Sony Giving Up on Electronics?

Sony Giving Up on Electronics?

Sony's electronics division isn't doing so hot. In fact it is apparently losing money on nearly every gadget it sells. If you're surprised at this, don't worry, you aren't alone. You may even be asking yourself what else they do. They have motion pictures and music but those endeavors have only contributed $7 billion to the company’s bottom line over the last decade. The electronics division has managed to lose a cumulative $8.5 billion in that time. So where do their profits come from? Unbeknownst to most of us in the west, Sony has a financial arm as well that deals in insurance and online banking that sees solid success in Japan. In the last year alone this division has been responsible for 63% of Sony's total operating profit. It's no wonder why when Daniel S. Loeb, an American investor and manager of the hedge fund Third Point, pressures Sony to revive it's failing electronics division many analysts are wondering why. The company's foray into markets like cell phones, TVs, cameras and game consoles have seen some successes but are ultimately struggling to stay afloat in a sea of stronger companies.

There is a danger in continuing to focus on this failing arm as a lack of managerial attention could start to harm the financial and entertainment divisions.  Sony Financial Holdings is already starting to under-perform its peers on the Tokyo Stock Exchange.

The opinion of the outside world seems to be that Sony needs to split these divisions into three separate and independent companies.

Some are hopeful that recent successes in the electronics arm may suggest a revival of sorts and to that point, only time will tell. The fact remains that Sony's insurance division is the company's bread winner. The question is how long Sony will continue to throw good money after bad.

Via NYtimes

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that is exactly why i say for years that nobody in it´s right mind should invest into the sony DSLR system.
there is no way to say how long sony will make DSLR or MOUNT A cameras.

FUD - Sony's camera business is profitable - don't conflate their lack of success in mobile phones and TV's with everything within the electronics division.

Jaron Schneider's picture

Sales were way down in 2012. Way down. This is a year after they said cameras were the future of the company and were holding it up. Not good.

The whole industry is moving in to declining sales. Some of the big will fall within few years.

Dependent on how muddy things get for Sony, the fact their DSLR arm might be turning a profit might not be enough to make even the slightest difference.

It'll be interesting to see how they fair after the PS4 is released, they took a loss on every PS3 console sold when they were released, I don't think they can afford that this time around.

Yep, And we shouldn't overlook that many other camera companies like Nikon, Olympus, Pentax even some Panasonic all use some of Sony's CMOS sensors in some of their product line. So if Sony stops making its sensors then the flagship Nikon D800 and many other Nikons will be stuck using Panasonic or Canon sensors.

This the area they're most competitive at so this is likely the last area of business they exit. And the CMOS manufacturer list is way longer than just three players :D To begin with companies like Aptina, CMOSIS, Omnivision, Micron Technology etc.

I wonder if they make the chips in the RED cameras as well. It seems to be a mystery.

That's very unlikely because they're the biggest competitors in digital cinema cameras. Sony F65 has a 6K sensor that's for a fact not the same as the new red dragon sensor. Sony's high end sensors are global shutter as RED continues with the inferior rolling shutter.

Rumors from several forums say RED sensors come from Toshiba. They make the sensor for the new Nikon D5200 and the 41MP Nokia Pureview 808 phone last year so they definitely have the potential.

I invested in the alpha 77, why? Because the 24-70 F2/8, 135 F1/8 and 16-35 F2/8 from Zeiss produce killer results. I have owned the 7D with a 24-70 F2/8 L and 17-40 F4 L and I am more satisfied with my Sony system that the Canon, the lenses are of a higher quality. I see where you are coming from, but I doubt highly that Sony will ditch the Digital Imaging arm or their Company, down to the fact that Imaging was one of the three main areas Sony are focussing on for the next few years. I know this from what the CEO said at CES Las Vegas.

Jaron Schneider's picture

No one is saying the products aren't good. Quite the opposite. It's just they aren't selling like Sony hopes or wants. Sales just aren't supporting the dream.

Davis DeLo's picture

Perhaps it's time to give up their insistence on in-house proprietary platforms. Get a real hot shot on the DSLRs and make memory sticks a memory on everything across the board. Sony is a strange beast, they invent great tech and hold it so close to their chest it gets smothered. For example, they could have really taken the amateur recording market over in the late 90's early 00's with the minidisc if it wasn't for it's closed nature. They should look at how well Apple faired when they finally moved to a commodity platform on their hardware. Imagine the wildly unlikely scenario where you could by a Sony camera with openly published firmware and hardware, you'd have ML on steroids across the platform.

Neil Burke's picture

The difference between Apple and Sony is that Apple is micromanaged from the top down. This is how they keep such a strong brand with tightly intergrated products. Sony on the other, well, the right hand has no idea what the left hand does.

Sony is to this day a trend follower ... not a trend setter like it used to be. The DSLR are plainly waste of investment as well as the boomboxes, light audio, cell phones and so on. They should really concentrate on audio video film and let the hyper volatile market of the cell / tablet market alone. But PLEASE Sony .. don't ever kill Zeiss

Jaron Schneider's picture

I don't think they own Zeiss, they just have a deal with them to produce optics.

yes you are right. My bad.

Jaron Schneider's picture

You could look on the bright side: if they stop making cameras maybe Zeiss will partner with one of the other, more established brands. One can dream anyway...

And then everything's price goes up, less competition = the ability to raise the price of everything.

You can buy zeiss glass already for Canon and Nikon. Oh and Hassels too.

Neil Burke's picture

I don't think you'll ever see Zeiss have a partnership with Canon or Nikon. Basically, their lens business is far too lucrative for it. Sony partnered with Zeiss for two reasons. They wanted an established name to add kudos to their system; and they didn't want to outlay billions on R&D on lens design and manufacture. Sonys business model of late has been to outsource as much as possible. The worst day for Sony was the day they sold their TV production plants (one of their original core business) to Foxconn.

Neil Burke's picture

Sony Consumer Imaging division is the second most popular camera brand in the world after Canon. Do you have an iPhone 5? Then you have a Sony camera in your pocket. They make a fortune as OEM sensor manufacturer. Personally, I believe they should expand their business- to-business operations and make more components for campanies like Apple. It's a great business model for Samsung, and Samsung are killing Sonys CE division because of it . In the past they have been too reluctant to let other brands use their technology (maybe they were a bit bitter after losing the format war to JVC, with VHS v Betamax and having to share the CD standard with Philips)

Sony means Electronics. I think it is big of a beast to give up just like that. They should and will re-evaluate their product line [VIAO??]. It seems like they have their hands in too many plates. Sony on their imaging side has wealth of camera[minolta] and lenses[zeiss/minolta] technology. I truly doubt that they will let that fold up. the failure in profit is probably because they don't have a niche product either in design or technology.When was the last time Sony announced a product that excited the market? PS2, maybe.? I remember when I was a child anything with a name Sony on it was considered high tech and superior than others. Then the fall was hard and sad. Once you reach the bottom, the only way is going up. So I hope they revive with exciting products. Their failure can have ripple effect to others.
I might have to eat my words since I live in an era where I saw the mighty GM and Chrysler fall..

Sony needs to price their products to attract the Nikon and Canon folks. I use to be a Nikon guy for years and added Canon to my collection because i wanted to shoot at 1.2. Sony acts as it they are Nikon and Canon in their pricing. Their cameras are too close in price to Canon and Nikon.

And you can see a difference between 1.4 and 1.2?

I sure can, try focusing on hair against a white backdrop

This their first full year profit in five years so this really shouldn't be any news at all.

Neil Burke's picture

I think your information is slightly wrong here... One of Sony's strongest "electronic" divisions is their camera division. They now outsell Nikon in many markets, coming second to only to Canon. Their worst performing division, year on year, is consumer electronics. This consists of their TV's, DVD players, Hi-Fi's etc. Playstation falls under "Computer Entertainment" division, and is doing quite well. Their movie and music divisions are doing quite well too (for example, while many might not care for Adam Sandler's movies, they make massive profits and are highly bankable for Sony).

Taking their camera division alone, as the second most popular brand, their sales worldwide are in the billions of dollars (or euros, pounds... whatever). The issue is that, as a clongomerate, Sony is far too big. So their great sales figures in one division will never be enough to prop up other divisions which are underperforming.

Anyhow, their worst performer is CE; their TV's etc. Sony still see this as their core business since it was their original business. In some ways they need to keep a prescence here just for marketing reasons and general brand recognition. Howard Stringer did a great job as CEO years ago, but seemed to loose his way recently. It was if he didn't know how to deal with the recession. Wether voluntary or forced from within, his decision to step down as CEo was a good move for the company. His successor on the other hand, Kazuo Hirai, has done an awesome job, in the year or so, since ho took the helm in Japan, finally returning core businesses to profitability.