Sony’s electronics business will play a supporting role in the future
Perhaps the most famous Sony product is the Walkman cassette player, although the Japanese company has offered many other interesting electronic devices throughout its history. In the future, hardware solutions will have a much weaker impact on the corporation’s business, they will play a supporting role.
The main range of Sony electronic devices is now formed by TVs, digital cameras, audio components, and smartphones. Many of these products are developed using old patents so that Sony is even referred to as an “archive company,” says the Nikkei Asian Review. In fiscal 2020, Sony’s electronics operating profit is expected to decline by 30% to $ 565 million, meaning that the company’s electronics sales will account for only one-tenth of its total operating profit. Twenty years ago, this figure reached 60%.
Of course, the coronavirus pandemic also intervened in the deterioration of the situation, which reduced the demand for smartphones and cameras, but the fundamental processes are such that in the Sony business, video games and music are starting to dominate in terms of generated profits. According to company representatives, in these conditions, the costs of developing electronic devices seem disproportionately high, and in the future, they will be optimized.
This does not mean that Sony will abandon the creation of advanced products. On the contrary, the corporation still hopes for its ability to produce devices that become hits, but its functionality will be focused on supporting the dominant types of business. For example, the Vlogcam ZV-1 camera, due to its ability to instantly focus on faces, has gained high popularity among video bloggers, the demand for it has exceeded supply by two times.
In early August, Sony broadcasted the performance of a popular rock band in Japan using an array of cameras filming the action from various angles. Viewers of the broadcast had the opportunity to change the angle in real-time. This example shows how Sony hardware solutions can successfully integrate into the company’s new paradigm.
While Sony remains the fourth largest company in Japan by market capitalization, the recent rise in the share price is due to the high demand for video games as a result of self-isolation. In April next year, the Sony Electronics division will be renamed Sony Corp., and the parent company will be named Sony Group, symbolizing the primacy of the priorities of the new era. In October this year, the directions for the sale of television equipment to consumers and corporate clients, which until now functioned separately, will be merged. Sony does not try to forget about its roots, but in the new conditions, it has to transform the business for the sake of survival.
