Will new CEO shift Sony's focus?

By Michelle Kessler and Jefferson Graham, USA TODAY

SAN FRANCISCO — The company that created the Walkman, PlayStation and Trinitron TV is struggling to keep up with the fast-moving consumer electronics industry.
Sony, once widely regarded as the world's best electronics maker, has lost ground to scrappy competitors such as Samsung and Apple in several key markets. That's a big reason CEO Nobuyuki Idei resigned Monday, electronics analysts say.

Sony, a conglomerate that also has music and movie divisions, will now be run by Howard Stringer, a television executive who previously ran Sony's U.S. operations.

In an e-mail to employees, Stringer pledged to make Sony "the strongest electronics, entertainment and technology company it can be."

Critics wonder whether he has the experience to save electronics. Stringer "does not appear to have extensive know-how with electronics technology and production," Merrill Lynch equity analyst Hitoshi Kuriyama said in a research note Monday.

"What that suggests, in the end, is that Sony's more about entertainment and less about technology," says technology analyst Tim Bajarin at Creative Strategies.

Electronics, not including video games, account for about 65% of Sony's revenue but posted a loss in its most recent fiscal year.

Sony spokesman Mack Araki says Stringer's time as head of Sony Corporation of America gave him all the electronics experience he needs.

A focus on entertainment could help Sony electronics, Bajarin says. Sony could use its entertainment muscle to push its electronic gadgets, much as Apple's iPod digital music player has benefited from the popularity of its iTunes online music store. Sony has long promised such synergies, but they're rarely realized, Bajarin says.

To do that, Stringer must first tackle problems in several key markets, including:

•Digital music players. Sony was once synonymous with portable music, via its Walkman line of cassette tape and CD players. The iPod changed that. More than 10 million have been sold since 2001, at a time when Sony was still struggling to find consumer acceptance for its long-dismissed MiniDisc line. Sony last year finally introduced a line of hard-drive-based digital music players. But unlike all competitors, they didn't play the dominant MP3 format. Sony finally relented earlier this year but remains behind.

•Televisions. Sony dominated the market for traditional, cathode ray tube TVs, with its Trinitron line commanding a premium. Sony was so determined to protect this cash cow that it missed the transition to flat-panel televisions, says display analyst Tom Edwards at Pacific Media Associates.

While Sony stalled, Samsung and Sharp took an early lead. When Sony finally started making its own flat-panel sets, it had to buy major components from competitors. In the past, "In that kind of emerging consumer electronics market, Sony would have been first," says electronics analyst Brian O'Rourke at researcher In-Stat/MDR.

Sony spokesman Rick Clancy says a joint venture with Samsung, scheduled to start later this year, should solve Sony's component problems. He says Sony flat-panel TVs are selling well, often making the company No. 1 in U.S. sales.

•Digital photography. Since digital cameras were introduced in the late 1990s, Sony had long been the market-share leader. Last year, Sony was dethroned by Kodak, which got there with aggressive price cuts and marketing, says market research firm IDC. Kodak sold 4.9 million cameras, vs. Sony's 4.3 million.

•Portable devices. Sony had a hit during the tech boom with its Clié personal digital assistant. But sales tumbled in the past two years, in part because of competition from other Sony products.

The PlayStation Portable (PSP) handheld video game system, which is out in Japan and will be released in the USA this month, also plays digital music and movies, for example. Sony stopped selling Cliés in the USA last year and plans to pull out of the worldwide market this summer.

Not all Sony products are in trouble. Its Vaio laptop line has a strong following. Its PlayStation video game system is a huge success and outsells all of its competitors combined, In-Stat says.

Still, the whole company needs an overhaul, says Richard Doherty, an independent analyst at the Envisioneering Group. Sony suffers from silos — independent groups that don't communicate and sometimes compete, he says.

In storage, for example, "You had the MiniDisc team vs. the hard-drive and flash-memory team — all these wonderful designers, and they were pitted against each other," Doherty says.

That structure contributed to the "Sony shock" of 2003, electronics analysts say, when the company reported a loss of almost $1 billion in one quarter. Later that year, Sony announced 20,000 job cuts and a $3.1 billion restructuring plan.

Stringer's challenge will be breaking down internal walls to make Sony even more efficient. He'll also have to get Sony's electronics and entertainment arms to work better together. One good example of how it can be done: Sony plans to include a copy of Spider-Man 2, a movie from its entertainment division, with PSPs sold in North America.

It's still unclear who Stringer will tap to help him. There was speculation Monday that Andy Lack, CEO of Sony BMG Music Entertainment, would be promoted to replace Stringer as head of U.S. operations.

But Sony said Stringer will continue to head Sony's Entertainment Business Group, including film and music operations, as well as lead Sony Corporation of America.

Also in doubt is the future of Ken Kutaragi, an electronics executive known as the father of the PlayStation. Kutaragi has long been considered a CEO candidate. Instead, he was demoted as Stringer got the job. That may be a chance for a rival to lure him away, In-Stat's O'Rourke says.

격세지감이라는 말이 여기서 쓰이리라.

불과 몇년전만해도 Sony는 삼성의 벤치마킹 대상이었는데, 이제는 삼성이 인수한다는 얘기까지 돌고 있고,

USA Today같은 권위있는(권위없나? -_-) 곳에서도 주요 시장을 삼성에게 잠식당했다고 표현을 하니..