Sony’s Death Spiral

Sony to axe 10,000 jobs in turnaround bid: Nikkei

Japan’s Sony Corp is cutting 10,000 jobs, about 6 percent of its global workforce, the Nikkei newspaper reported on Monday, as new CEO Kazuo Hirai looks to steer the electronics and entertainment giant back to profit after four years in the red.
Boldfaced emphasis added by me.First, Howard Stringer should have never been let near Sony, never mind being put in charge of it.

Second, the Japanese are too damned self-effacing for their own good. Howard Stringer would have been booted out on his fat ass within two years of his mis-management had he been here in America.

Third, notice the word I emphasized: profit. That’s nothing more than temporarily making the books look good. It says zero about long-term sustainability.

Fourth, this is not going to save Sony. Throwing overboard ten thousand people is an admission of defeat, period. That tells me that Sony has been so gutted and so bollixed that whatever good ideas might still be inside that company have no chance of getting any attention.

Fifth, it also tells me that those currently in charge of Sony wouldn’t recognize a good idea if it bit them in the ass and starting draining their blood by the pint. This might now be in the very DNA of Sony, since there were people inside Sony who advocated the Sony Reader should have had wireless from the beginning, yet were overruled and then ignored as Amazon triumphed.

Sixth, Sony used to be all about the display. Who has that reputation now? Samsung! Losing a core business like that is simply inexcusable. It would be like Nokia losing its phone operating system (oops!).

Seventh, all Sony is doing these days is Me-Too and zombie tech. Me-Too: Android devices that have nothing to recommend them. Zombie tech: How long can they keep milking PlayStation (which was created by someone who was forced out of Sony, Ken Kutaragi!).

Eighth, Sony has become legacy corporate. It’s now more interested in preserving the jobs of those who lead it than moving the company into a glorious future. Hunkering down instead of risking is little different from just being dead.

5 Comments on Sony’s Death Spiral

  1. You know what’s killing them? Pension obligations.

    They already had to reform the pension plan once in 2004. It was basically kick the can since they extended the payment period.

    They aren’t US-listed, so I’m having trouble finding the actual payout numbers- but I bet they’re up there since Japan has a population rectangle rather than pyramid.

    Pension plans just destroy the future of your company. It’s like saying “go out and make a couple billion; then, after that, you are free to try to make your customers happy.”

    But, it worked great in the 80s when they were racking it up!

    • I don’t understand why pension plans can’t work. It simply requires planning and saving appropriately. (Of course, much like with Social Security, whenever you have a large pile of liquid funds, somebody will want to borrow against it with risky investments.)

      That being said, I’m not sure why, as an employee, I should prefer a company pension to a personal pension (such as a 401(k)). Is it simply because the risk is effectively underwritten by the government with a company pension?

      • They can work for stable companies with simple, boring, steady businesses. A vineyard or company that makes garden tools, for example.

        But high tech companies tend to burn twice as bright for half as long- and they flock to whatever scheme allows them to do that. Consumers demand it because new toys! Now!

        It’s just the way life is- first in, last out.

  2. Howard Stringer was only hired because he was a white guy. He was in charge of the media business – the same media business that crippled their MP3 player before the iPod came out. It was a statement that technological innovation no longer mattered at Sony. The only innovation was from the PS3, but even then, it was crippled too.

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