Shareholders -- who own the company -- deserve a choice. If the company split, they could continue to own both, or sell one and hold the other.  That would make both divisions of Sony more valuable separately than they are together, which is probably what Loeb is thinking.

junko.yoshida
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Re: What new platform?
junko.yoshida   8/1/2013 10:13:58 PM
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Here's my rebuttal.

1. The CE hardware business is already a precarious business. Sure, you might want to see each business unit (hardware and software) to be independently successful. I understand. But if the oter part of your own company can help catapult the hardware biz, what's the harm in doing that? At least Sony could buy time to get the house in order before completely running out of money ( that's where Sharp is in today).

2. Who said that Sony is limiting distribution of its entertainment products to its hardware? Sony has never been that naive or short-sighted to think that as a successful strategy. The point of having both hardware and software under one roof is to understand what ticks sw biz ( or vice versa) or what makes sense to entertainment biz. It's unfortunate hat Sony was not able to pull off what Apple's Jobs did when it comes to the online music biz, but hopefully the Japanese company learned that lesson.

3. See my response above (answered in 1.)

4. Tom, let's not get carried away too much here. Honestly, I don't believe the activist's motive is so pure. Sure, Loeb might be able to make a bundle if his proposal is accepted. But the rest of the shareholders will be left holding the bag, because once a portion of Sony's entertainment biz is gone, much of the value of Sony Electronics will be also gone.

Ogemaniac
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Re: What new platform?
Ogemaniac   8/2/2013 2:30:17 AM
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The taxpayers will also likely get stuck holding a bag, too, after the CE division declares bankrupcty and sticks the public with all sorts of pension, welfare, and other obligations one way or the other.

Splitting a company. throwing a vastly disproportionate share of the liabilities to one side, and then letting it fail is par for the "hedge fund" course.

 

junko.yoshida
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Re: What new platform?
junko.yoshida   8/2/2013 7:36:31 AM
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I couldn't agree with you more, Ogemaniac. Look what happened to Elpida; look what happened to Renesas; look what's going on at Sharp.

While many of those Japanese companies' failures can be traced to the poor management, making the company [Sony] deliberately weak for the purpose of the hedge fund's gain doesn't strike me particularly as a smart move.

Tom Murphy
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Re: What new platform?
Tom Murphy   8/2/2013 11:06:27 AM
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Junko;

You're proving my points.

1. If the hardware business is precarious, and the entertainment earnings are irregular, then the volatility in the entertainment business actually poses a risk to the electronics group. And why should the hardware business be a drag on the enterainment group, which needs to have a healthy cash balance to support it through the typical downturns of flops.

2. I never said it was limiting distribution; I said it can't. Most hardware companies understand that they want to provide platforms, not entertainment content. Your example: Steve Jobs understood that without having Apple buy a big enterainment company.

3. Loeb's interest is what it is: he's an investor. He wants to maximize returns. Maybe shareholders -- who own the company -- should have a choice of whether they want to own both the hardware and entertainment businesses. If the company is split into two, they'll have stock in each and can retain it or sell it at their choice. 

Think of it this way: Disney and Apple are both great companies. But if you wanted to buy Disney shares, would it be fair to make you also buy Apple shares?  You should have the choice. IMHO, so should the shareholders at Sony.

(BTW, I don't own any of those three stocks. This is just my honest opinion.)

 

 

junko.yoshida
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Re: What new platform?
junko.yoshida   8/2/2013 12:24:26 PM
Tom, I am not recommending  hardware companies (like Apple) to buy software giant (like Disney) -- as a way to become profitable. It is a hard business model to pursue.

However, here's the reatlity.  Sony already owns the entertainment biz.

Unbundling it now won't help restore Sony. In a number of big technology changes anticipated in the next few years -- like 4K and 8K in TV for example, knowing the next move by studios (or what they want to do) could help the hardware business. Or vice versa. I think it's high time for Sony to leverage the knowledge, relationships and connections it has accumlated with the entertainment business to create a new business model or platform.

Not the other way around. (Throwing out the software business and going back to be in a no-value-add, low, low margin CE hardware business.)   

 

 

Charles Hansen
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Re: What new platform?
Charles Hansen   8/2/2013 1:12:57 PM
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Junko wrote, "In a number of big technology changes anticipated in the next few years -- like 4K and 8K in TV for example...."


OMG, is this what we're reduced to? Why don't we just turn the WayBack machine to 1958 in Detroit, where "innovation" consisted of longer tailfins each year?

Progress in CE is now a race to how many pixels we can cram down the consumers' throats? 1080p is enough for anything up to at least 60" diagonal.

I suppose there are some people that want to live like the Jetsons (or was it really the Montag's house in Truffaut's adaptation of "Fahrenheit 451"?) with an entire TV wall so we don't even have to go outside where there is pollution and crime and other nasty "real" things that we don't really want to see....


But for pity's sake, 8K? Please tell me that you're joking. Please?

junko.yoshida
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Re: What new platform?
junko.yoshida   8/2/2013 2:42:40 PM
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4K or 8K is not my idea. But it's out there, and many readers of this publication were miffed about my initial position on the issue:

Three reasons why Ultra HDTV is a non-starter

 http://www.eetimes.com/author.asp?section_id=36&doc_id=1266318

That aside, though, i need to remind you that there were a lot of naysayers, when HDTV was first floated around. Who needs HDTV?, they said.

I don't think CE companies should bet the farm on UHDTV. But we do need to recognize that 4K and 8K are something video experts both in the motion picture and CE industries have been talking about for sometime.  

Charles Hansen
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Re: What new platform?
Charles Hansen   8/2/2013 5:03:43 PM
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Junko, first of all I would like to thank you for a personal reply. I am very honored as I've been reading your coverage of CE in EE Times (unlike the NY Times, EE Times is still "The Journal of Record") since the mid-'90s, beginning with what evolved into DVD. Your reporting has be amazingly insightful, and you must be expert with using your "feminine wiles" to obtain information that no other journalist can!  :)

And I can understand the coming of "4K". By the time you get up to an 84" display, it does make a difference, and those are coming. The other factor was highlighted in the comments in your other linked article talking about "the best picture is what sells". And we have to remember that in the retail outlet, the customer is going to walk right up to within 30 cm of the screen and go, "WOW!", even though when he gets it home and watches it from 300 cm the differences will be negligble...

But there are two separate factors that need to be recognized:

1) The very highest budget Hollywood blockbusters will be filmed in 4K. But does anybody really think that they are going to sell exact duplicates of what is shown in a theater on a 500" screen for $19.99 at Best Buy?

If anybody thinks so, I think they are crazy. Just take a look at how much the compression used by cable and satellite damages the picture quality at:

http://www.avsforum.com/t/1459687/argo-itunes-vs-vudu-vs-blu-ray

Yes, they are all "1080p" -- but all 1080p is NOT created equal.

2) I have spoken with some of the top level people at one of the major Japanese CE companies and they have told me that 4K is a MUCH more significant improvement than 3D, plus no silly glasses are required. And I can get that and I can understand that scaling chips will fool enough people that 4K will become the next "big thing".

But 8K??? GMAFB... Where is this all going to end? 16K? 32K? 128K? At what point do people not give a hoot any more? With Detroit muscle cars, it was just over 400 cubic inches. I think we have already passed that spot with processor speeds in computers, at least for the mainstream consumer. Even picky audiophiles would be happy with 192/24 PCM audio files. At some point every field reachs a saturation limit where nobody cares any more. Aren't we there with cameras now? Does anyone really think that they need 50 Mpix instead of 15 Mpix?

Sure there are always some kooky techno-geeks out there that would purchase it (probably due to deficiciencies in, ahem, some other area) but that does not constitute a viable market. And I (for one) am sick of being told that my "latest, greatest, best ever invented" gadget is completly obsolete every two years because the people that design products have completely run out of any meaningful improvements and instead just offer more of the SOS.

Thanks for listening to my rant, JY.

rich.pell
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Re: What new platform?
rich.pell   8/2/2013 5:11:37 PM
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"Even picky audiophiles would be happy with 192/24 PCM audio files."

I wouldn't count on it, lol.

junko.yoshida
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Re: What new platform?
junko.yoshida   8/2/2013 5:34:28 PM
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Charles Hansen, thanks for your kind msg.

It's been a long journey -- it appears -- that both you and I travelled over the last two decades, without having ever actually talked to each other!

I love covering CE stuff because, well, regardless the demise of the Japanese CE vendors these days, there is always something that surprises us. 

But 8K??? GMAFB

Yeah, I hear you. It boggles my mind too. 

But you know, there is always insatiable appetite for stuff like this -- whether it makes sense or not. 

MClayton0
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Re: What new platform?
MClayton0   8/2/2013 11:45:15 PM
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I agree, splitting out movies is dumb idea, but it REALLY helps those hedge fund guys like Loeb, who love smaller homogeneous businesses which are more volatile, cyclical, and they can make trading money. 

alex_m1
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Re: What new platform?
alex_m1   8/2/2013 8:34:11 AM
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If they can gather exact second by second knowledge on how people watch their content, and correlate this knowledge to both the big and small details of said content, they could probably produce better content. That is what Netflix does.

DMcCunney
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Re: What new platform?
DMcCunney   8/2/2013 1:05:47 PM
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I can see why the activist hedge fund manager wants Sony to split: he has the possibility of making a lot of money.  Whether it's a good idea long-term for Sony is another matter.

There is actually a correspondence between Sony's hardware and entertainment side.  Both are hit driven.  If you don't have hits for a while, you can go out of business.  The problem is that product development costs so much.  If you are a movie studio spending up to $100 million to make a film, you better have a few blockbusters in your lineup to cover the losses on the films that tank.  If you are a CE manufacturer, likewise.

Sony had that problem in the hardware side. They got into trouble, along with Panasonic and Sharp, in the big screen TV business.  Big screen TVs were the "must have" product that supported much of the CE industry for a while, and the industry has been casting around looking for the next one.  (3D TV, anyone?)  Sony and the rest invested enormous amounts in the facilities need to make them.

For a while, Sony and others were in clover, generating large revenues and high margins as the market all bought big screen TVs.  But like other CE devices, big screen TVs became commodities.  The high margin high end of the market got saturated.  Sales moved to smaller and lower end models, with lower prices and much lower margins.  The Japanese manufacturers simply couldn't compete in the lower end with folks like Samsung.  It was a "lowest cost producer wins" game, and the Japanese outfits weren't and could not be the lowest cost producers.

This "boom-and-bust" cycle is intrinsic to that sort of business.  The question for Sony is that they didn't grasp the cyclic nature, and see the handwriting on the wall.  I'd argue they should have seen the end coming, and been winding down and preparing the exit the big-screen TV business well before they racked up billions of yen in losses on it.  New markets for new products are all very well, and you can make a lot of money addressing them.  But sooner or later, everyone has that new product.  Then what do you do?

I think Sony needs to take the hit and fold the TV operation.  I am not convinced splitting the hardware and entertainment sides into separate entities is the best long term solution.

junko.yoshida
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Re: What new platform?
junko.yoshida   8/2/2013 2:49:39 PM
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DMcCunney:

I can see why the activist hedge fund manager wants Sony to split: he has the possibility of making a lot of money.  Whether it's a good idea long-term for Sony is another matter.

I agree on your summary above. 

As for your suggestion that Sony should get out of TV business, I also agree. But here's the thing. I think they need to figure out a way to carve out a new revenue stream from content, and for their TV biz -- without them actually manufacturing TVs.   

DMcCunney
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Re: What new platform?
DMcCunney   8/2/2013 3:48:45 PM
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I think they need to figure out a way to carve out a new revenue stream from content, and for their TV biz -- without them actually manufacturing TVs.  

Er, what TV biz?  A TV is a TV is a TV.  There is an enormous amount of content out there. in broadcast, cable, satellite dish and online streaming sources.  If you have a TV and the connection to a source, you can view it.

This isn't like the iPod, where Steve Jobs was able to get the content producers to allow iPod users to get their content and provide stuff they could listen to.  And the agreement wasn't significant in allowing iPod users to get content.  MP3 players were not new, and content existed for them.  What was significant about Apple's deal was the price Apple was allowed to charge through the iTunes store.  The content providers were resistant at lowering the price content would cost.  Jobs managed to convice them that the volume they would do would more than offset the lower price charged per song, and was proven correct.

Sony is active in production of television content, through its Sony Pictures division, and generates revenue from it.  I'm not sure what sort of new revenue stream you see them being able to carve out, and what parts of their business it would benefit..

 

 

junko.yoshida
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Re: What new platform?
junko.yoshida   8/2/2013 4:04:01 PM
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DMcCunney, I used the word TV loosely. Let's call it a display. Without getting into the display business (which is killing everyone), what if you getf into a smart "box" biz (not necessarily a set-top per se -- it could be also the next generation playstation)? You don't need to deal with dumb displays.

You develop a value-added box that can handle everything from 8K to SDTV, optimize "content viewing experience" (not just the number of pixels, but even changing the user interface on the fly) to best fit for whatever screen a consumer happens to be using?  

I am just thinking out loud here, so I apologize in advance for my half-baked idea here. But you wouldn't call that box a TV biz, would you?

Bert22306
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Re: What new platform?
Bert22306   8/2/2013 5:33:32 PM
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Junko, you ask about a "value added" box that Sony might create. What I can't figure out is, why can't Sony, or all the other CE companies in the TV business, create TVs or other boxes (e.g. DVD players) that incorporate real honest to goodness web browsing? They could put their own engineers to developing clever UIs optimized toward TV content on the web, for instance, rather than buying a Microsoft or Apple solution. Instead, most "connected TV" products out there are rather pathetic. Mostly, you get access to a handful of pay-TV web portals, and that's it. There are zillions of TV portals out there, and they seem to change all the time.

Remember when the big news of the day was digital TV? Even that was like pulling teeth, to get the CE companies to incorporate decent digital "tuners." It took years, and ultimately an act of Congress, for heaven's sake. It's the same thing all over again, with IP access.

It's almost like these CE companies are happy to make everyone dependent of the proprietary set top boxes that the cable and satellite companies force down peoples' throats. I ended up connecting a PC to the TV, for this purpose, and I find that's how I do most of my TV watching these days. You'd think that would be at least one obvious avenue for TV innovation!

Caleb Kraft
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Re: What new platform?
Caleb Kraft   8/2/2013 5:41:06 PM
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Several companies tried this in the early 2000s. Remember the msn boxes? You could do normal web browsing via a wireless keyboard and mouse. They fell short when people wanted to use them to save images and stuff. I'm a little surprised that there haven't been much of a resurgence here.

I guess it seems like with the cost of small computers now, you basically just add a computer instead of adding a "feature" to the tv. You could easily put a raspberry Pi in line for full computer experience in a set top box sized package.

Bert22306
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Re: What new platform?
Bert22306   8/2/2013 5:55:39 PM
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Yes, but in the early 2000s still very few people had broadband access to te Internet, there was way less TV content on the Internet, and the codecs in use then (mainly H.323 and proprietary derivatives of it) did not do it justice.

Nowadays, US and foreign TV networks have very nice web sites, mostly ad-supported "free TV," that none of the typical AppleTV/Roku/etc. devices can access. And most people are too lazy (or worse) to connect a PC to their TV sets. While some countries, including the US, block their TV sites to international access, other countries (e.g. Germany) tend not to. And still others allow free access to their news programming, and even to at least some of their prime time programming (on demand).

I totally agree with your Raspberry Pi comment. The CE companies could embed something just like that, and create a nice UI for it. Not many consumers would be savvy enough to do this on their own. Really, I think the situation is almost inexcusable. And since this article about Sony adding value came up, I couldn't help but wonder why Sony (and others) are fast asleep at the switch.

DMcCunney
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Re: What new platform?
DMcCunney   8/2/2013 6:57:56 PM
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I am just thinking out loud here, so I apologize in advance for my half-baked idea here. But you wouldn't call that box a TV biz, would you?

I might.  The problem is one of definition.

There is television content, and there are the devices we use to display that content.  "TV" might mean either, depending upon context.  (And the devices will include both the actual display and the things like set top boxes that put that content on the display.)

I think the sort of box you describe is an interesting notion, and there may well be a market for it. Sony would be well suited to build it.  

I'm still not clear how it might directly benefit Sony's content business, unless you want to get into proprietary content formats only usable by the device and only available from Sony's content arm.  Sony has tried the proprietary route in the past in hardware (Betamax VCRs, Memory Stick mass storage) and in content (the original ebook format used by the Sony Reader was proprietary.)  It has not historically been successful.

junko.yoshida
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Re: What new platform?
junko.yoshida   8/2/2013 7:20:18 PM
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DMcCunney, I agree. Proprietary route never worked out for Sony (and never will). And by doing so, I believe it really damaged Sony's credibility. I am hoping that they have learned the lesson by now.

To your question about how the software side of Sony's business can profit from it, I don't think it is reasonable for content side to expect direct and "immediate" benefit from it. Rather, they can take comfort, knowing that their content will be viewed and consumed in the best, most optimal manner -- when consumers used this little smart box of Sony.  

DMcCunney
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Re: What new platform?
DMcCunney   8/2/2013 9:52:29 PM
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In fairness, I was too hard on Sony about being proprietary.  Betamax, for example, was Sony's entry in the VCR market when standards were still being established.  They wanted it to be the standard, but lost to the folks pushing VHS.  And I suspect they wanted the Memory Stick to become a form used by others as well, but it was one more entry in a crowded field, and Sony was the only one who used it.  They should have just gone SD in the first place.

I, too, hope they've learned from the experience.

And agreed on the very indirect benefit to the content side for your proposed device. But arguments for keeping Sony a monolithic organization instead of splitting it into HW and content parts really need synergies between the two, and being able to show direct benefits in having both parts under the same roof.

It still don't think splitting up Sony that way is a good idea, but that's an "It feels wrong!" response.  Thinking it through and figuring out why it feels wrong is a more complicated proposition.  You can make arguments in favor of the split.

Susan Rambo
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Negativity
Susan Rambo   8/2/2013 12:35:16 AM
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@Junko: Masaru Kato, reportedly said: "We were able to achieve adequate (first-quarter) results but I'm not necessarily optimistic about the future."

Why do you think Kato was publically unoptimistic? What purpose could it serve, other than to tell the truth?

junko.yoshida
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Re: Negativity
junko.yoshida   8/2/2013 7:32:30 AM
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@susan, because he has obligations to tell the truth to Sony's sharehlders. More than anyone else, Sony knows that Sony is not out of the woods, and doesn't want to mislead the market.

Susan Rambo
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Re: Negativity
Susan Rambo   8/2/2013 10:33:58 AM
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The one good thing about asking a dumb question is it still counts. Employees should pay attention to what the CFO says in public. Not that he's saying anything different to them in private.

kfield
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The demise of Sony
kfield   8/2/2013 10:26:19 AM
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It's been impressive to see the fall of a consumer electronics giant like this - but there have been plenty in its wake, namely some of the big American names in consumer electronics of the 20th Century. 

Frank Eory
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Re: The demise of Sony
Frank Eory   8/2/2013 2:23:53 PM
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There are valid arguments on both sides. If Sony can better capitalize on synergies or collaboration between the CE side and the media content side, then shareholders stand to beneft. But if it cannot, should a mortal wound in one operation be permitted to cause the demise of the other operation?

cookiejar
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Killer App famine
cookiejar   8/2/2013 2:41:37 PM
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Sony's innovations such as its Trinitron, Walkman, electret microphones, CD, DVD, BluRay, PS2 etc. allowed it to realize healthy profit margins with its "killer apps".

 

As it's innovations become commodities, that can be quickly reproduced by its competitors at similar high quality but much lower cost, the profit margins that Sony is used to become unattainable.  The effect was clearly demonstrated by the Beta VHS battle.  Current Sony products do cost more and are less and less "slightly ahead of our time."

In addition, Sony's entertainment division's occasional "next big thing" isn't enough to shore up profits diluted by the shear volume of its so-so products.

Adjusting one's lifestyle lower is very hard if you are used to rolling in dough.

Sony is certainly missing the technical leadership of its founder that gave Sony its glory days, doing what it was exceptionally good at.  It appears that Apple is bound for a similar fate.

pseudoid
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It is déjà vu all over again!
pseudoid   8/2/2013 4:26:41 PM
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Innovative and dynamic companies become too structured and end up losing the resiliency that they once had.  We are actually seeing a similar thing ongoing at Apple.

Partially, this is how Apple changed the game rules against the RIAA (and to a certain extent MPAA) Hooligan B*st*rds and their shenanigans.  This is a lesson that consumer-oriented companies fail to learn from!

Could the problems at Sony be a simple matter of having the wrong business model in the wrong decade?

It appears like the old adage about the "bigger hammer" syndrome; which usually does not resolve the problem.  IMHO, Intel is the best business role model; since they have continually re-adapted and re-invented themselves, time and time again.

We, as engineers, know fully well the consequences of "Peter's principle".  But Japan Inc. (aka MITI) is not able to absorb the full ramifications of the spanking lessons they are receiving in the auto industry from the Koreans (Hyundai) and similarly in the electronics industry from their same neighbor (Samsung).  Although, there may actually be a silver-lining for them, as MITI had dictated that Toyota work with Subaru and the (hopefully successful) outcome was the Scion FR-S and the Subaru BRZ.

I wish United States had such a cooperative environment as instituted by Japan Inc.'s MITI.

_hm
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Should Sony wait for one or two more years
_hm   8/2/2013 6:36:44 PM
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My suggestion for Sony is to wait for one or two moe years. Sony have improved so much in last two years. Little more effort and they can rebounce back to past power and glory.

 

junko.yoshida
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George Clooney Rips Dan Loeb
junko.yoshida   8/2/2013 7:28:54 PM
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Well, I am glad that I am not alone. It's now me and Clooney.

George Clooney went ballistic on Third Point's Loeb.

http://www.deadline.com/2013/08/george-clooney-slams-sony-investor-daniel-loeb/#utm_source=dlvr.it&utm_medium=twitter

joondan
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Re: George Clooney Rips Dan Loeb
joondan   8/4/2013 9:24:26 PM
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Clooney's remark might make sense in terms of an industry problem of not supporting independent art, but it seems a poorly calculated artistic fist-shake against 'the man' that doesn't take into account the consequences of what Loeb is trying to accomplish.  If the CE division is cannibalizing entertainment's profits, maintaining the monolithic Sony empire only results in less reinvestment of those cannibalized profits into the entertainment industry so there's room for the failed, 'art for art's sake' projects he wants to save.  The disappeared note about implications of Sony's empire on LG and Samsung's media aspirations, as though following the Japanese example were the only way Koreans could succeed in media, is just wrong, both factually and in it's arrogance.

Bert22306
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Re: George Clooney Rips Dan Loeb
Bert22306   8/5/2013 5:34:20 PM
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But in truth, Clooney is peeved at something different. Clooney never addressed whether a hardware company like Sony should also be involved in the movie business. Clooney's beef with Loeb was Loeb's badmouthing the movie business end of things. That's all.

Apple may not be producing entertainment content, but they too got involved in more than just making the hardware. With iTunes, they also became a store for content. Some of the Apple faithful like to claim that Apple "reinvented" the recorded music industry by doing this, for example.

Hard to say that diversifying one's business is "wrong," but on the other hand, both Apple and Sony seem to have a cult following that tends to take any criticism of these companies like a personal affront. It's certainly indisputable that when one part of the business takes a hit, it will feed off the profits of the part of the business that is doing well. That's why diversification makes sense from the company's perspective, wanting to survive, and perhaps not from a hedge fund manager's perspective.

C VanDorne
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CEO
Re: George Clooney Rips Dan Loeb
C VanDorne   8/8/2013 10:24:17 AM
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Junko, I know I'm late to the game here on this trail but I had to weigh in on this one.  Please tell me that I didn't just read that you're trying to seek validation from George Looney...ahhh I mean Clooney.  I really respect your reporting on world events from a first person perspective and I'd like to think that I can continue to respect your takes on that and other topics.  But he's nuts, and siting him for validation on anything except your side ambition of mastering mono-dimensional acting and bad manners is unbecoming of your journalistic standards.

junko.yoshida
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Re: George Clooney Rips Dan Loeb
junko.yoshida   8/8/2013 11:45:08 AM
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I didn't cite him in my story. Clooney's stuff was all over the Internet -- reported by a number of Hollywood pubs, and oh, not to mention Wall Street Journal.

I am not sure if Clooney is nuts (I actually have a lot of respect for some of the movies he made), but my point was to bring in some "Hollywood" voice in the "conversation" we are having in this forum. We should have some fun, shouldn't we?

pseudoid
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Personally speaking… (re: Sony)
pseudoid   8/2/2013 7:42:04 PM
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...I have always had a big issue with Sony as a consumer.  After all, are we not consumers first and foremost?  As EEs, we are fortunate enough to be of the educated-type of consumers, when it comes to CE [which is a good thing].  Yet, my biggest gripe with Sony is the fact that they have been in the forefront of "format wars" for quite some time. It is an insulting disservice to the general consumers as to how egregious Sony has been in these format wars.

One of the most recent episodes was the HD-DVD versus the BluRay tussle!  A friend, who had innocently purchased the BD version of the movie Matrix, was shocked to find out that it would not play in her DVD player.  I thought to help her take it back to Target and they even denied a replacement on a more suitable format as they felt that 'people' were returning them after making copies of the movies.  This was circa 2008 and a BluRay recorder cost about $900 and blank media was more expensive than BD movies.  This is when I finally started boycotting Sony products.

Let us also not forget the MiniDisc introduction when Sony marketers called it "perfect sound forever" during the technical intro meeting in the Valley for AES members.  The DAT format was another Sony snafu. Please also recall that the original music CD production equipment were actually 14 bit recorders, unbeknownst to consumers.

For a few decades, the Sony ROI was significantly helped by the exploitation of the format wars and has been part of their antiquated business model.

Tom Murphy
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Re: Personally speaking… (re: Sony)
Tom Murphy   8/5/2013 12:28:27 PM
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Pseudoid: Oh, you just reminded me that I got suckererd into buying a mini-disc recorder at one point. Shame on me. But yes, it does reflect on Sony, too.  I still think it's a brilliant hardware company, but it seems like it's been looking for its next big thing ever since the iPod overshadowed the Walkman.

KB3001
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CEO
Yes, Sony should be split up
KB3001   8/3/2013 1:50:42 PM
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Not because the current strcuture is inherently unsustainable but because its management (people, structure and processes) have proved incapable of running such a complex structure in a proper way. The financial services side of the business in particular should go.

Tom Murphy
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Re: Yes, Sony should be split up
Tom Murphy   8/5/2013 12:30:38 PM
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KB:  You raise a very good point. Sony may be among the most unmanageable companies in the world right now.  I would hope the board would be keenly aware of that, and will act appropriately. Each part might perform better on its own -- that is, by focusing on its own core business. The net effect could be good for everyone -- shareholders, consumers, and employees.

Susan Rambo
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Sony stays together
Susan Rambo   8/5/2013 10:51:32 PM
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No split for Sony, according to this news release: Sony Corporation Sends Letter to Third Point. In the press release, Sony says they sent a letter to Third Point LLC (the hedge fund founded by Daniel Loeb) reaffirming that "...the Board and management team strongly believe that continuing to own 100% of the Company's entertainment businesses is fundamental to Sony's success, and that a rights or public offering is not consistent with the Company's strategy for achieving sustained growth in profitability and shareholder value."

junko.yoshida
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Re: Sony stays together
junko.yoshida   8/6/2013 10:41:56 AM
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Susan, thank you for following this up. 

This was to be expected. But I believe that Sony went out of its way (in deliberations) so that they don't look like they are brushing aside Mr. Loeb. 

Tom Murphy
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Blogger
Re: Sony stays together
Tom Murphy   8/6/2013 11:40:38 AM
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Although Sony's board rejected the idea of spinning off the entertainment business "for many reasons," that may not be the end of the story.  As The New York Times notes, this could lead to a public debate over the idea.   The Times story quotes Loeb, who owns 7% of the company, as saying he looks forward to an "ongoing dialogue" with the board.  (I suspect we'll see some sort of open letter within a week.)  In any case, it's good that the company will increase its financial reporting on the unit so that investors can better evaluate the company. Either way, I'm sure both divisions will continue to do great work.

pseudoid
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Manager
Latest News on Sony Splitsville Blues
pseudoid   8/7/2013 12:36:23 PM
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Yesterday's news headline states that the "Sony Rejects Loeb Sale Proposal". [No, I will continue to refuse to put the punctuation mark inside quotes when it was not there to begin with!]

Specifically, Sony's board has unanimuously rejected a U.S. hedge fund manager's [Third Point CEO Daniel Loeb] proposal that it sell part of its entertainment business. Sony maintains that continuing 100% ownership of both parts of its business sectors is 'fundamental" to the company's success... [yak, yak, blah, blah, yahdy, yahdy, yahdah...]

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