By Lee Powney, brandrepublic.com, Friday, 12 October 2012 08:30AM
For most of its life Sony has been the market leader in cutting-edge technology. In 1979 Sony launched the Walkman. The Walkman brand became so ubiquitous that in 1986 the word walkman made it into the Oxford English Dictionary. In 1982 it launched the world’s first CD player.
In 2003 it launched the first ever next-generation Blu-ray Disc. The first Blu-ray disc drive notebooks were launched in 2006. And now - after a history of innovation - Sony is slowly dying in the face of disruptive players whose business models span hardware and services.
Quite simply, Sony is no longer grabbing the innovation bull by the horns and leading the way. This is reflected in the loss announcement of $5.7 billion in 2011.
The reason for this free-fall? Firstly, its innovation processes have been siloed. Despite having all of the necessary content and platforms (PlayStation, movies, music) to create a rich cross-device experience, it has failed to understand the need to create its own vertically integrated ecosystem, instead concentrating on developing individual products.
Secondly, it has failed to react to huge pressures from its nearest and dearest, namely Apple, Google and Samsung. Its TV sales were hit by Samsung’s value play, while its failure to react to the smartphone phenomenon allowed Samsung to leverage Google Android OS and become the number one Android smartphone player.
As a result, Sony now has a negligible share in mobile, a plummeting share in TV, and next to no presence in the tablet market. A sorry state of affairs by any standard.
Its decline has been aided by its inability to leverage its existing assets, namely its content. Apple has successfully integrated its services across iPhone, iPad and Mac and grown into a superbrand.
The coup de grace for Sony will be delivered by the launch of Microsoft Windows 8: a platform offering a true cloud-centric cross-device experience, spanning mobile, TV, and desktop.
The possibility of accessing all your own apps and content via Microsoft Xbox Live drives another stake through the heart of Sony’s ambitions in gaming. The upshot is a simple question for consumers: why buy a PlayStation when an Xbox can be integrated with your mobile or laptop?
Kazuo Hirai, chief executive of Sony made a statement recently promising an "aggressive" product-focused turnaround for the business. However, being a product business without a platform in today’s market means conceding the vast majority of value and control of the user experience to the platforms and vertically integrated players (eg, Apple). A product-focused solution just isn’t going to be enough to save Sony.
Sony has paid the price for taking its eye off the ball and ignoring the ‘Apple effect’. Today, if you have integrated software and hardware and your own ecosystem for your products, you have a strong advantage.
Not only has Sony missed a trick here, it also doesn’t have the innovation structure to create what is needed. In a constantly converging industry this can only means one thing: the death of Sony.
In short, if you create group entities and product line P&L’s without a closely coordinated innovation strategy, don’t be surprised if your product innovations run in isolation while the reality of the competitive environment around you continues evolving.
This article was first published on brandrepublic.com