Sony pledges to rise again

Scott Tong Apr 12, 2012

Kai Ryssdal: We start today with a different electronics company. One in a very different circumstance. And maybe the best way to set it up is to ask this question: How many gadgets made by Sony do you own?

Yeah, that’s the problem. The one-time standard-bearer for the conglomerate known as Japan Inc. has lost money four years straight. Earlier this week, it announced the the latest hit: $6 billion in red ink.

So this morning, brand new CEO Kaz Hirai talked up his turnaround plan: focus on this, downsize that — 10,000 layoffs.

But the prospects for Sony? And long-term for Japan Inc.? Marketplace’s Scott Tong reports.

Scott Tong: The corporate name Sony has two roots: Sonus is the Latin word for sound,  and “sonny boy” is a Japanese term for a young pioneer. Indeed, the company founders — here on this archive tape from 1950 — were first in transistors, TVs and audio.

But now, CEO Kaz Hirai talks of returning to glory. He spoke this morning in Japanese; here’s an interpreter.

Kazuo Hirai: The world expects Sony to surprise them with attractive and innovative products and services, things that represent Sony’s return to glory.

The first step to that return is clear to MIT business professor Michael Cusumano.

Michael Cusumano: First priority is save the mothership, make sure the company doesn’t go bankrupt. And then second, get back to being a leader in innovation.

Sony does lots of things: finance, chemicals, medical products. But under Hirai, a core focus will be mobile electronics — phones, laptops and tablets you walk around with, from the inventors of the Walkman.

Here’s Michael Levin at Consumer Intelligence Research Partners.

Michael Levin: Their ability to miniaturize and take advantage of mobile technology would be appropriate for them to do more with.

Of course another giant brand already does that — it’s based in Cupertino, rhymes with ‘chapel.’ Sony is behind in every big category.

Take video on demand. Sony has a product.

Sarah Rotman Epps: The problem is, consumers have never heard of it.

Analyst Sarah Rotman Epps is with Forrester Research.

Rotman Epps: You think about how much resources Netflix puts behind acquiring new content and acquiring new customers and promoting its content. Sony has put a fraction of the effort.

Today Sony also talked up its camera and gaming business. Notice TVs are missing. The division’s lost money eight years straight — everyone makes them now, and profits are thin. And Japanese factory costs are high; it’s a rich country.

Cusumano at MIT says another broader problem for Japanese firms in general is they look inward, and miss big world trends.

Cusumano: They really missed the Internet. All the Japanese companies missed that. They were just really focusing on boxes.

It’s a tough story, but does this mean Japan in general is doomed?

Not to Tokyo venture capitalist Yoshi Hori. He says there’s old Japan and new Japan.

Yoshi Hori: If you see from outside, you only see Toyota, Sony and Honda. You don’t see new Japan so easily, because new Japan tends to be more shy.

He says manufacturing cars and electronics is starting to yield to new sectors: e-commerce, gaming, clean energy. Where old-line companies like Sony fit into that future is an open question.

I’m Scott Tong for Marketplace.

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