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Sony Businesses The Almighty Buck Hardware

Sony Is Done Working For Peanuts in the Hardware Business, New CEO To Detail Shift Away From Gadgets (bloomberg.com) 132

Kenichiro Yoshida, who took over as chief executive officer in April, is set to unveil a three-year plan on Tuesday that embraces Sony's growing reliance on income from gaming subscriptions and entertainment. From a report: The transition is already happening: even though the company sold fewer hardware products such as televisions, digital cameras, smartphones and PlayStation consoles in the year through March, it was able to post record operating profit. It's a tectonic shift for a company built on manufacturing prowess. Sony popularized transistor radios, gave the world portable music with the Walkman and its TVs were considered top-of-the-line for decades. With the rise of Chinese manufacturing, making and selling gadgets has become a business with razor-thin profit margins. Investors have applauded the transformation that's been under way since Kazuo Hirai took over as CEO in 2012, with the shares climbing more than five-fold amid a turnaround.
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Sony Is Done Working For Peanuts in the Hardware Business, New CEO To Detail Shift Away From Gadgets

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  • And other good hardware that they used to make, instead of becoming reliant on gimmick revenue sources. A Playstation with OtherOS too.
    • I owned two Trinitron TVs. One got color-spotty in the upper-left corner (sorry STTNG) and was so warm that our cat made a bee-line for it whenever we turned it on. The other lost the ability to controls its own volume and spent much of its days with foam and pads of paper duct-taped to the side speakers to regulate the sound. (It's a wonder I had a girlfriend back then.)

      So, is Sony "good" hardware? Meh...maybe for the time, but quality enough to trust the name 25 years later? Nope.
  • Huh... unfortunately the change is a bit late for Sony Online Entertainment which was sold off in 2015 and renamed "Daybreak Games". Then came the layoffs.

    • by Anonymous Coward

      This wouldn't have changed anything with regard to SOE. Their only real claim to fame was buying out Verant, but maintaining Verant's mismanagement.

  • Samurai say much ress ovah-head to manufactah nussing.
    • Are there mod ratings for "Racist"?
      • Actually, I don't believe the difficulty that native Japanese have pronouncing "L" has anything to do with race... but then again, I was born and raised there (total fucking immersion, too) and I've never had any difficulty but I'm white so perhaps you have a point. ;)
  • by sjbe ( 173966 ) on Monday May 21, 2018 @11:17AM (#56647084)

    It's a tectonic shift for a company built on manufacturing prowess.

    Sony was never really a manufacturing juggernaut though they certainly were/are competent at it. Manufacturing was always a means to an end for them. Their core competency was in engineering hardware historically and they were quite good. They ran into problems with software which to this day they still struggle with on many of their product lines - at least the bits of it that interface the customer. A lot of this was because they historically had a culture of hardware engineers who didn't really grok software. That's changed somewhat in recent years for some of their divisions though not all.

    Sony is/was quite competitive on non-commodity hardware or hardware where they have patent protection. For example their mirrorless cameras are really good and they supply the camera sensors to much of the industry for digital cameras. (for example the iPhone has a Sony camera sensor in it) I use one of their A9 mirrorless cameras and it's a remarkable bit of tech. (though the software interface still sucks)

    Sony popularized transistor radios, gave the world portable music with the Walkman and its TVs were considered top-of-the-line for decades

    And all that was engineering prowess, not manufacturing prowess. Sony never was a low cost manufacturer so they usually had to compete towards the high end of the market. None of that has changed. The company has also diversified quite a lot. Sony is a huge insurance and financial services company. They also are big in entertainment (games, movies, etc) They're best known for consumer electronics but that provides increasingly less of their revenue anymore.

    • And all that was engineering prowess, not manufacturing prowess.

      They never understood that every part of the product has to be well executed in order to charge a premium. They invested a ton in R&D, and not nearly enough in manufacturing. That resulted in capturing only early adopters, and not the mass market. Once products, like DVD players, became commodities, Sony was blown out of the water by companies that could produce higher quality for a lower price.

      • by sjbe ( 173966 )

        They never understood that every part of the product has to be well executed in order to charge a premium.

        True. Especially true for their software. I have a Sony A9 camera. It's a fantastic piece of hardware with amazing capabilities. But the one glaring flaw it has is that the software interface and network connectivity is just atrocious. (to be fair I could say the same about Canon or Nikon) Sony built an amazing device but didn't get the user interface bit because they are just clueless when it comes to that. That's been my experience with a lot of Sony kit. Good hardware, interesting design, well ma

      • And all that was engineering prowess, not manufacturing prowess.

        They never understood that every part of the product has to be well executed in order to charge a premium. They invested a ton in R&D, and not nearly enough in manufacturing.

        There are two Sonys, there is the old Sony that made stuff that lasted for ever and ever amen, and there is the new Sony which came into being approximately around the time of the compact disc which fell flat on its face in the manufacturing department, as you say. I have an old Sony bookshelf stereo that just needs pots cleaned or replaced which is still working really nicely, and when I was a kid I had a Trinitron TV for a long time that just kept on working well beyond expectations despite substantial ab

    • It's a tectonic shift for a company built on manufacturing prowess.

      Sony was never really a manufacturing juggernaut though they certainly were/are competent at it. Manufacturing was always a means to an end for them. Their core competency was in engineering hardware historically and they were quite good. They ran into problems with software which to this day they still struggle with on many of their product lines - at least the bits of it that interface the customer. A lot of this was because they historically had a culture of hardware engineers who didn't really grok software. That's changed somewhat in recent years for some of their divisions though not all.

      Sony is/was quite competitive on non-commodity hardware or hardware where they have patent protection. For example their mirrorless cameras are really good and they supply the camera sensors to much of the industry for digital cameras. (for example the iPhone has a Sony camera sensor in it) I use one of their A9 mirrorless cameras and it's a remarkable bit of tech. (though the software interface still sucks)

      Sony popularized transistor radios, gave the world portable music with the Walkman and its TVs were considered top-of-the-line for decades

      And all that was engineering prowess, not manufacturing prowess. Sony never was a low cost manufacturer so they usually had to compete towards the high end of the market. None of that has changed. The company has also diversified quite a lot. Sony is a huge insurance and financial services company. They also are big in entertainment (games, movies, etc) They're best known for consumer electronics but that provides increasingly less of their revenue anymore.

      Imagine if GM, Ford or Chrysler (back when they existed, and weren’t cobbled together with other companies, Frankenstein’s monster style,) decided to get out of automotive manufacturing to focus entirely on gasoline refining.

      That’s how this move strikes me, and begs the question, “what happens when the world can’t afford or just turns away from petrochemical fuels?” They DIE is what happens, and they die because their leadership was stupid and short-sighted, and the r

  • TFA shows a nice graph of their hardware sales by year. It's interesting to note that smartphone sales dominated until around 2015. Incidentally, 2015 was the year they came out with their first flagship phone featuring a fingerprint sensor (Xperia Z5). Smartphone sales started declining ever since. I wonder if it has anything to do with their moronic decision to limit fingerprint sensor functionality to the EU market only. It will be interesting to see how the Xperia XZ2 does considering it's the first fla
  • by argStyopa ( 232550 ) on Monday May 21, 2018 @11:20AM (#56647104) Journal

    ...when your product has become a commodity, you have three choices:

    1) try to buy your way to control of the market. If there are high capital barriers to entry in the field, and you already have a lot of the costs invested, you have a chance. As a 90% dominant player, you might be able to undercut/destroy any new entrants before they can get established (or better, make it clear that you COULD do this to intimidate any investors contemplating getting into your market enough to dissuade them from even trying).

    2) upscale: use your ostensible experience and sunk investments with the product to deliver more product for the same price. If they can make a walkman that plays mp3's, you offer one that plays mp3 AND will pull content from the web/youtube. If they copy that, you offer one that's waterproof, etc.

    3) sell your brand and GTFO. Parlay what is ostensibly a good reputation into short-term cash by licensing your brand to one of the better commodity producers for a fee. They get to make their shitty knock-offs but put your label on it so they can gain extra sales (and possibly a slight margin) trading on your name/history, while you just get $ for doing nothing. Then you can fire your workers, sell your factories, and make serious money with no capital employed at all as long your reputation is worth something for them to pay for it, which is probably a while.

    The problem with choice 1 is that sometimes it's simply not possible, particularly when your competition is in China.
    The problem with choice 2 is that with electronics the capital investment is rarely a big barrier to entry (unless you're talking like chip-fabs or something). A quick reverse-engineering (or even simply knowing something is conceptually possible) is enough to allow low-cost commodity competitors to quickly catch up to you without bearing much of your research/dev costs. ...which is why we see #3 as the very common option. For example, I've seen that result for a certain brand of food products - a company with a deep historical reputation as pretty much become little more than an office managing the licensing of their brands.

    • ...when your product has become a commodity, you have three choices:

      There's a fourth option. Go up market. Sony really missed the mark on that one. They had the biggest name in electronics, and blew it because:

      • They tried to force vendor lock-in. Sticking most of their loyal customers with abandoned [wikipedia.org] technology. [wikipedia.org]
      • They didn't maintain a reputation for quality.

      As a result, the Sony brand became synonymous with throwing money away.

      • by Gr8Apes ( 679165 )

        ...when your product has become a commodity, you have three choices:

        There's a fourth option. Go up market. Sony really missed the mark on that one. They had the biggest name in electronics, and blew it ...

        They did, for 1 simple reason - they hate their customers. Check out the list of things they did to their customers, including what's effectively a bait and switch practice where they sold a few expensive pieces of equipment prior to mass producing them with cheap chinese knockoffs. Inserting root kits into their CDs. DRMing their content to hell and back. And more... much more. Customers will only stand for that abuse for so long before buying the clone from the company producing your sanctioned cheap knoc

    • by AmiMoJo ( 196126 )

      Many Japanese brands tried a different option.

      4) Abandon the low end of the market and only produce high end products with good margins. Sony TVs are an example.

      Like Apple they make aspirational goods.

      Problem now is that people like LG are making TVs that are just as good. Maybe better. They cost slightly less and their margins are bigger due to lower costs manufacturing in Korea.

  • Junk (Score:4, Informative)

    by Thelasko ( 1196535 ) on Monday May 21, 2018 @11:20AM (#56647106) Journal
    They're getting beat up in the hardware market because they didn't invest in quality control. Sony used to be a premium brand. Rather than invest in high quality products, they tried to force vendor lock-in [wikipedia.org] through a variety of boondoggles. [wikipedia.org] This was a poor investment choice as only one of these technologies took off (Blue-ray, but only kinda). Had they spent that much money on quality, they could charge a premium over the competition.
    • Yeah. Once upon a time Sony was synonymous with high-quality equipment. Not so much anymore I guess. Sad. I had Sony VCRs and Sony monitors and they were great.
    • Why do you call MiniDisc a "boondoggle"? It was decent idea to try at the time, in my opinion. You gotta try new things in the market to stay competitive. Some will secede and some will fail, and hopefully average out for the better.

      True, they could have managed it better, such as trying to increase market share over profits by having more lower-end player options. Recording labels would then offer more choice in the format. Limited content choice was a problem. Perhaps they would have eventually got a clue

      • Why do you call MiniDisc a "boondoggle"?

        It depended on expensive technology that was obviously going to become outdated in short order. It doesn't matter whether you think MD was obsoleted by hard drives shinking (Seagate 1.8 MB CompactFlash drives, as seen in the iPod) or by flash getting cheaper; Sony was working with smaller and smaller hard drives in their Vaio line and with flash memory in their portable voice recorders, so they should have been able to extrapolate trends in both markets and figure out that MiniDisc was a bad idea at best. B

        • by Tablizer ( 95088 )

          Cheap/small harddrives didn't solve the problem of how music gets into the device. Sure, we have Internet music stores/services now, but bandwidth was expensive back then, and only a small percent of consumers were connected to dialup services of ANY kind. Nobody could predict how, when, or if it would get cheap enough. Compression algorithms of the time were proprietary and nobody could predict who would sue who and how much. (There was a legal kerfuffle over the MP3 format for a while, but vendors threate

          • The word "typically" gives it away: doing such "typically" worked for them before.

            No. It never worked for them. Betamax finally flopped, because they did the same kind of dumb crap, for example.

            • by Tablizer ( 95088 )

              The Betamax/VHS battle could have gone either way: people still debate endlessly which is "better" and they fought almost neck and neck for a while. The "length problem" of early Betamax was quickly solved. Anyhow, Sony still made big profits selling VHS VCR's.

              • The Betamax/VHS battle could have gone either way: people still debate endlessly which is "better" and they fought almost neck and neck for a while. The "length problem" of early Betamax was quickly solved. Anyhow, Sony still made big profits selling VHS VCR's.

                Either you don't understand the argument, or you're just disingenuously trying to win it anyway. The Betamax/VHS battle DIDN'T go either way, and it didn't first because early tapes were too short, and second because of Sony's licensing restrictions. Even though most porn was shot on Betacam SP at the time, Sony wouldn't put porn on Beta.

                Sony could ruin ice cream with licensing agreements.

    • This was a poor investment choice

      The ones that don't pay off usually are, however it is worth noting that Minidisc was a victim not of Sony itself, but of technology. Minidisc was revolutionary. I owned a few players and my local store even carried music in minidisc format. But all the things that made it great compared to CD: small size, high quality, ability to record and edit easily, reduced skipping, and better battery life was overshadowed by the dawn of portable MP3 players. Claiming they weren't investing in high-quality products is

      • They are a company that really catered to a wide variety of groups and the quality of Sony products was entirely dependent on your own budget.

        That right there is the problem. If you are an up market brand, you can't make cheap crap for Walmart and put your badge on it. You need to protect your reputation by consistently putting out a high quality product. If you want to make cheap crap, brand it as something else.

        • If you are an up market brand

          They're not. They are an everything brand. Not every company needs to fit into one category or another.

          Ford will happily sell you the fucking awful Ford Ka as they will a Ford GT. Nikon will happily throw out a garbage Coolpix at Walmart as they will sell D5s to professional photographers. Samsung will sell shitty TN panel mini TVs with garbage pictures to hotels, just as they will produce professional IP5X rated panels for continuous operation in mission critical services.

          Sony was never an up market brand

  • by Anonymous Coward

    And here I thought that Sony just bought a stake in Peanuts from DHX Media.
    http://money.cnn.com/2018/05/14/news/companies/peanuts-dhx-sony/index.html

  • Services are lame. Sell cool hardware or die, Sony. Be who you are.
  • I have to admit I'm slightly bothered by the trend, overall, in shifting away from building physical things to selling virtual stuff.

    Right now, lots of companies are finding it's easier to make good profits by selling subscriptions to stream content to people than it is to actually BUILD something tangible, and then deal with shipping it out to be sold, handle repairs of the broken units that come back, etc. etc. (Look at IBM and their selloff of their entire notebook computer division to Lenovo, in favor

  • Is it taught in MBA classes now that the only way to make money is to sell subscriptions and non-tangible goods? That makes sense in web startup land...(how many copycat subscription box services are there? There's at least 2 in each category.) But yeah, it's like the entire manufacturing industry has decided that just because something isn't as insanely high-margin as software, that it should be abandoned.

    Are there any companies not thinking this way? Even GM and Ford probably want to sell you autonomous c

  • Sony has been on my boycott list since 2005 due to their attempted (attempted is the keyword here, +1 Linux) cracking of my personal hardware. Hope their "illegal" (we know it isn't really illegal if a corporation does it) practices were worth it. https://en.wikipedia.org/wiki/Sony_BMG_copy_protection_rootkit_scandal [wikipedia.org]

    Also, Sandisk is on my shit-list too for refusing to honor a mail-in rebate for $5. I hope they enjoyed missing out of $1000s (literally, thousands (I like storage)) of dollars in sales to sav

  • Honestly, I completely forgot they were still a brand. I had to think for a second about what they still make.. minidisc, no, playstation 3? 4? It's basically a Japanese xbox, right? Like a Switch with prettier graphics?

    Is Sony still relevant? vizio makes TVs, lenovo makes laptops, google and apple make cell phones... Samsung makes washing machines... what does Sony still do anymore?

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