Sony stuck in Apple’s shadow
By admin on November 4, 2008
Sony is feeling the pressure.
Contending with a cool rival like Apple is not easy: the iPhone, iPod, iMac, i-this, and i-that are highly integrated products that are useful, entertaining, and trends in their own right.
The company has laid down the law in terms of what consumers, shareholders and stockholders alike can expect from a 21st Century company: high growth, reliability, usability, innovation, profitability… the list goes on and on… and on.
On the other side of things, there’s Sony. Sony sells a bunch of highly-differentiated entertainment products, but the company has done very little to integrate its product lines into useful gadgets that the average contemporary person wants, needs and is willing to pay big bucks for. And Sony stockholders are beginning to ask, “Why aren’t we cool?”
With low integration and even lower profit margins (roughly 10% per product), profits are forecasted to be cut in half this year, off 72% from last year.
Sony’s CEO, Howard Stinger, responds (via BusinessWeek):
- “Sony is a very big company,” Stringer says by way of explanation. “Our toughest competitors are niche organizations.”
- Stringer is quick to admit, though, that Sony may face a troubled future if it can’t rival Apple in creating simple software that makes its gadgets fun and in giving consumers easy access to music and videos. Apple’s iTunes store has long made filling iPods a cinch, but Sony’s consumer electronics and PlayStation divisions have only recently started to integrate their offerings with those of the company’s movie studio and music label.
- So Stringer went straight to the source. Three years ago, he hired Tim Schaaff, a top lieutenant of Apple CEO Steve Jobs, and created the title of senior vice-president for software development for him.
- Stringer is clearly hoping Schaaff can seed Sony with Apple’s Silicon Valley entrepreneurial culture. Stringer has given Schaaff unprecedented freedom to conquer resistance and boost cooperation among Sony’s myriad—and often warring—units. Schaaff has also served as something akin to secretary of state, working with other companies to help make Sony products more appealing.
- Schaaff managed to convince studio executives that the PS3 network could provide a new outlet for their movies—and serve as a counterweight to Apple’s growing clout in the market for downloads. At its launch on July 15, the PlayStation Network offered both rentals and purchases from six of the seven largest movie studios. To many at Sony, the deal signaled increasing cooperation among the PlayStation team in Northern California, Schaaff’s group, and Sony’s film division.
Read the full article, Sony chases Apple’s Magic.
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