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FDunn3
I stopped purchasing anything Sony about 20 years ago when I had a problem with ...
xorbit
Japanese CE giants losing credibility war
Junko Yoshida
11/2/2012 5:30 PM EDT
Sony electronics shrinking
The good news is that Sony expects to be in the black for its current fiscal year. The bad news is that it probably won’t be able to achieve its goal of returning its electronics business to profitability.
Sony posted a consolidated net loss of 40.1 billion yen for the April-September half, compared to a 42.4 billion yen loss during the same period a year ago. Helped by selling off its chemical products business, the company’s operating profit jumped about 40 percent in the second quarter, but this wasn’t enough to offset increased tax burdens.
It’s encouraging to see the company’s losses from its TV operations are shrinking this year, and Sony’s financial services are generating a better-than-expected profits.
But the company is hardly out of the woods.
The biggest problem is that Sony has shown no evidence that newly “refocused areas” -- digital cameras and imaging technology, video games and mobile devices – outlined earlier this year by Sony’s new chief Kazuo Hirai are putting the company back onto a growth trajectory.
By contrast, sales of game consoles and digital cameras continue to shrink. "A return to the black [in the electronics business] will be difficult" in the current year, Sony acknowledged.
Sharp losing Apple's trust?
It’s clear that Sharp’s future hinges on its success on small- to medium-size screens for mobile phones and tablets, not large-screen TVs. It’s been speculated that Sharp’s survival depends on its ability to ramp up production of panels for Apple’s iPhones and iPad. The company may have already screwed that up, according to a story that appeared in Nikkei, Japan’s economic journal.
Apple reportedly started looking for a new panel supplier in 2009. Apple’s search was triggered by Samsung’s launch of its Galaxy line of smartphones, which soured Apple’s relationship with its Korean rival.
Apple has always had a multiple-sourcing strategy for displays. But without Samsung as its key display supplier, Apple was eager to find another leading LCD vendor.
Apple liked what it saw in Sharp's panel technologies, including its IGZO (indium-gallium-zinc oxide) and in-cell technologies, which integrate touch sensors directly into LCD panels.
In December 2010, Apple decided to go so far as to help Sharp expand its capacity to manufacture panels for smartphones and tablets by providing Sharp with 100 billion yen it needed to remodel its flagship panel factory in Kameyama. The fab was originally built to produce large-screen TV displays.
Despite Apple’s support, Sharp, was unable to manufacture enough panels at the cost Apple demanded, according to the Nikkei report.
Apple did adopt Sharp's IGZO panel technology for the new iPad unveiled in March, but Sharp reportedly missed the delivery date of new panels by nearly half a year..
Further, mass production of in-cell panels for Apple's iPhone 5 only started at Sharp's Kameyama plant on the same day that Apple announced plans to release a new iPhone on Sept. 12. Missing the delivery date is bad enough. But to do so with the critical products Sharp is betting its future on -- for its most important customer – borders on suicidal.
Sharp harbored hopes of becoming a leader in solar energy technology. But that plan also went out the window when Sharp ended production of photovoltaic modules in the U.S. and Europe to concentrate production in Japan. This retrenchment was a part of a turnaround plan the company had to submit to secure bank loans late September.
Related stories:
The good news is that Sony expects to be in the black for its current fiscal year. The bad news is that it probably won’t be able to achieve its goal of returning its electronics business to profitability.
Sony posted a consolidated net loss of 40.1 billion yen for the April-September half, compared to a 42.4 billion yen loss during the same period a year ago. Helped by selling off its chemical products business, the company’s operating profit jumped about 40 percent in the second quarter, but this wasn’t enough to offset increased tax burdens.
It’s encouraging to see the company’s losses from its TV operations are shrinking this year, and Sony’s financial services are generating a better-than-expected profits.
But the company is hardly out of the woods.
The biggest problem is that Sony has shown no evidence that newly “refocused areas” -- digital cameras and imaging technology, video games and mobile devices – outlined earlier this year by Sony’s new chief Kazuo Hirai are putting the company back onto a growth trajectory.
By contrast, sales of game consoles and digital cameras continue to shrink. "A return to the black [in the electronics business] will be difficult" in the current year, Sony acknowledged.
Sharp losing Apple's trust?
It’s clear that Sharp’s future hinges on its success on small- to medium-size screens for mobile phones and tablets, not large-screen TVs. It’s been speculated that Sharp’s survival depends on its ability to ramp up production of panels for Apple’s iPhones and iPad. The company may have already screwed that up, according to a story that appeared in Nikkei, Japan’s economic journal.
Apple reportedly started looking for a new panel supplier in 2009. Apple’s search was triggered by Samsung’s launch of its Galaxy line of smartphones, which soured Apple’s relationship with its Korean rival.
Apple has always had a multiple-sourcing strategy for displays. But without Samsung as its key display supplier, Apple was eager to find another leading LCD vendor.
Apple liked what it saw in Sharp's panel technologies, including its IGZO (indium-gallium-zinc oxide) and in-cell technologies, which integrate touch sensors directly into LCD panels.
In December 2010, Apple decided to go so far as to help Sharp expand its capacity to manufacture panels for smartphones and tablets by providing Sharp with 100 billion yen it needed to remodel its flagship panel factory in Kameyama. The fab was originally built to produce large-screen TV displays.
Despite Apple’s support, Sharp, was unable to manufacture enough panels at the cost Apple demanded, according to the Nikkei report.
Apple did adopt Sharp's IGZO panel technology for the new iPad unveiled in March, but Sharp reportedly missed the delivery date of new panels by nearly half a year..
Further, mass production of in-cell panels for Apple's iPhone 5 only started at Sharp's Kameyama plant on the same day that Apple announced plans to release a new iPhone on Sept. 12. Missing the delivery date is bad enough. But to do so with the critical products Sharp is betting its future on -- for its most important customer – borders on suicidal.
Sharp harbored hopes of becoming a leader in solar energy technology. But that plan also went out the window when Sharp ended production of photovoltaic modules in the U.S. and Europe to concentrate production in Japan. This retrenchment was a part of a turnaround plan the company had to submit to secure bank loans late September.
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iniewski
11/2/2012 7:47 PM EDT
Out of the 3 areas proposed by Panasonic (solar, lithium-ion batteries and appliances) I would only put my money on batteries...solar is effectively dead without government subsidies, solar energy can't compete with natural gas..appliances is modestly growing market and smart appliances are over-hyped...but everyone needs better batteries! electric cars need better lithium-ion ones but it gets bigger if IoT takes off every gadget will need one as well (energy harvesting gets you only so far, actually this is where solar might play a role)
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junko.yoshida
11/4/2012 12:07 PM EST
You are absolutely correct about Panasonic's lithium-ion battery business.
Panasonic is supplying lithium-ion battery cells for Ford Motor Company’s two hybrid and two plug-in hybrid vehicles. So, they are NOT abandoning that part of the lithium-ion battery business and they are rightly seeing future in it.
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Ogemaniac
11/4/2012 6:50 PM EST
"solar is effectively dead without government subsidies"
Wrong. If you eliminate fossil fuel users' right to pollute without compensating the victim, which is a subsidy of over a trillion dollars per year worldwide, then solar would be just fine.
Solar cannot compete if it has no subsidies but its competitors do. But that doesn't tell you very much.
Basic econ says the way to handle pollution is to force polluters to pay. Until they are required to, markets are using the wrong prices and get the wrong result.
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seaEE
11/2/2012 9:26 PM EDT
I visited Sharp's LCD factory in the early 1990's. At that time they had some of the best LCD technology around. And they had five year plans for where their product lines were going. But what I remember most about the visit was the hospitality and politeness of the people. I'm really hoping to see these companies emerge from their present difficulties and be the vibrant players that they have been in the electronics market.
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me
11/3/2012 11:01 AM EDT
What to make is one thing, whom to sell to is another. Europe is in trouble, US is slow, and they just picked a fight with the Chinese at this very moment, when they need the Chinese to make it cheap and buy it dear, like Apple is doing.
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Bert22306
11/3/2012 6:35 PM EDT
I thgought Sony did a really smart move when they got into high end digital cameras, adopting the Carl Zeiss T* line of lenses previously used by Kyocera's Contax brand. Actually, I wondered why companies like Kyocera (Contax and Yashica cameras) didn't themselves aggressively get into digital photography, since the tea leaves were pretty clear on that too?
So the fact that Sony jumped in seemed smart. And their full size 24 X 36 mm sensors in the top of the line SLRs was superb.
The problem MAY be, though, that with cameras now in every cell phone and smart phone, perhaps people have dumbed down to accepting mediocrity, as they have also done with audio. It's a shame, if this is what's keeping Sony camera sales down.
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junko.yoshida
11/4/2012 12:15 PM EST
Sony did make a great comeback with their high-end digital cameras in the last few years, and lot of photography fans loved them.
But that "camera buff" population isn't growing, and even if it did, that market certainly wouldn't be able to make up for the loss of the company's huge TV business.
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Battar
11/5/2012 11:09 AM EST
Panasonic are also in the high end camera business, using Leica lenses. But it's a fairly small market.
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resistion
11/3/2012 9:54 PM EDT
Panasonic looks like they don't know where to focus.
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sprite0022
11/4/2012 7:30 PM EST
what's the jobless number of Japan now, anyone?
Is japanese folking all switch to fishing now?
If moores law dead in 5-10 years this will be the fate of US ppl, I can smell intel, micron, amd ... follow sharp's footsteps.
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Ogemaniac
11/4/2012 9:56 PM EST
The unemployment rate in Japan is around 5% and it is easy to find low-wage unskilled jobs. Finding a good job, like anywhere else, is difficult, as the large Japanese conglomerates are retrenching and laying people off.
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sprite0022
11/4/2012 10:09 PM EST
what a pity, for those who owns skill but have to settle for unskilled jobs.
what a waste of gifts...
can't they regroup like brits did with ARM?
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Andrzej11
11/5/2012 2:00 PM EST
Whilst Sony's TV unit losses have averaged over a billion dollars per year over the last 8 years and getting out of the TV business may be an economic necessity, I have not heard of any mention from Hirai that Sony was exiting the TV business. In the past Hirai has stated that the TV was the centrepiece of Sony's home ecosystem, and promised to put the TV unit back into the black by March of 2014. Moreover if Sony planned on exiting the TV business, why would it enter into an OLED partnership with Panasonic in June of this year? On Oct. 2 Hirai stated that “Sony has a very deep DNA in creating the best picture and the best sound.” Doesn’t sound like someone who is about to exit the TV business even though the TV unit is on track to lose another billion dollars this year even after further production cuts of 2 million units per year.
As for shrinking game console and digital camera sales, Sony, along with many others, is falling victim to the overwhelming success of smart-phones and tablet computers in these spaces.
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junko.yoshida
11/5/2012 2:30 PM EST
You are absolutely right. None of the Japanese CE vendors will totally "exit" from TV business; but they will eventually shift their model from making everything on their own to sourcing TV sets from someone else and slapping their logos on top of them. (Just like what all PC companies in the U.S. do)
I am aware of Sony-Panasonic deal on OLED, but I wouldn't bet on OLED to save either companies' TV business.
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Andrzej11
11/5/2012 3:19 PM EST
I agree that the Japanese companies will not exit the TV space willingly. In the case of Sharp it may be forced upon them as they teeter on the verge of bankruptcy as they warned investors last week about their serious doubts of being able to continue as a going concern.
It would appear that they will become overpriced resellers but this strategy will work only if their brand names continue to carry a significant premium in the marketplace.
As for OLED, I agree it won't save their TV business but it will give them the opportunity to lose a few more billion.
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xorbit
11/5/2012 6:32 PM EST
"Sony’s financial services are generating a better-than-expected profits."
That's the saddest part of the whole article. It seems the way the economy is set up, the biggest rewards are for those who just skim money from it instead of adding value to it. It's a sad system when you reward the leeches and punish the doers.
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FDunn3
11/6/2012 7:58 PM EST
I stopped purchasing anything Sony about 20 years ago when I had a problem with one of their CRT based TVs just out of warranty.
Calls and letters to Sony answered the same way "take it to your local Sony Repair Station(SRS), but it is not under warranty.". Fine, so I asked for schematics of the TV to try and repair it myself and was told Sony only supplied those to the SRS's.
I chunked the TV and swore off anything Sony from that point on. A couple of years later when the Internet was coming ito it's own I found similar comments there as well. Sony just flat stopped lietening and assisting it's customers because they thought their brand name would carry them through thick and thin.
As far as Sharp going to junk bond status I am only happy for one reason, Apple already announced plans to stop dealing with Samsung on their displays (whom is their highest quality/quantity supplier and moving that volume to Sharp. ;)
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