Opinion: Sony's ditching Vaio to concentrate on more profitable areas. Could further surgery help put the once all-conquering consumer electronics giant bcd on top?
Earlier this week, Sony announced it’s selling off its Vaio PC arm and pretty much getting out of the computers business. The news sent shockwaves through the sector; Sony’s laptops had long been regarded among the best available since they launched back in 1996. However, with declining sales of PCs worldwide, clearly Sony had decided to move on.
Could this move and the “spinning off” of its Bravia TV arm - apparently to concentrate on “high-end tellies” - be the start of fundamental change at Sony? For a long time, the company’s been like an oil tanker. Headed in the right direction, unstoppable. But when it needs to change direction, it can take a helluva long time to change course.
The problem is that Sony sailed off in the wrong direction for years. You only have to look at Apple to see how badly wrong Sony got it. For everything that Apple did right, you had Sony on the flip side of the coin doing it wrong.
It lost its dominance of portable music players to Apple after failing to launch an MP3 player quickly enough. It saw its slice of the mobile phone pie nibbled away after failing to adjust quickly enough to the post-iPhone landscape. It’s never really managed to leverage its movie and music outputs into an experience to rival iTunes, Amazon MP3, Netflix, Spotify et al. Even its PlayStation gaming business has come under fire from Apple’s App Store, although it’s hard to argue there’s been any lack of innovation in this particular arm of the Sony empire.
Make. Believe. Repeat.
Sony's problem is that it was mentally rooted in a bygone era when mega-corporations tried to do everything. It would probably be quicker to list markets Sony isn’t involved in.
That doesn’t mean the days of mega-corporations are over. Samsung and Hitachi are examples of huge conglomerates that are doing very well for themselves, and Sony isn’t the only major consumer electronics brand that has suffered over the last decade – though it is one of the biggest. Its name remains among the most respected and sought after, but the rise of Samsung, LG and Apple, coupled with a certain ponderousness when it came to cutting-edge innovation and - just as important these days - the will to dump poorly-performing products - left it scrapping for market share.
The selling off of Vaio could be a major signpost on the road to recovery. The PlayStation 4 is another – it’s already the fastest-selling console at launch in history. The camera division continues to go from strength to strength. Its mobile phone and tablet business? Possibly the sales aren’t stellar yet, but the products are very strong – not something that was true a few years ago.
Outside of consumer electronics, its music and film publishing divisions also continue reporting profits. However, there are some questions over the future of these divisions, as Sony seeks to focus on its core businesses.
In other words, its Vaio unit might be the first to go, but it certainly won’t be the last. Sony is going to shed its dead weight. Some of that dead weight is likely to include beloved brands like Bravia, Walkman and, in time, possibly even its Xperia range. That’s not a sign of weakness, it’s a signal that Sony is forging ahead; looking to a more nimble, profitable future rather than a glorious past.
So what’s next?
In my opinion, Sony over extended itself and the its current “issues” - a one billon dollar loss and a reduction in worldwide headcount of 5,000 are not to be sniffed at, even at a company as huge as Sony - are a result of that. Its size meant that it wasn’t able to follow trends as quickly as its rivals and as a result, it lost out.
I think Sony’s sale of its PC wing is just the beginning. I wouldn’t be surprised if its TV business restructures even more radically in the next year. And I wouldn’t bet against it being sold off before the end of 2015, either, unless 4K proves to be the market savour that 3D wasn’t.
By the end of the decade, Sony could look like a very different company, focused on gaming, cameras and mobile. It needs to be taking bigger chunks of the headphones and wearables markets too; both are a perfect fit for them, no pun intended. Sometimes you have to destroy to create, and that’s what Sony’s doing with the Vaio sell-off.