Sony suffered a great loss due to "mountaintopism"

Sony suffered a great loss due to "mountaintopism"
While the words "SONY 4K" filled the Brazil World Cup stadium, two major businesses quietly left Sony. Yesterday, Sony completed the sale of its VAIO notebook business to the Japan Industrial Investment Fund; on the same day, Sony's color TV business was officially spun off into an independent subsidiary. Behind the "heroic cut" of the former global electronics industry overlord is an embarrassing reality: the electronics main business, which contributed 60% of Sony's revenue, still failed to get rid of the loss dilemma last year. In 1946, Sony was founded in the ruins of Japan after the "Second World War" and became a model of technological innovation and multinational operations for Japanese companies. Its unique products such as radios, video recorders, Trinitron TVs, Walkmans, and CD players have been popular around the world for half a century. However, Sony does not seem to have made long-term plans and investments for the 21st century, and has been stumbling for more than a decade. Kazuo Hirai, who was once the right-hand man of former Sony CEO Howard Stringer and is currently Sony's president and CEO, is well aware of Sony's internal problems. As soon as he took office in April 2012, he proposed a reform plan, hoping to revitalize Sony's electronics business with the concept of "One Sony". Kazuo Hirai worked hard to promote cooperation between departments and launched new products such as lens cameras and Xperia smartphones, which were described as "Hirai's children". Ideals are full, but reality is skinny. In response to Sony's two "chronic diseases" of insufficient innovation and insufficient internal coordination, Sony's two-year plan to turn losses in the electronics business still failed. Time is running out, and Kazuo Hirai must fight to the death. Reforms encounter setbacks and then subtractions Opening Sony's annual report for the 2013 fiscal year and comparing it with Hirai's reform plan two years ago, you will know that the reform has encountered setbacks. In the 2013 fiscal year, Sony's operating income was 776.73 billion yen, a year-on-year increase of 14.3%, benefiting from the depreciation of the yen, the launch of the PS4 game console and the growth in smartphone sales. However, Sony's operating profit fell by 200 billion yen from the previous year to 26.5 billion yen, mainly due to the expansion of losses in the computer business to 91.7 billion yen, and the reduction of losses in the color TV business, but still a loss of 25.7 billion yen. Looking at Sony Electronics' three core businesses, mobile, gaming, and imaging, the imaging business shrank slightly last year because the digital camera market was eroded by smartphones, but it remained profitable; in the mobile business, the mobile phone business turned a profit, but was dragged down by the laptop business, and the overall operating profit of the mobile business was negative; the gaming business also showed a loss in operating profit. When Kazuo Hirai announced Sony's 2014 fiscal year business policy in April this year, he revealed that Sony's 2014 fiscal year turnover is expected to increase slightly by 0.4% to 780 billion yen, and operating profit will increase fourfold to 140 billion yen over the previous year; however, due to the need to pay a large amount of reform expenses, Sony is expected to still lose 50 billion yen in fiscal 2014. This is significantly different from the plan he proposed two years ago that Sony's 2014 fiscal year turnover would be 8.5 trillion yen and operating profit margin would exceed 5%. Therefore, Kazuo Hirai took another "ruthless approach" to sell the computer business and spin off the TV business, planning to cut the costs of Sony's electronics business headquarters support department and local sales agencies by 30% and 20% respectively before fiscal 2015. In 1996, Sony, Microsoft and Intel jointly developed the personal computer "VAIO", which was a symbol of Sony's entry into the IT field from the home appliance field, and brought huge profits to Sony. In February this year, Sony signed a memorandum of understanding with the merger and acquisition fund Japan Industrial Partners Inc. to sell the computer business under the VAIO brand to the latter. Trinitron TV once brought great honor to Sony, but ten consecutive years of losses finally led Sony TV to the road of splitting. After independent operation, Sony Color TV Company will reduce costs, improve efficiency, focus on high value-added products such as 4K TV, and strive to turn losses into profits in fiscal 2014. Kazuo Hirai said that Sony will complete the "structural reform" of the electronics business in fiscal 2014. Although it needs to pay 300 billion yen in reform costs, it will save the company 100 billion yen every year after fiscal 2015. Some people criticized that Kazuo Hirai was slow to "cut off" the loss-making business two years after taking office. In fact, the youngest CEO in Sony's history (except the founder) started "doing subtraction" three years ago. In 2011, Kazuo Hirai, who was promoted to executive vice president of Sony, began to take full responsibility for the operation of Sony's consumer electronics business. In December of that year, Sony sold 50% of its shares in S-LCD, a joint venture between Sony and Samsung, to Samsung for US$940 million to achieve "light asset" operation of Sony's color TV business. In April 2012, after Kazuo Hirai officially became president and CEO of Sony, Sony sold its small and medium-sized LCD panel business and merged it with the small and medium-sized panel business of Hitachi and Toshiba; at the same time, Sony's chemical business was sold; Sony reduced its staff by 10,000. At that time, Hirai said that all loss-making businesses that could not generate synergy effects would be cleared. In January and February 2013, Sony sold its Osaki office building in Tokyo and its US headquarters building in New York, recovering about US$2.3 billion in funds, which turned the loss around in fiscal 2012. However, since the profitability of its main electronics business did not really recover, Sony suffered losses again in fiscal 2013. Factionalism leads to failure. Sony has a good hand, but no good "luck". Compared with Apple and Samsung, Sony has a longer industrial chain, from camcorders, video recorders, cameras, to TVs, mobile phones, tablets, laptops (sold), and then to music, film and television, and game content. Sony has become one of the world's largest entertainment companies through the acquisition of Columbia, MGM, etc. Rich hardware and content resources are Sony's natural advantage of "combining software and hardware". However, factionalism has made Sony's "four-screen interactive" strategy a bubble. In early 2007, Sony's former managing director Tianwai Silang wrote an article pointing out that performanceism ruined Sony. Around 1995, Sony began to implement performance appraisal. Due to the focus on short-term performance, Sony founder Ibuka Masaru's "passion" for developing innovative products has become less and less in Sony; business departments undermine each other and want to gain more benefits from the overall interests of the company. Sony's music department once required that if Sony hardware carries its music, first protect the patents, and secondly be supplied exclusively by the former. In 1980, Sony began to sell Walkman, which was unrivaled in the world. In 2001, Apple launched the iPod, sending the Walkman into history. The past success has become a stumbling block for Sony. At the beginning of the 21st century, flat-panel TVs emerged, and Sony was still nostalgic for the Trinitron era. Samsung and LG continued to invest in LCD panels. In 2006, Samsung became the new overlord of the global color TV industry with LCD TVs. In fact, Kazuo Hirai has already "prescribed the right medicine" for the problems of lack of innovation and beggar-thy-neighbor. In August 2011, a new department called "User Comprehensive Experience Department" was established under his leadership. The department has the right to conduct comprehensive evaluation and decision-making on product planning for digital cameras, TVs, game consoles, audio-visual products and computers. Sony Xperia Z smartphone is the result of cross-departmental cooperation. Its image sensor comes from Sony's semiconductor department; the camera function integrates the best technology of Sony's digital camera department; the music playback comes from Walkman technology; even the engine chip that provides picture quality optimization for Bravia LCD TVs is embedded in it. But why has Sony's electronics business not escaped from the predicament after Hirai's "hard work" for more than two years? Luo Qingqi, senior director of Paler Consulting, analyzed to the reporter of China Business News that Sony is essentially still a hardware company. "In the Internet era, it is necessary to build a huge user resource, and the company needs to change from a closed system to an open platform." Sony's color TV has always emphasized picture quality and sound quality, and started late in terms of intelligence. Little did people know that Nobuyuki Idei, who has served as Sony's president since 1995, had already proposed that Sony transform towards networking, and had plans to acquire Apple, but was later stopped by the company's former chairman Norio Ohga. Knowing is easy, but doing is difficult. Sony, an electronics giant known for its engineering culture, has been transforming towards the Internet for nearly 20 years and is still "feeling the way". In addition to the business model, the industrial layout is also a pain for Sony. Chen Yan, executive director of the Japan Enterprise (China) Research Institute, believes that the Japanese electronics industry has passed its peak of glory and it is difficult to make a profit, so it must transform. Toshiba and Hitachi have turned to infrastructure industries such as power generation and elevators; Panasonic has turned to the BB field of automotive electronics and residential energy; Sharp's LCD business has also turned losses around by taking advantage of the depreciation of the yen; Sony's industrial transformation is slow. It established a joint venture with Olympus last year, and its medical electronics business has not developed as fast as expected. In fact, Sony is almost the only Japanese electronics giant that sticks to the consumer electronics field. In the "red ocean" of consumer electronics, with Apple and Samsung in front and a group of Chinese brands behind, Sony's market response and management efficiency seem a bit slow. Zhang Bing, research director of Display Search China, said frankly that Sony was the first to launch OLED TVs, LED backlight TVs, 4K TVs, and curved TVs, but it was not the company with the most market gains. For example, Sony TV started to promote 4K at the end of 2012, but the price has always been high. Last year, Skyworth lowered the price of 4K TVs in China, and this year Samsung lowered the price of 4K TVs globally, grabbing a lot of market share. Pushing cloud services to change the situation. There is not much time left for the three-year mid-term reform, and Kazuo Hirai must fight to the death. At the 2014 fiscal year business policy briefing on May 22, he revealed that Sony will strengthen its entertainment and financial businesses. "The model of distributing content through the Internet will further strengthen our advantages for a company like Sony that has rich content resources." Sony shareholder and CEO of hedge fund Third Point Daniel Loeb asked Sony to split its entertainment business in the United States last year, but was rejected by Kazuo Hirai. After all, film, music and finance provide Sony with stable profits. For the main electronics business, Kazuo Hirai said that this year he will use PS4 and network services to establish a new business model. As of April 6, 2014, PS4 has sold 7 million units worldwide. About half of the users who bought PS4 have joined PlayStation's paid membership network service "PlayStation Plus", and the number of active users of PlayStation Network and Sony Entertainment Network has exceeded 52 million. In the United States, Sony plans to start offering the beta version of the streaming game service "PlayStation Now" this summer, and plans to provide cloud-based TV services within 2014. Including games, music and video services, the total network service-related sales revenue exceeded 200 billion yen in fiscal 2013, and will further promote the growth of network-related sales revenue in the future. At the same time, Sony will stabilize the growth of its mobile phone business this year, continue to launch Xperia flagship products to the market, and expand the popular product line; in addition to Japan and Europe, it has also established strategic partnerships with operators in the US market. In terms of imaging, Sony Olympus Medical Solutions will consolidate its position in the industry of image sensors. The surgical endoscope developed by Sony Olympus Medical Solutions using 3D/4K technology is planned to be launched in fiscal 2015. However, the challenges are still huge. A mobile phone industry analyst believes that in recent years, Sony's mobile phone product line has been enriched, updated faster, and has differentiated functions such as waterproof and high-definition screens. However, in the Chinese market, the positioning of Sony mobile phones has yet to be clarified. Apple and Samsung are already in the high-end market, and many domestic brands in the mid- and low-end markets focus on cost-effectiveness. Sony mobile phones are not cheap and currently attract a niche group of people. "Sony mobile phones are betting on China's 4G and have cooperation with operators. It is difficult for Sony to become a 4G mainstream, and it will be difficult for non-mainstream brands to make profits." Another display industry analyst said that from a global perspective, the growth rate of the mobile phone industry has slowed down, and new demand has shifted to markets such as South Asia, Southeast Asia, and Africa, where the consumption capacity is relatively low. Last year, Sony ranked around seventh or eighth in the global smartphone market. As the market moves towards the middle level and Chinese companies such as ZTE and Huawei are making efforts, it remains to be seen whether Sony can maintain last year's share. In May this year, Sony established two game joint ventures with Oriental Pearl in Shanghai, one to produce hardware and the other to do software and services. Sony China President Nobuki Kurita said, "I have two expectations for the game business to enter China: considering the user population of the product, the game console can help Sony's youth strategy and allow Sony's product information to better reach young people; the game console product can also show the high-quality advantage of Sony TV." However, in the long run, games will also be impacted by smartphones, just like digital cameras. Only by opening up the "blue ocean" can Sony usher in new vitality. Kazuo Hirai revealed that in April 2014, Sony has established a new department, which will provide development soil for innovative thinking and new businesses, and strive to quickly achieve the successful expansion of innovative businesses. Sony aims to achieve an operating profit of 400 billion yen in fiscal 2015. Judging from this year's CES, Sony's new business may be wearable devices, including smart watches and smart bracelets. Display Search analyst Yu Ningning analyzed that the sales of smart watches launched by Sony and Samsung were not large. The key is whether Apple iWatch can ignite the wearable market in the second half of this year. Once it is ignited, Sony will also benefit from it. Recently, Google announced the operating system for wearable products. Sony is expected to use the Android system when launching related products. In the same ecosystem, competition is inevitable.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.

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