Saving Sony

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During the week, PageOne reported that the loss-making Japanese electronic giant, Sharp was sold off to Foxconn for just $3.5 billion, well, another Japanese electronic giant might be transforming into a dwarf.

Sony Mobile unit has packed its bag and luggage from Atlanta Georgia to Silicon Valley to save the company from total collapse. However, Sony did not carry many of its employees along. Sony Mobile US, cut thousands of jobs before embarking on the journey.

Business has not been good for Sony for not just Sony Mobile but Sony as a whole. While the mobile unit used to command 4% of the US market share, it now struggles to have 1% of the market, according to IDC. Sony’s Xperia Z5 received positive rating for its camera capabilities, sales have been dismal with only Amazon and Best Buy listing the devices in the US. Sony Mobile’s decision to move to Silicon Valley is to get close to AT&T and other mobile carriers for synergy, however, Its sales in Japan cannot save the company.

While it is an understatement to say this is not the best of time for Sony, the bigger picture paints a more delicate scenario for the company. Apart from its credit rating being cut to junk by Moody’s credit rating agency, Sony surprised the world in February by selling its VAIO personal computer unit for a paltry sum of $500 million.

In a deal with less details about core rationale for the price accepted by Sony, VAIO was sold to Japanese Investment Partners. In case you think Sony has gone bonkers for making such move, you are wrong. It turned out that Sony has been recording loss upon loss for a while now. Moody’s advised Sony to repair its battered ‘balance sheet’.

Sony issued a profit warning to its investors by booking an annual loss of $1.08 billion loss. To save itself from itself, Sony will be cutting about 5,000 (3.5% of total work force) jobs globally to save just $5 million on its balance sheet. Moreover, the list of Japanese electronic giants falling is increasing by the day. Sharp, Sony and Panasonic. However, their foreign rivals such as Apple and Samsung are having a field day.

Learning from Sony

*Sony did not have an alternative strategy. The company lost out in the premium category and the low-end market, it continued with the same approach for too long.

*Multiple brands should not derail any company but coordinated to get efficiency and synergy.

*Get out of a market you have lost and find another market. Sony wants to do well in all markets, but did not get any.

*When you get into a good market, promote yourself. Sony has not done a good job of promoting itself. Its mobile phones are sold in Nigeria with little or no marketing supports.

So what should Sony do? Some analysts are already saying Sony should stop making phones and focus on consumer electronics, gaming consoles and entertainment. This is a good idea but it needs proper strategy to even compete in some of those areas.

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