Today, in an astonishing move, Sony CEO Nobuyuki Idei, has stepped aside and the consumer electronics giant has promoted former head of Sony Corporation of America Howard Stringer to the position of chairman and chief executive officer. Stringer has one heck of a task in front of him, however, because Sony hasn’t been doing very well in the last few years and this year looks like another one where they’ll be using more red ink than black ink in their financials.
There are a lot of challenges facing Stringer in his new position, but perhaps he’s open to some friendly advice…
- Proprietary Interfaces are Dinosaurs — every time Sony has released a product in the last few years it has had either a proprietary implementation of an open design or a completely proprietary core technology. For years, Sony has been selling digital cameras, for example, that use its proprietary, expensive, and hard-to-find “Memory Stick” rather than the more common digital memory formats. Customers haven’t been impressed.
- Technological Leadership Is Vital — The industry-creating Walkman series should have been extended to include MP3 players years ago. Sony just missed the boat on this completely, and Apple now has a commanding lead with its phenomenally popular iPod players.
- The Film Industry Is Too Volatile To Retain — The logic was sensible: buy Metro-Goldwyn-Mayer and the company would have the full circle of media production, distribution and playback. Problem is that the world changed during this time, peer-to-peer showed up, people started renting films from online sites like Netflix, and, well, that archive of great movies suddenly wasn’t worth as much as expected. Worse, the film industry is terribly fickle and even with video distribution and foreign releases, the fact is that MGM hasn’t had too many hit movies in the last few years other than Spiderman.You can’t rely on hit movies to boost profits!
- Only Packaging and Marketing Matters — the consumer electronics industry has been revolutionized by manufacturing outsourcing in a way that few other industries have seen, and no major corporation should be designing its own chips, producing its own LCD panels, assembling its own products. Modern consumer electronics is all about style, innovation and marketing. Apple Computer gets it. Dell gets it. HP doesn’t. And, of course, Sony doesn’t. Jettison the chip making business, Mr. Stringer.
- Your Competitors are Always Changing — as recently as a decade ago, no-one would have viewed the Koreans as serious competition to the Japanese leadership of the consumer electronics industry, but Samsung has proven a nimble competitor. And in Japan, Sharp and Matsushita Electric (Panasonic to you and me) are drinking Sony’s tea, while Sony flails. Instead of sitting on your laurels, it’s time for Sony to identify a smarter senior management team.
- The Playstation Is a Winner, Leverage It — The reports I’ve read indicate that Playstation inventor Ken Kutaragi has resigned from the Board of Directors and is losing his position as executive in charge of semiconductor and home electronics. This sure seems like a bad strategic move to me. Instead of pushing Kutaragi-san out of the company, leverage his expertise and design genius to apply some of the Playstation magic to the rest of the Sony product line. Imagine a TV that enabled customers to dock their cameras or media players and view data on the big screen or stream data onto their small units. Imagine a Wi-Fi friendly family of electronics, wireless Playstations, and … well, the possibilities are endless, but success will come from creative thinking, not pulling Kutaragi away from home electronics and giving him just the game division.
- Personal Computers as a Business Sector is Dead — IBM has figured it out and is selling its PC division to a Chinese manufacturing corporation. The straw that broke the proverbial camel’s back at HP was former CEO Carly Fiorina saddling the successful printer division with its failing PC division after the terrible Compaq acquisition. Dell gets it with its focus on customization and cost-per-unit. Gateway doesn’t get it and is dying. Sony doesn’t seem to get it and their units are marginalized and very rarely spotted in technical circles. Let PCs go.
To be fair, former CEO Nobuyuki Idei did start moving the company in the right direction with his leadership of Sony’s three year major restructuring effort, but the focus is wrong. Aimed at reducing fixed costs by over $3 billion by “rationalizing” production, streamlining procurement and cutting jobs, Sony should instead be focusing on regaining its leadership position and creating world-class products. Cutting costs is a result of reinventing a company, not a goal. Mr. Stringer, this is your chance to fix this error.
Overall, I’m enthused. I used to look to Sony Corporation for innovation in consumer electronics and for years swore by their state-of-the-art Trinitron televisions, but now I look around my home and find that I have no Sony products at all. Toshiba TVs, Apple computers, Denon stereo gear, Nikon cameras, and an Apple iPod. Not a single Sony logo in sight.
It’s time to turn that around, Howard. Resist the urge to think of Sony as an entertainment company — even though that’s your background as a former CBS executive — and reinvent one of the best consumer electronics brands in the world. Bring out world-class products, competitively priced and marketed using 21st century techniques (e.g., online!) and everything will be coming up roses.
Further reading: BusinessWeek, Reuters Newswire, Financial Times and Sony Corporation Financials.