Sir Howard Stringer’s appointment in 2005 as Sony’s CEO was meant help turn the company into what it used to be–Apple (AAPL) based in Tokyo and not Cupertino. With products like the Walkman and early versions of the PlayStation, Sony was considered the most innovative consumer electronics company in the world, until about five years ago. The firm’s inventiveness fell on hard times. The party line was that the cause of this was fighting amongst the company’s engineers.
Stringer based a lot of his turnaround plan on the newest version of the PlayStation, the so-called PS3. It would put the firm back into competition with the Microsoft (MSFT) Xbox.
After three years of Stringer at the wheel, the coroner’s report is that Sony is dead as a first-tier global consumer electronics firm. The Xbox has done remarkably well, and once-tiny Nintendo has seized the lead in the video game market with its remarkable Wii. Meanwhile, PS3 sales are falling year-over-year.
According to The Wall Street Journal, "The sales decline is a heavy blow to Sony, which was banking on the video game division to provide a bright spot as its core electronics business is hit by the global economic downturn." The game operation of Sony has been an earnings drag for several years now.
Sony has three other substantial businesses. It sells cameras. It markets TV screens. And, it has a movie studio. A tough economy is likely to hurt all three. To make matters worse, the studio business is extremely cyclical.
The thought of Sony as a leading electronics company is just a chuckleheaded dream. Sony’s run is over. It will hang around, but that is about it.
Douglas A. McIntyre
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