Can Sony return to trend-setter after becoming lumbering giant of electronics?

Once at the leading edge of consumer electronics, Sony is now more lumbering giant than trend-setter after falling behind competitors such as Samsung and Apple.

Sony watchers are urging the down-on-its-luck company to rediscover its pioneering ethos.

Founded in 1946, Sony symbolised Japan’s rebirth after its World War II defeat, rising from humble beginnings. It had little else besides the smarts of founders Masaru Ibuka and Akio Morita, to come up with hit after hit: the transistor radio, home tape recorders, the Walkman portable recorder-and-player.

In a sign of its more recent travails, the Tokyo-based electronics and entertainment conglomerate on Thursday reported a net loss of 126 billion yen ($1.1bn) for the fiscal year through March, almost as bad as the 128.4bn yen loss it racked up the previous fiscal year. Annual sales rose nearly 6 per cent to 8.2 trillion yen.

But looking ahead, Sony forecast that operating profit will grow in the year ending March 2016 to 320bn yen from 68.5bn in the previous year.

Though below the average analyst estimate of 408bn yen, according to Thomson Reuters, this year’s target would still be Sony’s biggest annual operating profit in seven years. That would mark another milestone in chief executive Kazuo Hirai’s long haul to pull the Tokyo-based firm out of years of heavy losses in mass consumer electronics, squeezed by cheaper and more nimble rivals.

Under Mr Hirai’s direction, Sony has axed thousands of jobs and reshaped itself to target expansion in lucrative areas such as sensors used in cameras for popular handsets like Apple’s iPhones. That strategy has vexed influential former executives who have called on the CEO to boost innovation in Sony’s own products rather than focus on cost-cutting.

Despite the behind-the-scenes grumbling by Sony ‘old boys’, investors have welcomed signs of progress at one of Japan’s most iconic technology firms. Shares have risen 46.7 per cent so far in 2015, and year-on-year, the stock has more than doubled, hitting 3,827.50 yen in mid-April, its highest since 2008.

While this push-pull debate between former insiders and current investors is playing out in the background, in the foreground the company will continue seeking to rebuild its operations around its strengths.

Here is what is ailing and what is promising in five of Sony’s key business areas.


Back in the 1960s, Sony dominated in TVs with its own technology called Trinitron, which boasted such a reputation for image quality it won an Emmy Award in 1973. But Sony underestimated the industry’s switch to flat-panel TVs from CRT, or cathode-ray tubes. Sony has lost money in its TV business for the past decade. Samsung leads with about a third of the global TV market share, followed by LG. Sony trails with under a tenth of the market. Last year, Sony split off the TV division as a wholly owned entity. And it’s banking on 4K, with image quality superior to high-definition, or “ultra-HD,” each set costing as much as $25,000. The problem: Rivals are all working on the same.

“Sony management keeps saying the electronics market is shrinking. But that’s a given. Sony in the past came up with products that created new product sectors,” said Yasunori Tateishi, who has written a book on Sony’s woes.

Image Sensors

Image sensors are used in devices such as smartphones, digital cameras, medical devices and self-parking cars, and translate the information of a pictorial image into digital signals. Sony’s sensor technology, known as CMOS, was years in the making and its development was expensive, causing the division to post years of losses. Sony might be finally ready to cash in on the investment. It is moving aggressively into high-end video cameras and SLR, or single-lens reflex, cameras, underpricing powerful Japanese rivals Nikon and Canon.

Sony’s latest cameras can take smooth video of fast-moving objects and shoot video where there is almost no light. Although smartphones have eroded Sony’s Cyber-shot digital camera business, Sony is now wooing professional and upscale amateur photographers. Sony also acquired a 20 per cent stake in medical equipment maker Olympus in 2012, to develop endoscopes and other surgical tools packed with Sony technology, such as three-dimensional imaging and 4K.

Kazunori Ito, an analyst at Barclays in Tokyo, believes that image sensors, along with games, can be counted on to be the new profit drivers for Sony, at a time when restructuring charges are winding down. The cameras are drawing new fans, including Havard Ferstad, a 34-year-old IT consultant and Tokyo resident, who has bought a 200,000 yen ($2,000) Sony camera. “The thing is that Sony has high quality sensors in their still cameras, and they are giving it to consumers at a relatively low price,” he said.

Game consoles

The first PlayStation video game home console, which went on sale in Japan in 1994 and in the US in 1995, has been a hit. With three successors already out, there is almost certain to be a fifth, or PS5. Sony has also delivered popular hand-held machines, starting with the PlayStation Portable, discontinued last year, and the PS Vita.

Sony has only two major rivals in the game-machine business: Nintendo and Microsoft. The PlayStation 4 is at the top, and the PlayStation Network, which has more than 100 million registered accounts worldwide, relays content and services, including games, streaming video, TV shows and chats. The game-networking platform will extend to more devices, such as TVs and tablets. In the US, Sony recently entered the pay-television business with an online package of more than 50 channels starting at $50 a month, called PlayStation Vue, for PlayStation owners in three cities.

“That’s the power of the PlayStation brand, a brand that has been cultivated over the course of 20 years as the core gamers’ system,” said Jeffrey Wilson, senior analyst with, who points to Final Fantasy VII and Metal Gear Solid 4 as strong exclusives. “Right now, Sony needs to give gamers what they signed up for when they purchased a PS4 – a string of good games.”


In 1995, Sony acquired Hollywood studio Columbia Pictures for $3.4bn, a deal which was widely criticised as over-priced. Norio Ohga, president at that time, was a former opera singer and musical connoisseur, with a vision to make Sony an entertainment company. Whenever Sony had a hit movie, such as the Spider-Man series or a popular musical release from artists like Beyonce and Daft Punk, that helped offset its losses in the electronics business.

Striking the right balance between electronics and entertainment has been difficult. In 2009, Howard Stringer, then Sony chief, scoffed at a reporter’s question about whether Sony planned to produce material by Michael Jackson, a Sony artist who died that year, using 3-D technology. Sony later reversed course and produced 3-D versions of Jackson’s music videos, including the post-mortem “This Is It.”

Recently, Sony Pictures suffered from a hacking attack over its movie called The Interview, which spoofs an assassination of North Korean leader Kim Jong Un. The film was released in independent theatres and through internet outlets in December.

“Those interested in cinema and who watch Sony’s films are primarily judging the company by the quality of the films they produce and release, so whether they sell electronics is not really on their minds,” said Maggie Lee, a film critic for Variety. Ms Lee said the hacking woes actually drew more interest in The Interview, and she also had praise for Coming Home, directed by Zhang Yimou, and Sono Sion’s Shinjuku Swan as strong recent offerings.


The Aibo entertainment robot, on which Sony pulled the plug in 2006 under a plan to cut costs, was a perfect example of the “synergy” that has been an elusive goal for decades, creatively bringing together two areas of Sony’s expertise: entertainment and gadgetry. The mechanical pets, costing about $2,000 each, were programmed with a disarming “personality,” drawing fiercely loyal fans. Never mind that only 150,000 of the toy-poodle-sized toys were ever sold. They boosted Sony’s image as an innovator that was more than about just money-making. Stringer’s decision to kill Aibo set off an uproar from the robo-pooches’ owners.

“Sony became too Americanised. It used to be a different kind of company,” said Nobuyuki Norimatsu, nicknamed “Aibo doctor,” of A-Fun, a company of engineers who do repairs for discontinued electronics goods. Last year, Sony ended maintenance services for Aibo. Norimatsu has a Buddhist priest chant prayers for the robotic spirits before taking an Aibo apart. It’s that kind of caring and love Sony needs to reclaim, he said.

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