Sony shedding 10,000 jobs as new CEO promises change

Posted:
in General Discussion edited January 2014


Sony's new CEO Kazuo Hirai announced on Thursday an aggressive plan to turn around the ailing electronics titan that will result in 10,000 job cuts.



Hirai revealed at a new conference in Tokyo that the company's annual loss will reach $6.4 billion this year, almost twice that of earlier predictions, as noted by Reuters.



"We have heard a multitude of investor voices calling for change," Hirai said. "Sony will change."



According to the report, the change will come with a restructuring charge of 75 billion yen ($926 million). The company hopes to reduce fixed costs for its TV unit by 60 percent next fiscal year and cut operating costs by 30 percent.



The loss of 10,000 jobs results in a 6 percent reduction in Sony's workforce on top several rounds of layoffs in recent years. Hirai, who took over in February, has promised to take any necessary "painful steps" to improve the company's fortunes.



The company isn't alone in its struggles. Fellow Japanese TV makers Sharp and Panasonic have also fallen upon tough times.



"Japan's consumer electronics industry is facing defeat," Reuters reported Fujio Ando, senior managing director at Chibagin Asset Management, as saying earlier this week.



Rival device maker Apple is now worth more than 30 times as much as Sony in terms of market capitalization. The company's chain of successes have threatened Sony's businesses. For instance, the iPod has replaced Sony's Walkman as the modern music player, while the iPad and MacBook Air have disrupted the company's PC sales. The rise of iOS as a viable gaming platform has hurt Sony's PlayStation profits.



Difficulty in the smartphone industry led Sony to take full control of its joint venture with Ericsson earlier this month. The company paid $1.4 billion to buy out its partner. Even as Apple's iPhone has taken in a growing portion of the mobile phone industry's profits, Sony Ericsson lost €247 million last year.



[ View article on AppleInsider ]

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Comments

  • Reply 1 of 38
    kkqd1337kkqd1337 Posts: 177member
    Oh dear Sony... maybe you shouldn't have been so arrogant all those years



    Sony will hopefully push through here... love their Z series laptops and think they will make a good Ultrabook as long as they price it right and don't get greedy



    just checked their website, their laptop range consists of: C,E,F,S,Y and Z series.... too much?
  • Reply 2 of 38
    Sony could just concentrate on the PlayStation brand for now.



    Follow Apple's way - lots of plans but executed step-by-step. Don't rush.



    Or maybe it's time to bring back the person who shook Sony back then.
  • Reply 3 of 38
    mdriftmeyermdriftmeyer Posts: 7,215member
    You were an electronics corporation, then a Music and Motion Picture Catalogue conglomerate, then a Game Console conglomerate, and each time you overreached your original vision suffered and your products cheapened, while prices kept going up.



    The crash is inevitable.
  • Reply 4 of 38
    maccherrymaccherry Posts: 924member
    Once you get as big as Sony you just start to make crap so people will buy your sh** again. And again.

    Same thing will happen to Apple. Just give it time and all them iPhones and mac will b as disposable was those cheap a$$ printers by HP.
  • Reply 5 of 38
    sockrolidsockrolid Posts: 2,788member
    Quote:
    Originally Posted by AppleInsider View Post


    [...] For instance, the iPod has replaced Sony's Walkman as the modern music player, [...]



    Sony blew it. They kept trying to force weird, proprietary storage formats on the public.

    MiniDIsc. Memory Stick. UMD. ATRAC encoding instead of MP3. None of which did anything to

    help the Walkman brand. Sony just donated the portable media player market to Apple.



    Quote:
    Originally Posted by AppleInsider View Post


    [...] while the iPad and MacBook Air have disrupted the company's PC sales. [...]



    Sony never controlled their own destiny in the Wintel PC market. No Wintel PC maker does.

    Because they're all at Microsoft's mercy. And they'll all suffer when Windows 8 is released.

    Windows 8 is the answer to a question nobody is asking.
  • Reply 6 of 38
    shaun, ukshaun, uk Posts: 1,050member
    Sony, Panasonic, et al could learn a lesson from Apple: too much choice is just confusing for the customer and must make it difficult to gain economies of scale in the manufacturing process. I've bought a lot of Sony kit over the years and it's always been good quality and very reliable but it's very depressing walking into my local Sony Centre these days. The staff all look bored and there's just too much crap. Compare that to the simplicity of the Apple Stores. If you read one of Sony?s product catalogues it?s just amazing how many products they make.
  • Reply 7 of 38
    asciiascii Posts: 5,941member
    I don't know if it will work, but they do need someone aggressive, because what they are doing isn't working. Good luck to him. I have owned an original Playstation (years ago), a Sony TV and a Sony DVD player, all good quality, never let me down. I hope he can revive it.
  • Reply 8 of 38
    They need nothing less than reinventing themselves.



    Quote:
    Originally Posted by ascii View Post


    I don't know if it will work, but they do need someone aggressive, because what they are doing isn't working. Good luck to him. I have owned an original Playstation (years ago), a Sony TV and a Sony DVD player, all good quality, never let me down. I hope he can revive it.



  • Reply 9 of 38
    MarvinMarvin Posts: 14,200moderator
    Quote:
    Originally Posted by AppleInsider View Post


    Sony's new CEO Kazuo Hirai announced on Thursday an aggressive plan to turn around the ailing electronics titan that will result in 10,000 job cuts.



    This is pretty much par for the course when a new CEO starts as it means an instant reduction in expenses for the company and it makes it look like the CEO has justified their position. Fire 10,000 people on $30,000 per year = $300m saving, pay the CEO $15m and the company is $285m up. Well done, new CEO. While 10,000 people struggle to pay for their homes, this one individual gets to buy multiple homes. I guess it's all they can do at this stage though.



    They are still making a loss in the Playstation sector - last year, they had a loss of $1b in one quarter. They probably would make more by just doing software for iOS and Android. A 500 million unit install base where the most popular activity is gaming and all you have to do is publish an app that gets first-time sales on every sale (no used games).



    They could even republish a lot of PS2 titles and make an absolute killing in software sales for next to no effort. It would of course kill off their own portable hardware but not enough people are buying it anyway. 1.5m Vita buyers per quarter (at launch no less) is not going to work. Apple ships that many in a day when a new phone comes out.



    Kill the Vita and get Gran Tourismo on my iPhone 4S, stat.



    Quote:
    Originally Posted by AppleInsider View Post


    Hirai revealed at a new conference in Tokyo that the company's annual loss will reach $6.4 billion this year, almost twice that of earlier predictions, as noted by Reuters.



    I wonder how many billions they can lose before bankruptcy. If they were a bank with private gain and public loss, I know the limit is infinite billions but for a company that is held to the rules of capitalism, bankruptcy can't be too far off for them now. Maybe companies should turn into banks where opening savings accounts and borrowing credit/mortgages is done in return for their products.
  • Reply 10 of 38
    Everyone who posts about Sony's mistakes will be right. They have made so many they have a complete mess on their hands. With a share price below book value, there are massive write-downs to come. I expect they will be forced to bust themselves up and be sold off in pieces. Unfortunately, it will take so long to get to this point, the brand will have zero value -- perhaps it already does, I'm getting old.
  • Reply 11 of 38
    irnchrizirnchriz Posts: 1,580member
    Quote:
    Originally Posted by AppleInsider View Post


    The rise of iOS as a viable gaming platform has hurt Sony's PlayStation profits.

    [ View article on AppleInsider ]



    Handhelds, yes, home consoles no. Plus the PSP had disappointing sales long before iOS appeared. Sonys problems lie in the way it split all of its divisions and regions causing a loss of focus/integration/planning. They got sloppy.
  • Reply 12 of 38
    quadra 610quadra 610 Posts: 6,743member
    Big Deal.



    Sony out, someone else in.



    Sony's become too generic to care about.
  • Reply 13 of 38
    bwikbwik Posts: 562member
    Quote:
    Originally Posted by maccherry View Post


    Once you get as big as Sony you just start to make crap so people will buy your sh** again. And again.

    Same thing will happen to Apple. Just give it time and all them iPhones and mac will b as disposable was those cheap a$$ printers by HP.



    I agree. Corporate structure dictates cost cutting and design-by-consensus. The personal clout of Steve was the only reason Apple was able to build the iPad or iPhone. Both of which were, according to market journalists at the time, stupid products.



    Apple won't be producing things so innovative that they appear "stupid" to the marketplace and then suddenly rocket up to 10s of millions of sales.



    Reminder, this was in 2010 when the iPad required Steve's personal clout in order to launch. Apple today is just a corporation. Its job will be to maintain what it has against innovative newcomers.
  • Reply 14 of 38
    gtrgtr Posts: 3,231member
    Will Hirai get to be Hero?



    Time will tell.
  • Reply 15 of 38
    bwikbwik Posts: 562member
    Quote:
    Originally Posted by Marvin View Post


    While 10,000 people struggle to pay for their homes, this one individual gets to buy multiple homes. I guess it's all they can do at this stage though.



    What possible justification can Sony have to employ thousands of people? They sell generic electronic products. The danger with companies is they get run for the employee's benefit not the shareholders (who are widows and orphans trying to pay for their mortgage too, in many cases).



    Sony has been trading on its old brand equity for years. Employees have been paid without delivering value to the customer. Sony could purchase generic electronics (and often does) and simply box them and affix a Sony label. This takes a bare minimum of workers -- maybe 1000 for the company.



    In another industry, I think Mercedes Benz has also been trading on its old brand equity for years. Collecting high prices from confused customers who don't realize the products are no longer premium. That is a recipe for short term profits and high salaries for lazy workers. But eventually the reckoning comes.
  • Reply 16 of 38
    mgleetmgleet Posts: 28member
    The only Sony products I've ever owned were a 1st gen bulky PS2 and a 1st gen PSP. I loved both (tho I loved my array of Nintendo handhelds more). All in all I probably own Sony near an accumulated year of entertainment. So while it's no loss at all for me currently, it is a little bit saddening to see Sony flailing.



    Reggie Fils-Aime, Nintendo's President in America, once said in an interview that Nintendo competes with Apple, before most people realized it. Even though the iPod touch and iPhone weren't really fantastic for games at the time, Apple and Nintendo still competed on time. If people were using an iPhone OS device for whatever reason, that's time not spent on a DS.



    Also, people don't want two devices in their pockets. iPhones and iPod touches are way more multipurpose than DSes. It's the iPhone or iPod touch that left the house. Without either of those, it might be the DS that gets used during breaks.



    I see people in various forums say that the iPad doesn't compete with game consoles simply because they suck for games. Just a couple posts up someone said that. But if people are sitting on the couch using an iPad having fun with GarageBand, where without it they would be sitting on the couch playing games on a PS3, those are customers that Sony is absolutely losing.



    If you look at iPads and PS3s as entertainment devices rather than gaming devices, I think that it's hard to say that they don't compete and that the PS3 is way better. They compete on time. And time can be better spent on an iPad.
  • Reply 17 of 38
    Quote:
    Originally Posted by Marvin View Post


    This is pretty much par for the course when a new CEO starts as it means an instant reduction in expenses for the company and it makes it look like the CEO has justified their position. Fire 10,000 people on $30,000 per year = $300m saving, pay the CEO $15m and the company is $285m up. Well done, new CEO.



    You hit the nail on the head. Contemporary management usually looks for the path of least resistance when it comes to "improving" the bottom line and making themselves look better. The easiest way to guarantee an instant improvement in the numbers is to simply fire people. It's not exactly the type of decision that warrants someone being paid millions to make.
  • Reply 18 of 38
    Quote:
    Originally Posted by MGLeet View Post


    I see people in various forums say that the iPad doesn't compete with game consoles simply because they suck for games. Just a couple posts up someone said that. But if people are sitting on the couch using an iPad having fun with GarageBand, where without it they would be sitting on the couch playing games on a PS3, those are customers that Sony is absolutely losing.



    The iPortal will be a game console, among other things. There is no reason in the world why it would not include that functionality.



    There is lots of money to be made with accessories. A game controller or three can be purchased to expand the functionality of the basic unit.
  • Reply 19 of 38
    quickquick Posts: 227member
    Quote:
    Originally Posted by Shaun, UK View Post


    Sony, Panasonic, et al could learn a lesson from Apple: too much choice is just confusing for the customer [...]



    Absolutely! Sony's brand value decreased over the years with the confusing amount of products they have on offer. By simplifying their palette to 2-3 models per segment (mobiles, cameras, tvs, laptops, etc.) Sony will at least regain attention to their products.
  • Reply 20 of 38
    Quote:
    Originally Posted by AppleInsider View Post


    ... Rival device maker Apple is now worth more than 30 times as much as Sony in terms of market capitalization. ...



    And even with the reduction in workers, Sony still has over three times as many employees as Apple does.



    I think they have a lot more shrinking to do before this is over. They need to shed at least half of everything they have (workers, products, etc.).
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