Converging on Sony

Just what are the consumer benefits of having one supplier rather than many?

Sony’s chairman and CEO, Howard Stringer, has announced that after 7 years, or so, at the top he is handing over to his successor. Sadly, he isn’t handing over a business that has been reinvented in quite the way that he intended. Sony’s stock lost just over half of its value in 2011 alone, its third loss-making year in a row. The new man, Kazuo Hirai, shown opposite, has a tough job and this week apparently acknowledged there was an “acute sense of crisis”.

Incredibly, there are about 900 million Sony devices in use on planet Earth and this is likely to grow to 1200 million by 2015, so the firm has a foothold in many of our lives. Sony, once just an electronics company, is now one of the leading entertainment companies in the world too. You can watch the Men in Black, Spider-Man and James Bond franchises, which it owns, on your Sony TV, PlayStation, or Sony Ericsson phone I expect. It will be just Sony smartphones soon though as it has recently bought Ericsson out of the Sony Ericsson joint venture in smart phones, unfortunately just as sales have collapsed.

There is no doubt that Sony is a class act and it can compete in each of its product areas with anyone, although it has pretty strong and intimidating competition on all fronts. The question I have is just how it might go about leveraging this breadth and making its ventures add up to more than it has done already.

I only ask this question because, of late, Sony has decided that this comprehensive coverage, of most of the consumer electronics bases, will allow it to make “convergence”, an idea that has been driving the sector for a decade, even more of a reality. At the recent Consumer Electronics Show, in Las Vegas, Harai said: “Only Sony can offer a truly unique convergence of hardware, content and network services,” to a single customer.

Sony have already been criticised for slow development times. So, how much harder would life be if it had to further coordinate technology, products, commercial and marketing activities, and all this across such broad markets? More importantly, what exactly are the benefits to the consumer, in an era of increasing choice and openness?

Convergence is a neat idea, but it is something that is made much more difficult by shortening technological lifecycles, and more focused competitors who are probably going to be hard to beat in each sector. I’m personally not convinced that this is something they can deliver on or that people will want to buy.

Despite the popular saying, supertankers are actually quite easy to turn, but they are very hard to stop. Sony needs some clever navigation if it is to find its way through the dangerous shallows it has now entered. Harai-san, I’d suggest a little less reliance on convergence, or else others will be converging on you with quite different intentions. Convergence is a siren call that has the potential to surely lead you onto the rocks.

Mark

 

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