While most of you were sleeping last night, Sony execs were mostly sleepless as they’d just announced a huge loss — one of the worst in company history. I mean huge. In fact, after releasing a 40 percent reduction in their 2013 profit forecast and a nearly $200 million loss for the most recent quarter, their stock tanked over 10 percent on the Tokyo Stock Exchange right after the announcement.
What the heck is wrong? Is Sony leadership clueless?
They are, at best, an also-ran right now in consumer electronics without a single innovation since their famed PlayStation home video game player. Nothing.
Sony had decades of pioneering with awesome gear including the Walkman, the Video8 format, Blu-ray, Betamax, SDDS sound, the CD (with Pioneer), the floppy disc for computers, the memory stick and DVD-Audio — all inventions that were huge successes; heck, even the ones you think weren’t successful, in fact, were. Take Betamax, for example. Betamax lost the home video format war of the 1970s and ’80s, but every studio, production company or TV field camera used the format for over 20 years — Sony sold millions.
But, since the company’s heyday in the 1980s and ’90s, it’s floundered, at best as a “me too” manufacturer — with one exception: PlayStation.
And, thank goodness for Sony, the PlayStation 4 (aka PS4) is about to ship — otherwise, it’d be a total train wreck heading towards nothingness.
But Sony’s 4K projector is amazing. Its XBR series of flat screen HDTVs are incredible. But, nothing else excites anyone (minus the PlayStation 4 — which will miss the 2013 Christmas season of sales). But Sony, in nearly all areas of consumer electronics, faces stiff competition from Korean manufacturers LG and Samsung with both 4K and high-end HDTVs. And, as both those two companies are flying high — and have much better brand recognition and respect among up-and-coming Millenial buyers, Sony is doomed.
Or, are they? What can they do to recover and climb back up to the top of the consumer electronics pinnacle?
Here are two suggestions:
1. Partner to Innovate: Sony just isn’t doing any right now. None. It’s like it’s given up and are reacting to what everyone else is doing in nearly every product category. Sure, it tried a tablet, a phone and a set-top box, but all three have been nothing special. No unique features, no great “gotta have it” at all. So, Sony NEEDS to partner to survive. And, it can’t be a normal partnership — no using Android to build phones or new tablets or a set-top box or even Smart TVs. It needs to differentiate as that’s what Samsung, LG, et al. are already doing. So, what do they do?
Partner with Apple — in a BIG way (i.e., Apple, which is sitting on a mountain of cash, should buy Sony). Apple, too, is about to go through what Sony went through in the early 2000s – Apple’s been on top for nearly a decade and is starting to slip thanks to the same set of manufacturers that have chipped away at Sony’s market share in recent years. But, unlike Sony, Apple has innovative technology and intellectual property (and a built-in LOYAL user base that won’t just go away). And, if Apple were to partner with anyone in consumer electronics, it should be Sony. Everyone else is partnered with either Microsoft or Google (Android), so Sony needs someone else. And, NO it can’t do it itself. If it did, go ahead and start digging Sony’s grave as IT WON’T WORK.
So, why would Apple even entertain this? Simple — the studio (aka content for iTunes and the Apple TV) AND a way for Apple to integrate iOS, its mobile operating system, into a plethora of consumer electronics gear it currently doesn’t make (e.g., TVs, Blu-ray players, whole home AV systems, receivers and, dare I say it, a different line of phones). It’s a win-win.
2. Sell it Yourself: Best Buy’s turned into the biggest bait-and-switch retailer in the country. You never know what they’re going to recommend (unless you happen to have access to their weekly spiff sheets) to a shopper who walks in its stores. But, nine out of 10 times, it won’t be Sony. So, how do you even get something from Sony if you wanted it? Sure, a lot of people buy online and will use SonyStyle.com to shop, but most still buy home entertainment products via the showroom and Best Buy controls that nearly everywhere. So, Sony needs its own retail presence. So, get some (more) stores. Or, better yet, see suggestion #1 above.
Look at it another way: Apple is strong in innovation and has brand loyalty wrapped up among the teens, 20-somethings and 30-somethings. Sony is lacking innovation but has brand loyalty only with 40-somethings and above and has the manufacturing capacity Apple lacks (Apple outsources all manufacturing to third party companies around the world like Flextronics). So, Apple would gain manufacturing capacity, integration of its iOS mobile operating system into everything Sony makes and buys brand loyalty for the older crowd. Sony gets access to innovation, instant brand loyalty from the younger crowd and one of the best retail channels on the planet.
Apple should buy Sony before there’s not a Sony left to buy.