Sony: The Tattered Legacy Of Sir Howard Stringer

The breach of the Sony PlayStation Network which exposed private records of up to 77 million customers is only one in a long line of failures which have occurred since Sir Howard Stinger became the first non-Japanese to run the iconic consumer electronics firm. He took the job in mid-2005. Sony’s shares have been flat since then.

Stringer’s job was to break through the insular culture which had existed at Sony for decades. The firm’s board reasoned an outsider might be able to succeed at this difficult challenge. Stringer had spent most of his career in the television business. He did not come from the worlds of either Japan or electronics.

Stringer’s stumbles can be illustrated with recent Sony problems beyond the PlayStation debacle. Sony’s LCD joint venture with Samsung struggles as prices for its products flounder. And, Sony recently launched two Google (NASDAQ: GOOG) Android powered tablet PCs. Those products enter an already crowded market with Apple in the poll position. Sony has a tiny share of the traditional PC business and its Sony Ericsson venture has only a modest portion of the smartphone market. That leaves the tablets without a point of entry which traditionally helps tablets gain momentum.

Stringer has also elected to hold onto Sony Pictures. It operates in a highly competitive industry which is dominated by large media companies like News Corp (NYSE: NWS), Viacom (NYSE VIA), and Time Warner (NYSE: TWC). The digital age of premium content leaves Sony in a position of being a consumer electronics firm with a film production appendix.

Stinger also bears much of the blame for Sony’s failure to enter the multimedia player and music businesses which are now controlled by Apple’s iPod and iTunes. Sony should have had leverage with its Walkman line which held a position like the iPad during the 1990s. Sony let that opportunity slip away as it did its leadership position in game consoles built on the wildly successful PS2 platform.

Stringer has nothing to recommend him as a successful CEO. Kazuo Hirai,who runs Sony’s game operation, is likely to be promoted to CEO, perhaps as early as this year. Stringer can walk off the center stage having left Sony in an untenable position in most of its businesses.

Douglas A. McIntyre