Is Sony just average?

Posted Oct 26th 2006 11:45AM by Douglas McIntyre
Filed under: International Markets, Bad News, Competitive Strategy, Microsoft (MSFT), Viacom (VIA)

When Sony Corp. (NYSE:SNE) had the Walkman and the Watchman and Playstation first appeared, the company was viewed as the premier consumer electronics company in the world. Sony was on the cutting edge. It was the innovator.

Perhaps that crown has passed to Apple. Maybe even Microsoft with its Xbox succees. And, perhaps, Nintendo.

Sony has lost the crown, and it probably will not get it back.

Sony lost $175 million in the quarter that just ended. Its recall of faulty PC batteries was partially to blame. The company also said its game division was in real trouble. Sony has already started cutting prices of its new Playstation3, and Playstation portables are not selling well.

Interestingly, rival Nintendo said that its profit for the last six months was up three-fold as sales of its DS game machine did well. And Sony's Japanese competitor is about to come out with its new Wii game platform.

Sony is in some shaky businesses now. At least for them, their game platform business is doing poorly and now will rely on acceptance of the Playstation3. With real competition from Nintendo and Microsoft, success is not a lock.

Building PC batteries is another rough business. Not only can they catch on fire and cause massive recalls, but the PC business is no longer growing as fast as it once did.

Of course, Sony owns one of the major movie studios, Sony Pictures Entertainment. But the studio business in notoriously fickle and faces challenges from online video and piracy. And Sony has to compete with large, well-funded companies like Viacom, News Corp, and Time Warner.

Sony was once the envy of the corporate world. That may be gone for good.

Douglas McIntyre is a partner at 24/7 Wall St.

Tags: battery recall, BatteryRecall, DC game machine, DcGameMachine, Nintendo, Playstation, sne, Sony, Wii

Print this

Reader Comments (Page 1 of 1)

11-09-2006 @ 9:39AM

Dallin said...

I say Sony reaps what it sows. The company is notoriously arrogant for game developers to work with and after it pushed Lik-sang out of business (the most trusted import video game company in the world), I hope it meets a similar fate. I don't support companies with such shady business practices. I wish the game community would show its displeasure by refusing to buy sony products.