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How Kazuo Hirai plans to save Sony from mediocrity

Will this bi the shift that Sony fans have been waiting for
April 13, 2012

What a difference a couple of decades — and some bad moves – made for Sony. This is a company that has created some of the world’s most iconic and beloved piece of electronic gizmos (Walkman and PlayStation, anyone?), but now sees itself playing second fiddle. We’re talking about a multimedia powerhouse that was once close of buying a troubled company called Apple in the early 1990s, which has ironically outgrown it now 30-fold in terms of market value ($18 billion compared to Apple’s $581 billion).

There’s no sugar coating the fact that Sony is ailing badly, and this is the sad reality that that Kazuo Hirai, the new CEO of Sony, inherits upon taking the helm from Howard Stringer. A condition that begs for Hirai to work on his magic once more, just as he did when the Sony veteran successfully revived the company’s gaming unit.

Just how bad of a state Sony is currently in right now? In 2011 alone, the electronics giant suffered a $6.4 billion loss. In the more traditional TV market that Sony once sat comfortably upon the throne, it hasn’t been in the black for eight years in a row, with losses amounting to $10 billion. Sony has also been left in the dust by the likes of Samsung, HTC, and even LG in the smartphone market.

While it’s very hard for one man alone to change the fortune of a company, the chances are somewhat better when that man is Kazuo Hirai. During a news conference at Sony’s headquarter in Tokyo, a confident Hirai told reporters, “I am determined to transform and revive Sony.” And we tend to believe him. The new game plan that he has set will have Sony focusing on three core business: digital imaging, gaming, and mobile products.

For the company’s digital imaging business unit, Sony plans to accelerate the development of digital imaging technologies, such as image sensors and signal processing technologies, which will not only be geared towards the consumer market, but also to professionals in the media, medical, and security fields.

For its gaming arm, the company will move away from using physical media by expanding the availability of downloadable game titles for its handheld gaming consoles like the Vita and PSP, as well as for Android tablets and smartphones.

Finally, for the recently established Sony Mobile unit, Hirai said that he wants to make sure that Sony will become a leading player in the smartphone market, with handhelds becoming Sony’s hub in the mobile business. Content from Sony Entertainment Network will be tightly integrated into all of its mobile devices. The goal has been set quite high, as Hirai plans to triple the unit’s revenue in the next three years to $22 billion. Overall, Sony is seeking a sales target of $105 billion in two years for all of its business units.

The devil is in the details and we’re eager to see more of the strategy being unfolded. If the newer crop of Xperia smartphones is any indication, we’re inclined to think that Sony is heading in the right direction. Focusing on developing tightly integrated smartphones (preferably Android flavor) as one of its business cores will do Sony wonders. Just look at Samsung and how the mobile unit there has became Samsung’s biggest cash cow. The power of the PlayStation brand and Sony’s huge multimedia resources will be  key differentiating factors. And they should help the electronics giant move away from mediocrity.