Could the industry be seeing the error of its ways?
Sony's CFO Masaru Kato has indicated that Sony will sell less, vs. building up inventory and dropping price for another year of losses for the company.
I guess Sony has finally decided (at least the CFO) that chasing market share for the sake of chasing it is not a viable business model. 7 years of losses for the TV division have put some new ways of thinking about how to run the business. Building to market share expectations doesn't work. Building on a model and supporting the business and a model weeks of supply against actual sales trend has more logic and tendency to drive business results you can take to the bank.
As one of the leaders I have worked with in the past would always say "Business done for fun is better left undone"
Sony is not a non-profit organization, it cannot support new R&D to bring new products that US or any other market would want if it cannot reinvest profit into R&D. It needs to be able to support its overhead.
Could the days of the spoiled US consumer on Electronics be over? Could we be starting down the path to break the cycle of losing money on new product launches just to hit a unit sales / market share number which has resulted in large loses in the industry? Look at the number of brands that are gone, or are basically non-existent today due to this cycle? It has not only impacted TV Vendors, but look at the number of quality Electronic Retailers that are no longer here today as well.
I applaud the stance the Sony CFO is taking, and I hope he can hold off the Marketing team and Sales team that continue to drive to a unit number for the year for Sony. If they chase this number, Masaru Kato's attempt to go down a new logical path and financially sound path will be derailed.
As much as the consumers feel they are rewarded by plummeting prices on technology, be careful what you wish for. Research and Development of new technology that has improved our lives over the years can not be supported and continued with negative income. Innovation begins to go to a crawl. We have not had a new revolutionary product in some time. We are in an evolution cycle for the majority of Consumer Electronics products.
DVD to Blu-Ray, Flat Screens to Flatter Screens, Iphone 3 to 3G , to 3Gs to Iphone 4. Notebook to Tablet
To develop something completely new, consumer electronics companies need to be able to feed the research and development teams. Not chasing Units / Market Share / and running a factory 100% capacity if there isn't someone willing to buy what is being produced.
Sony CFO has spoken - will other follow - will Sony really hold back and forgo some sales to keep inventory and profits in line? Only the holiday season will tell.
I for one hope that the Sony CFO and company can hold its position, if the industry can change the current destructive path it is on, I see a brighter future for all.
JZ
This point of view has been growing inside this company for years. Unfortunately as you mention the sales and marketing powers always carried the most weight. For many years the SONY brand stood for quality and innovation. The SONY brand continues its free fall among the top ranked brands in the world. Gone are the days when SONY and Coke were the most recognized brands in the world. Just in the last year SONY fell five spots from 29 to 34 in world wide brand ranking. Samsung has risen to #19. I also applaud this point of view. SONY needs to get back to its roots and invest in R&D to create the next Walklman, Trinitron or Playstation to restore its brand recognition. Apple has proven that if you develop new products people want you can drive market share without relying on slashing prices. In the end companies have to make money and be willing to re-invest to support growth.
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