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Sony Trying to Restore Its Dominance As Electronics Giant

Posted on: Wednesday, 28 September 2005, 12:00 CDT

By Kyodo News International, Tokyo

Sep. 28--TOKYO -- Consumer electronic giant Sony Corp. is testing the rough seas of the digital electronics market again with a sweeping restructuring plan unveiled last Thursday, including a reduction of 10,000 employees-- some 7 percent of its global workforce-- and the closure of 11 production facilities.

"I cannot easily see Sony's originality," said an executive of a major electric machinery manufacturer, looking at Sony's Bravia brand of liquid crystal display television sets released on Sept. 14.

For electric machinery producers, thin-type TV sets, a growing field, are particularly important to their overall brand. "Unless we win here, we cannot profit," said Kunio Nakamura, president of Matsushita Electric Industrial Co., pointing to the importance of the market.

Prices of liquid crystal display TV sets on sale in shops are said to have gone down 30-40 percent in the last half a year.

For Sony which delayed developing such TV sets despite a successful experience with cathode-ray tube TV sets, the additional investment in developing them, a step other manufacturers are well beyond, is a large handicap.

The advance sales of Sony's LCD Bravia brand in the United States are said to be favorable, but industry analysts said whether Sony can realize novelty, its traditional strength, depends on the results of the domestic commercial battle.

In the past, Sony marketed its Walkman by attracting young people and music fans who wanted to listen to music anytime and anywhere. But that field where the company was previously unchallenged has since undergone drastic change.

The iPod, produced by Apple Computer Inc., a company that formerly specialized in personal computers, has been sweeping the Japanese market, and its share of the portable music player market has now reached more than 40 percent.

Koichiro Tsujino, responsible for portable music players at Sony, said, "Apple's strategy to create a new market with its technological power was what Sony was once good at." Sony products are now on the defensive.

Sony's decline represents a Japan-U.S. reversal in producing goods, as American companies gain increasing market share in areas once dominated by Japanese manufacturers. Another example is in the field of game machines, where Sony holds an overwhelming share, with Microsoft Corp. challenging the competition with its Xbox 360.

In the three months since he arrived at the company, Sony Chairman and CEO Howard Stringer, along with President Ryoji Chubachi, has read opinions from 2,000 employees as well as e-mails from customers and analysts in order to work out the restructuring plan.

One employee said, "At various places throughout the company, similar products are being developed," while another said, "Development policies have been changing time and again, producing no results." Stringer told a news conference last Thursday that Sony has so far been unable to realize fixed target numbers but said the company will hit the targets hereafter without fail. Unlike former management forced to operate in face of the information technology recession, the new management is backed by an economic recovery.

Takashi Okuda, an executive director of Sharp Corp., admitted the continued potential of their rival, saying, "The strength of Sony is its brand power." Sony has a history of hit commodities, including the Trinitron TV screen technology, Walkman music player, and Vaio personal computer. Whether the company can renew its strength as a distinguished electronics enterprise depends on whether or not the company can create innovative products more appealing to consumers than those of its recent attempts, said the analysts.

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Copyright (c) 2005, Kyodo News International, Tokyo

Distributed by Knight Ridder/Tribune Business News.

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Source: Kyodo News International, Tokyo

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