Last year, Sony introduced an uninspiring piece of hardware to the world: The Sony Tablet. Understandably, consumers were not impressed. The hardware was expensive, it was late to the show, and its vanilla offerings were undifferentiated from the competition. Consumers were not impressed, and they showed it with their wallets. But it didn’t have to be this way. Sony, perhaps more than any other company in the world, was equipped to take on Apple in this space had they striven for greatness.
Sony was uniquely positioned to face the new era of consumer electronics: the fusion of media and devices. While we rightfully see Sony as a hardware company first and foremost, it is also a company whose profits are now primarily derived from their media units: games, movies, music, and the like. Sony Pictures, Sony Music, and Sony Computer Entertainment are the reasons why the company as a whole is able to survive. The only other company with the combination of hardware and media needed to stand up to Apple was of course Amazon, who had engaged in the media arms race head-on and acquired Lab 126 in order to create its hardware.
Take a step back and consider this: a tablet that is able to purchase and play Playstation games, Sony Pictures’ movies, and Sony Music’s songs. In addition, had it worked with the Japanese publishing houses that were fearing the threat of Amazon’s kindle for their lives, the hypothetical Sony Tablet could have been the first legitimate ebook platform for Japan, a country mired in an unending love affair with books [1]. It could have set up global translation and digital distribution of Japan’s notoriously slow-moving media that are pirated all over the world: manga, anime, and the like. It would have been a product unlike any other; one that would stand had above shoulders amongst its peers, looking up only at Apple.
Though I claim that had Sony acted with great gusto, they could have stood up to the threat from the West, it would have taken a strategic decision of mammoth proportions. It would cannibalize multiple business units and would have required inter-industry negotiations of almost unprecedented levels. Heads of these divisions would have certainly fought to the death to prevent the erosion of their businesses, to the detriment of perhaps the company as a whole [2]. Japanese publishers, famous for their tortoise-like speed, are shackled by players up and down the supply chain who would balk at such radical changes [3]. Who knows? maybe this conversation did happen inside Sony, only to be quashed by the never-ending squabbling and resistance from its media chiefs. Amazon themselves made the decision to cannibalize their cushy physical goods sales model in order to better prepare for the future.
But in this age of hyper-competition, if you don’t iterate upon your own market, then someone else will. Recall that even Apple cannibalized its own original iPod with a succession of new models, then drove its own market sector into extinction with the iPhone. Sony is the company that famously could not seize upon the opportunity of the MP3 player, afraid that it would hurt its MD and CD Player businesses. To destroy your own core business in favor of the future is to think long term.
Long term is a theme we’re all familiar with, particularly in the wake of the Financial Crisis of 2008-2010. But how many companies are actually able to think long term? It wouldn’t be a stretch to say that in order to stand up to the pressure of institutional share holders, a company needs its founder(s) to be leading the company.
When we think of companies that are making sacrifices today to plan for ten, twenty years down the road, which names come to mind? For me, the names coincide with the most prominent names in tech today: Google (Page and Brin), Apple (Jobs), and Amazon (Bezos) [4]. They are companies that are lead, if not in body then by a domineering and ever-present spirit, of its founder(s) [5].
As they say, once a___, always a ___. Once a hardware company, perhaps Sony is destined to stay a hardware company, without the guiding light of its legendary founder.
In the distant past, Sony was a company that was held in awe by the world for its outlandish risk taking. Its successes and failures are legendary. But as with so many innovative companies, the loss of its founders was also the loss of its inspiration.
Will Sony ever rise from the ashes, born again like the rising sun? Unlikely.
[1] The price of inaction for these publishers, knowing for years that the earth-shattering moment of ebooks would eventually arrive in their isolated land, is Amazon’s take no prisoners pricing scheme that will suck their bones try. They could have negotiated a much sweeter deal with Sony, if they could have decided to sacrifice a leg in order to save their bodies. Alas, it did not happen.
[2] Sales figures at SCE, Sony Music, and Sony Pictures would have certainly fallen had they combined forces to create such a media tablet solution. But if they resist change that consumers demand, then someone else will surely offer what the customers desire.
[3] Only in 2012 has Kindle finally made inroads in said country.
[4] Facebook is so new that they haven’t had to make such critical choices yet (though the exception might be mobile), and Microsoft has so far been slow to adapt.
[5] Investors have criticized Amazon for its razor thin margins and its heavy spending on products such as the Kindle Fire, which for now, are creating losses for the company. Investors similarly fired at Apple for not rewarding shareholders (i.e. themselves) by using its cash horde for share buybacks or dividends — a practice that was resisted until this year, until after Jobs’ death. Google was criticized for its large investment in research with seemingly no practical business application, and eventually shut down its Google Labs operations. While the results are not in, perhaps we are seeing the first signs of Apple and Google looking at now rather than the future.