UPDATED: JAPAN: Pressure grows on Sony to rethink its TV strategy as losses keep on mounting
UPDATE: Sony has no intention of quitting the TV business – that's the message from Executive Deputy President Kazuo Hirai, who also says there are no plans for the company to pull out of its LCD panel joint venture with Samsung.
Speaking to Japan's Nikkei business news yesterday, Hirai (left) said that 'Sony has been really struggling amid the economic slowdown, excessive LCD panel supplies and a resulting increase in price competition.'
But, he said, the company has 'no intention of quitting the TV business because the four screen-based products – smartphones, personal computers, tablet computers and TVs – are essential for Sony's business.'
Hirai, who is in charge of Sony's consumer electronics and network services division, confirmed that the first signs of the company's strategy to stabilise its loss-making TV operations will be seen within weeks. 'We launched a project team in April and began looking into concrete measures,' he said.
'While pressing on with structural reform without sparing any areas as sacred, we will strengthen our product lineup for emerging markets and make other efforts. We will implement action plans in stages, starting this month."
Asked about rumours that Sony is planning to exit its Korea-based joint venture LCD panel operation with Samsung, S-LCD, Hirai simply said 'there is no truth' in the reports.
Sony's under pressure to make a rapid announcement of its plans to turn around its TV business, which looks set to make a loss for the eighth year in a row.
Analysts point out that the company's focus on technology – in the form of 3D and internet-connected TVs – has failed to halt its sliding market share and improve profitability, and that further cost-cutting may now be its only hope.
The bumpy ride experience by Sony's TV division has already seen another victim: the president of the company's home entertainment unit, responsible for TVs, is to be replaced. Masashi Imamura, currently head of the company's personal imaging unit, will replace Yoshihisa Ishida, who will become a deputy CEO at Sony Ericsson.
The company slashed its sales and profit estimates last week, giving slow sales of TVs and the USA and Europe as a major reason, and has revised its TV sales target for this financial year by almost 20%, down to 22m units.
In an interview with Japan's Nikkei business news last week, Sony's Chief Financial Officer, Masaru Kato, said that planning was underway to tackle the problems in the TV business, which it says is currently expected to lose as much this financial year as it did last year – around Y75bn, or about £590m.
'No stone unturned'
He told the Nikkei 'In advanced nations, markets are maturing and price competition is stiff. We want to turn the business into one that can be profitable even if we do not pursue volume. Everything from development through parts procurement, production and sales will be reviewed.
'No stone will be left unturned, so we might consider such measures as teaming up with other firms. Even headquarters and sales companies will be targeted. Even though we haven't yet decided how to announce the plans, they'll be implemented immediately.'
Commenting on the report, Sony spokeswoman Mami Imada said details of the reorganisation may be announced as soon as this month. That shows how urgently the company is taking its current slide in world TV markets, especially when compared with the success being enjoyed by Korean rival Samsung.
In the last two years, Sony has cut 30,000 jobs, sold three of its seven TV plants worldwide – with 90% of its TV-making operations in both Nitra, Slovakia (above) and North America going to Foxconn's Hon Hai company, and offloaded its Barcelona Technology Centre to two Spanish companies.
Sony as a whole has fallen in value from a high of around $100bn to $25bn, or less than a quarter of the value of Samsung, but while analysts at Bllomberg point out that removing the losses suffered by the TV division would bring that back up to about £43bn, the company says it has no plans to exit the TV business.
Sticking with TVs
It may be trailing Samsung and LG with just a 12.4% share of the global TV market, falling further to 11.4% in the first quarter of the current financial year, but Shiro Kambe, the company's chief spokesman in Tokyo, says it's never considered walking away from TVs, because the business is so important to the company.
It's estimated that, by the end of this financial year, the TV division will have lost Sony more than Y500bn (almost £4bn at current exchange rates) since 2004.
UPDATE: In related news, Sony has announced that it's started streaming free 3D content to Bravia TVs in Japan, via its internet services, in an effort to boost the appeal of its 3D sets.
Content will include highlights of Japan's recent victory in the Women's World Cup football, and a range of cultural programming alongside trailers for music, movies and games.