Sony's New CEO To Look Beyond Hardware

angry tapir writes "Sony's new CEO says the company needs to move on from its hardware roots. From its inception, the company has defined itself through its gadget lines — Walkman, Vaio, Cyber-shot, PlayStation — but incoming CEO Kazuo Hirai, who will officially lead the company from April, says Sony must now focus more on the software and platforms they access. He said he wants to model the company after its successful PlayStation gaming business, which he helped turn around, where 'hardware drives software, and software drives hardware, and it's all tied in by the network.' Sony is forecasting nearly US$3 billion in losses for the fiscal year through March."

Comments

It's not going to work

[laffer1]

Sony is just too conservative and unwilling to invest to be successful in the software business. 90% of their time will be spent locking down systems and adding DRM. They won't build what the customer wants.

Re:It's not going to work

[Theophany]

Not to mention that their software is universally shite, relative to competitors. They've seen Apple's successful walled garden model and want in, difference is that Apple are a software company and Sony, most certainly, are not.

Re:It's not going to work

[RazorSharp]

I know it's popular to call Apple "a marketing company" around here, but it's gotten ridiculous. What started as a very sarcastic cheap shot has somehow become an accepted truth. Last time I checked, Apple makes their money by selling computers, phones, and other hardware. They make a little off software, too. I'm pretty sure if Apple somehow lost their iPhone market, they wouldn't be able to offset the loss by selling t-shirts with their logo on it.

But, yes, Sony could learn a lot from Apple's marketing strategies.

Re:It's not going to work

[Solandri]

No, what you're describing is the public perception. What he's describing is the reality. Most of the big-name "computer manufacturers" aren't really hardware manufacturers. Apple's laptops are designed and made by Quanta. Apple gives them some guidelines and requests some modifications, but the design and manufacturing is done by Quanta. Ever wonder why some of the HP laptops look a lot like MacBooks? It's not because HP is copying Apple. Quanta is also the primary original design manufacturer for HP. Literally the same Taiwanese people who designed and manufactured the Macbooks also designed and manufactured those HPs.

The same goes for other products. The iPod and iPad by now I think most people know are made by Foxconn. Who designs them is still uncertain. The big name sellers and the OEMs/ODMs are very reluctant to publicly discuss who makes what. The CPUs in their mobile devices are made by Samsung, though it looks like Apple is burning that bridge and is trying to design their very own ARM CPU for their next gen products.

So Apple is essentially a middle-man. Someone who comes up with an idea, hires a outside companies to work out the design details and manufacturing, then assembles and imports it, and sells it under their brand name. A parts assembler. A marketing company. Many other companies you may think are hardware companies do this too. IBM used to make their Thinkpads in-house, but as near as I can tell Lenovo has outsourced most of their laptop production to ODMs. A lot of Sony's low-end and mid-grade laptops are made the same way. Dell just orders the different parts of their desktop computers, and assembles them before shipping it off to you.

But some of them do have their own design, fab, and production facilities. Dell designs their own motherboards and cases (and tests them pretty extensively - it's extraordinarily difficult to put together a custom PC that's as quiet as a Dell business desktop). Sony's high-end laptops are designed and built at their facilities in Japan. The same for the sensors for their cameras, which they also sell to other companies (most of the other digital camera "manufacturers" use Sony sensors - a huge opportunity Kodak missed because they didn't have silicon fabbing experience). So they're very much a hardware company.

I'd characterize Apple as a software and online services company first (OS X, iOS, and iTunes are their bread and butter), marketing/assembling second, and hardware a distant third.

Ok

[Anonymous Coward]

Hardware is becoming generic and software is becoming critical. Software should at least be a big part of the plan. Sounds reasonable enough to me.

I'd rage about Sony evilness ... but that would be offtopic (and I'm sure there will be plenty of that anyway by people much more serious about it than me!).

overpriced, underspecced.

[Anonymous Coward]

Maybe Sony hardware used to be worth the premium, way back when, but nowadays they are just trading on their reputation.

I had a Sony Viao laptop for years. It was OK, nothing wrong with it, but equally there was nothing so amazingly right with it that it was worth the huge pricetag - the same spec laptop with another brand label on it would have been just as good at 2/3 the price. It's a shame, because there is room in a market for a gadget manufacturer that sets itself apart from the competition by offering superior reliability / build quality / robustness.

I think customers have been catching on to this the last few years, and Sony's hardware sales have dropped as a result.

Re:overpriced, underspecced.

[unixisc]

The brand name meant something when it actually was made in Japan. Once they started outsourcing to China, like everyone else, there's no reason to pay more for them than anyone else.

Sony:

[Culture20]

Your hardware was always good, but your focus on lock-in with nonstandard things like Memory Stick and user-hating products like the rootkit DRM on audio CDs is what killed you. Geeks everywhere have been telling their family and friends that you suck for the last decade. That tide will not change before you lose a lot more money. Just close up shop and call it a day.

Here's an idea

[PPH]

Sony could add a feature to its hardware platforms to allow loading/running an alternate OS. Preferably one that would attract lots of developers to their platforms. Perhaps even an open source OS, thereby making the best community developed products easy to distribute.

Nah. It would never work.

And he's right...

[Sir_Sri]

And he's right. In the long term, and that might be another couple of generations, game consoles will be terminals, TV's were dumb terminals and need to be made smart, smartphones can't distinguish themselves from one another if they are all basically the same hardware and software.

Hardware is a bad business to be in. There is becoming less and less of a need for a lot of different foundries, sure there will be some world wide but they are, by and large, astronomically expensive and need to have multiple customers, this is your TSMC, Intel, AMD etc. Given that, Sony, along with everyone else, is buying from them. That means your differentiation comes from what you run on the hardware, not what the hardware is.

Sony *should* own some major portion of the mobile market place. But it doesn't. It has just another android phone basically x10. The PS vita should be *the* premium android phone right now. But it isn't. That's a software and a vision problem, not hardware problem. Because what does a Sony smartphone bring to the table with software?

Sony *should* have a secure, reliable network that people can trust to buy movies music and games on, and that will be up 'all the time' (within reason of course), and, given the PSN outages last year, that isn't the case.

The future for Sony is smart boxes that go with (or inside) dumb boxes, and link up to their smart software services. TV on demand, on your TV, or PS1, 2, 3 or 4 games, all over the net. That may mean running their own cloud backend. But it's still known hardware problems solved with engaging software that's better than the other guy, not shitty software with somehow innovative hardware, because there's not a lot to innovate on the hardware.

In other words, they're largely a consumer facing version of IBM or HP. I'm sure they have, and could do more with the battery/chemicals business and so on, the backend may be boring tech but it can be useful. They can make TV's that use 70% less power for example. But pitching that to consumers requires informed consumers, and most of us, about most of the technology we use, aren't, or at least aren't informed enough for things like a TV that uses 70% less power, but costs 2x as much to even know if that's a worthwhile deal. They could, I suppose, choose to radically reinvest in something else, solar power, that kind of thing, but most of their innovation has been in content distribution (floppy disks, CD's, DVD's, Blu Ray, the whole gaming business etc.) and content delivery at that level is now a networking infrastructure problem.