Sony Corporation (NYSE:SNE) was once a leading player in the consumer technology space–it’s now an industry laggard. The company’s fate is a cautionary tale for industry leaders throughout the business world, but particularly for Apple Inc. (NASDAQ:AAPL), the industry’s current darling.
Sony Made Music Portable
It’s hard to believe today, but at one point in time people had to be connected to a wall or in a car to listen to music. So-called boom boxes were portable, if you could lug around the fleet of D-cell batteries they required on your shoulder. You could have used the handle, but back then it was cooler to put the boom box on your shoulder.
Then, one magical day, Sony made the “Walkman” and the world rejoiced. Perhaps it wasn’t so exciting, but it was the first time that people could carry around their music and listen to it with ease. It was a revolution in the way music could be played, though storage of music remained a major problem. First there were cassette tapes, and then compact disks. (If you remember those days, you’ll probably also remember spending hours making “mix-tapes” for your “friends.”)
Style and Substance
That wasn’t the only Sony hit, either. It seemed everything the company touched was stylish, more advanced, and more reliable than what competitors were creating. One of the key’s to its success was the style component. Sony simply made cool looking gear, from the Walkman to the television to the computer. Its gear lived at the high end of the price and quality spectrum, so profits were notable.
Somewhere along the way, however, the company lost its stride. Quality remained a hallmark, but Sony was no longer as cutting edge or as stylish as it once was. This had a huge impact on sales, which have been volatile for more than a decade. It latched on to the television market, a notable success early on, but as prices for new TVs have fallen, so too have Sony’s profits.
Peaking in 2008, revenues have fallen pretty much every year since. Earnings, meanwhile, have gone away, substituted by losses. Sony, while still a giant company, has major problems to fix. It’s hard to believe that a company with such a dominant industry position could falter, but it happened. Hubris is partly to blame.
The recent news that Sony is set to release an iPad clone called the Xperia just makes Sony look late to the party. The company is currently focusing on the mobile sector, so the Xperia fits with that goal. However, the mobile revolution started years ago, and without the same product chops that it had a decade or two ago, Sony looks like an also-ran with notable problems to fix.