Sony: Ready for a Comeback?

In recent years, market trends have not been kind to Sony. The company has struggled to adapt to changing technologies and consumer tastes. Once a powerhouse, it slipped in stature and lost billions. But now, in its most recent corporate announcements, there may be a glimmer of hope.

Today, companies like Apple, Samsung, Google, Amazon, and Facebook get all the headlines. And rightly so; they are the undisputed tech leaders. It wasn't always that way. Long before smartphones were a thing, Sony ruled consumer electronics. If your TV wasn't a Trinitron, it was second-rate; likewise your CD player, Walkman, and stereo. The typeface logo of SONY stood for innovation and quality.

Getting to the top is hard; staying on top is harder. Somewhere along the way, about when the internet and smartphones got big, Sony lost its mojo. As a whole, the market for traditional consumer electronics, Sony's core strength, withered. Sony got into game consoles when the getting was good, but it seemed to be playing catch-up everywhere else. Several of its Japanese rivals got their plugs entirely pulled, and Sony seemed to be just hanging on by the skin of its MiniDisc.

Three years ago, when the situation seemed particularly bleak, CEO Kazuo Hirai announced a turnaround plan that would abandon laptops, scale back television manufacturing, and instead focus on gaming and phone-camera chips. Now, that plan may be bearing fruit. The company announced that it expected to see an operating profit of $4.5 billion for its upcoming fiscal year through March, 2018. That would be a tidy 73% rise in profits from last year, and would be its highest annual profit in two decades. Its stock price has increased 15% this year, and doubled since 2013.

About a third of Sony's total profits come from PlayStation 4. The PS4 is entering its late life cycle, typically the most profitable part of a product's life, when R&D costs are long paid off, and the hardware design can tolerate cost-cutting. Interestingly, Sony's sales of online games, downloads and streaming are exceeding those of hardware; this suggests that Sony, with the PlayStation Network, is successfully migrating to the increasingly important cloud market.

Sony dominates the image sensor market, accounting for half of the worldwide production. The division lost money last year due to the Kyushu earthquakes which disrupted chip production. This temporary reversal should be overcome this year, as manufacturing capacity is restored and as more and more phones use multiple-sensor designs, particularly dual-lens rear cameras. Sony's struggling phone business is showing a small profit, while the movie business, navigating through its own turnaround plan including a $1 billion write down last year, hopes to return to profitability.

After years of elusive profits, the prospect of a solid jump in operating profit is good news. More important, the turnaround appears to be working. Now, instead of playing defense and downsizing, can Sony get back on the offense, and invent new products that bring real growth?

COMMENTS
pw's picture

Sony's Customer Service and warranties are a scam..
The have their CS service in Boca Ratton Florida.. The consumer laws in Florida protect Sony.. Sony most usually won't honor (and don't have to in that State)..
The idea the Sony is now making uber expensive $$ Loudspeakers is laughable..

hk2000's picture

Just a customer who had a bad experience and holding a grudge. Or a Samsung shell.

hk2000's picture

even today with UHD TVs, if your TV is not a Sony, it's second rate!!

brenro's picture

Kuro's owned the plasma era. JVC is on top in projectors. Sony's LED TV's are only rated so so, and their first foray into OLED's are rated below the LG's they buy their panels from on most review sites.

thehun's picture

Yes it's said but true. Samsung dominates the CE market right now and more. Sony without PS4 would have been bankrupt awhile by now.Of course I'm looking at this from N.A.market they probably do much better in Asia especially in Japan

C.WYATT507's picture

I have always liked Sony's upper lcd lines.i own the XBR930D and it is better than any Samsung in natural picture quality. And i just bought Sony's new UBP-X1000ES 4K blu-ray player and it is also awesome.Sony still builds quality products from my experience. Definitely better than Samsung crap.

John_Werner's picture

I count Sony fortunate. They lost their core market of home entertainment, but they tagged on to a very strong niche market which would be “gamers”. Ken is pretty on-spot with their trajectory. I’d say it happened something like this. In the TV game in The US it was Zenith and RCA. When I was a kid if your family didn’t have a Zenith or RCA console TV/stereo or big-ass wooden TV set you were instantly delegated to the lower middle-classes or, worse, conservatives. Then in the eighties those behemoths weren’t cool but a 19” and bigger Sony Trinitron was. As well as a “component” stereo system along the lines of Sony, Pioneer, Sansui, or Kenwood. Sony was kind go the TV market though without doubt surpassing the previous juggernauts of the USA: Zenith and RCA. It would get, however, more competitive. Sony, though still a powerhouse from the AM transistor days on up to the Trinitron, was a top-tier choice. But in Hi-Fi they had their adversaries. Panasonic made a hell of good range of receivers, Sansuit and Kenwood hung on tight for a while, but it was Pioneer who pushed the RMS watts per channel rane to it’s logical end. In that it made a name for itself in home, not to mention mobile Hi-Fi, while Sony was losing some ground to other brands like Mitsubishi. Sony rebounded with The Walkman. The first personal stereo solution to make a big splash in the market place. Along the way digital audio was beginning to be something more than theoretical and, again, Sony was right there even having a big input with Phillips as to the final format. The Disc Walkman would follow. At this time Sony was still a big player in home Hi-Fi. I’ll wager the last truly great home Hi-Fi component the company ever produced was the, at the time, tour ‘de force, TAE-1000 digital multi-channel A/V pre-amp/processor. I speak from firsthand experience as I actually still use one today. While this seemed like Sony was at the forefront of audio by the bits something happened. Sony stalled when it came to audio over the internet and all things related. A personal audio player name Rio trounced everyone, big boys and all others, to being the first widely available MP3 audio player. Sony resisted, possibly because they were sitting on a mountain of valuable music and media that had previously had immense value if sold on physical media to which they were Columbia a veritable juggernaut. Whoa unto those whose hubris clouds their vision. Sony tried to just keep doing what they were doing and with mixed results. Their TVs never quite regained their market dominance even as this and that Bravia set became benchmarks upon their release. Their stereo components were just “one of the brands” you could purchase….not, perhaps, the first choice. I can telll you this too because when I purchased the predecessor to the TAE-1000 preamp (the TA-9000 I believe) it was a nightmare of poor choices and bad implementation of hardware (the remote wouldn’t operate for more than three days on a fresh set of batteries). Sony had officially failed and in about 2007 the whole world knew this as the iPhone became the deFacto new Walkman. It could be a a fade to black for Sony as even their, mostly good, VAIO PC’s lost them money. But, never estimate a goldmine of a niche market. That would be that of the so-called “gamer”. In all of this pitch blackness Sony had boxed themselves into there was a light, dim as it was, at the end of the tunnel. This is how, in my pedestrian opinion, Sony has risen from the ashes. The PlayStation saved the Sony Corporation. It has allowed them to begin to carve a place out among those who seek the best. Their video projectors are right there with JVC’s for the title of absolute worlds best. Their mass market stereo component, although paltry and affordable, are extremely respectable and more than competitive. They are now embracing niche audiophile markets. An excellent network player. Their only turntable, while modest, is a game-changer in value and features. Their newest personal audiophile audio player compares with many of the various players who have created this new Hi-Fi category. As for statements…well they have a very high-end range of speakers which makes no apologies when competing with anything the likes of Wilson or Magico. Something is definitely still happening very positive at Sony. To me this means simply to keep your eye on anything that comes out with Sony nameplate.

X
-->