It wasn’t supposed to be like this for Sony. Though the company struggled through the 2000s, it was supposed to emerge as a model of corporate synergy and profitability thanks to a new vision ushered in by CEO Howard Stringer. Nothing could now be further from the truth. Eclipsed in the popular imagination by Apple and battered by the earthquake in Japan and floods in Thailand, Sony looks as defeated as ever, predicting another loss for this fiscal year, this time to the tune of US$1.2 billion.
If the Walkman symbolized Sony’s failures to adapt to the 2000s, it is television that now stands as the emblem of the company’s troubles. Though mobile and the web have disrupted all media, a large screen in the living room has proven a resilient idea, and is still the modern hearth around which people gather. Sony’s troubles with TV, however, are twofold. Not only do they have to respond to market pressures on the business, in light of a changing media landscape they also need to rethink the very of idea of what a television is and does.
Pragmatically speaking, Sony’s primary issue is the commoditization of the high-definition television. Rapid uptake of new technologies and intense competition between manufacturers have pushed margins on many sets into negative territory, and as Bloomberg Businessweek’s recent profile of CEO Stringer pointed out, over the past eight years the company has lost an astounding US$8.5 billion on TVs.
Yet saving their core television business extends beyond the need to produce a profitable electronic product. The traditional TV is under attack from all sides. Netflix and other content services threaten to turn the TV into simply one screen among many, and premium picture quality—once Sony’s bread and butter—is now a selling point for only a tiny market segment.
Probably Sony’s biggest worry, however, is pre-empting Apple’s entry into the market, now taken as inevitable after Walter Isaacson’s biography quoted Steve Jobs saying he had “cracked the problem of TV.” Though no one quite knows what Jobs’s cryptic statement meant, it’s not hard to imagine an “iTV” that implements voice and touch screens for control, and uses the depth and reach of iTunes’ apps and content to reimagine what that blank screen in the living room is capable of—and that sees Apple charging a premium price.
For his part, Stringer has said Sony is working hard on “a different kind of TV.” But more than anything, any new TV has to solve what thus far has been Sony’s biggest problem: the integration of its myriad business divisions in a seamless, intuitive way. For five years, Stringer’s Sony has been inching toward a holistic approach that integrates its key businesses under what’s dubbed the “Sony Entertainment Network,” a persistent, iTunes-like online service that serves media and game content and works across all Sony devices.
The television has to be the linchpin that arranges those errant strands into a coherent universe of hardware, software and content. A truly different TV would respond to the new needs of consumers by creating an interface that enables rather than obscures access to all that content, but that also reimagines the TV as but one part of a broader ecosystem. In much the same way that the iPhone reshaped Apple’s core business focus, Sony’s only choice is to reinvent its flagship business by building a universe of content and services in which the television set sits at the centre.
Doing so will task the company with inventing a family of products that are as much about design and user experience as they are about features, something Sony has for years failed to do. There is some minor cause for optimism, though. The job will likely fall to Stringer’s presumed successor, Kaz Hirai, whose integrated vision for the Playstation brand has been the lone spot of hope for the company over the past few years. He’ll need to repeat that success with the TV—or Sony will be facing another lost decade.
Navneet Alang is a technology critic and author of the blog Scrawled in Wax.