Sony trying to find its way back to success

The store’s design, although more hip and up-to-date than the company’s traditional Sony Style retail outlets, is emblematic of Sony’s struggle to regain its footing in recent years after a host of missteps: the company always seems to be playing catch-up instead of leaping ahead.

“Sony once hit home runs, but now it’s lost its touch,” said Akihiko Jojima, an analyst and author of the book “Sony’s Sickness.” It’s been a humbling fall for the company, which once shook up entire categories of electronics with its Walkman music player and PlayStation game console, and commanded premium prices for top-quality products.

In the last few years, its position as a consumer electronics titan has been usurped by more nimble competitors. The iPod from Apple dominates digital music players. In gaming, both the PlayStation 3 and its PlayStation Portable consoles from Sony trail the competing Wii and DS machines from Nintendo — and the DS is about to get a 3-D upgrade. Samsung Electronics leads in the global flat-panel TV market, a traditional stronghold of Sony, based in Tokyo.

Sony’s pioneering e-book reader lost its early lead to the Kindle from Amazon.com. And in the fast-growing smartphone market, an important area for future growth, Sony’s hands have been tied. Under a 2001 deal that spun off its mobile phone operations into a joint venture with Ericsson, Sony has been prevented from offering cellphones that draw heavily on its own other technologies.

All the while, Sony has failed to leverage the wealth of content at its music and cinema arms to the advantage of the wider company. Sony, while acknowledging its past stumbles, says that its comeback has begun.  “We will go on the offensive in 2010,” Sony Seniro Vice-President Yoshihisa Ishida said at the unveiling of a new 3-D television in Tokyo this month. Sony will begin selling 3-D TVs in June, joining an industrywide push to bring the technology behind the hit movie “Avatar” from cinemas to living rooms.

In the next few weeks, Sony will introduce a new online service that will eventually let users download music, television shows, movies and games from the company’s extensive library onto gadgets like computers, Blu-ray players, televisions, game consoles and digital cameras. The network, tentatively called the Sony Online Service, will be based on the company’s existing PlayStation Network, a game download site with more than 40 million accounts.

New generation TVs

Sony is working with Google and Intel on Google TV, a platform for a new generation of televisions and set-top boxes that will make it easier to browse the Web on TV screens. The first devices featuring the technology are expected to be on sale this summer. The company is also working on tablet computers similar to the coming iPad from Apple.

Whatever the mode of attack, the next steps by Sony’s Chief Executive Howard Stringer — who promised to make Sony ‘cool again’ when he took the helm at the manufacturer in 2005 — will be critical. Sony’s finances, battered in the global financial crisis, are finally improving after an aggressive cost-cutting drive and a revival in sales. In the final quarter of 2009, Sony surpassed analysts’ expectations with a sevenfold increase in profit, to ¥79 billion, or $853 million. Sony’s stock price has doubled in the last year, outperforming the broader Japanese stock market. Sony’s new retail concept in Nagoya, which the company plans to introduce worldwide if it is successful, is an effort to showcase its entire network of products. Displays at the store show how various gadgets can work together: a camcorder, Blu-ray player and TV, for example, or a camera, Vaio laptop and digital photo frame. Sony hopes that new technologies like 3-D television will help it regain leadership in the electronics industry, exemplified by its Walkman music players in 1979. But the company has drastically different rivals than in past eras.

Flying start

The store got off to a flying start. More than 300 people lined up for the March 17 opening of the sleek space, designed by the architect Tadao Ando. A line quickly formed in front of Sony’s new 3-D televisions. “Sony quality has always been the best,” said Yusuke Takagi, 20, a design student in Nagoya, who said he owned a PlayStation 3, a PlayStation Portable and a CyberShot camera. But he said he was also intrigued by the iPad tablet, which goes on sale at the end of April in Japan.

Sony tried to marry its hardware with content long before Stringer’s arrival. In 1987, Sony bought CBS Records for $2 billion and followed through two years later with a $3.4 billion purchase of Columbia Pictures. By the late 1990s, Sony was pushing what it called a “ubiquitous value network,” in which gadgets would seamlessly communicate with one another, beaming back and forth music, movies, messages and phone conversations.

But a series of blunders continued as a former Sony executive said Sony’s biggest mistake was to misread the importance of mobile phones. But in  February, at the Mobile World Congress in Barcelona, Stringer said that cellphones are now “the world’s most ubiquitous computer” and indicated that Sony would somehow get back in the game.

“We are building a new network service that will connect many more network-enabled products,” he said. “We are committed to extending that service to Sony Ericsson mobile phones.”  Sony also needs to focus on building one blockbuster multifunction device said an analyst.At the Nagoya store, at least, expectations were running high.

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