Ronnie05's Blog

Modern day Dell? Or Sony? Or is there something more to Samsung?

Posted in Industry updates, Mobile Devices and Company Updates by Manas Ganguly on January 15, 2013

Q4, 2012 revenues- $52.7 bn, profits- $8.8 bn.CY 2012 revenues – $188bn, profits- $27bn.

Samsung is on a roll and having thumped Nokia four quarters back, Samsung is taking the fight to the mighty Apple. Samsung is already the no.1 Mobile phone maker and smart phone maker globally. Also, its foray into Smart Cameras and Refrigerators have altered Samsung’s position from a Fast Follower to a Technology Leader in the Industry! 2012 has been very productive for Samsung as it seems to have a transition from a moderately successful electronics Chaebol to the leading non-iOS device maker. Interestingly enough Samsung and Apple make 104% of the Mobile devices profits – leaving no headroom for any investments from any other Mobile device maker. Samsung’s relentless progress in the Mobile-tech sector over 2012 have christened it as the Fifth Horsemen – next to Google, Apple, Amazon and Facebook. (and I am shocked by the absence of Microsoft in that list by MG Siegler).

The Fifth Horseman- Samsung!

Even while Samsung has made its modest efforts to extend its run in smartphones to Smart TVs, Smart Cameras and Smart Refrigerators – the key to Samsung is and will remain to be smartphones. If smartphones as a device follow the PC/Laptop route – i.e only incremental changes and no quantum leaps- then Samsung will end up the HP, Compaq and Dell route – where these players kept producing laptops until laptops became redundant – due to the advent of Smartphones and tablets (Handhelds is the industry terminology). Those profit figures will be difficult to emulate year on year in horizontal device domain.

Currently, at this point of time, Samsung seems to be going the Sony Way – Like Sony had the Walkman, the Bravia TV, Sony Music system, Vaio laptops, Mobiles & Smartphones, Cameras and other very strong sub brands in the consumer segment and has been largely unable to piece it together in a coherent strategy. The lack of this coherence was what has led to the slow skid at Sony. Samsung similarly is invested in a dozen and more device categories – TVs, Mobiles, Tablets & Smartphones, Laptops, Cameras, Refridgerators, ACs and Washing systems and in the current context is seemingly trying to put all these devices in the connectivity era. However, that is nothing more than just a smart tactical move – and Samsung knows this. Samsung’s dilemma is about not being able to marry these disparate components into one converged strategy.

(to be continued)

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Where did Sony Loose its Mojo?

Posted in Mobile Devices and Company Updates by Manas Ganguly on December 15, 2012

Sony-Xperia-Yuga

As I write this post, I am aware of a considerable hype and excitement that has been created by Sony Experia C660 Yuga Smartphone- 5” Full HD display, Glass Back, Android 4.1.2, Samsung Exynos 5 Quad Core processor, 3GB RAM, 128GB Storage, 16MP Camera and more. Sure that’s excitement- its closer to a laptop than a smartphone and sure that’s big- But I am really not sure –if that enough to get Sony back in the game. Here’s why-

Sony- Brands

Back in 2005-08, Sony (Then erstwhile Sony Ericsson) was big in devices- the 4th or the 5th in terms of device volumes and revenues, 2nd or 3rd on Profits and an enviable leadership in ASP. As if that wasn’t good enough Sony had a real plan to leverage its other sub brands – Walkman, Cybershot, Handycam, Playstation, Bravia, Sony Pictures, VAIO and Sony Music. Sony thus had enviable stakes in Music, Video, Imaging, Gaming, Computing, Content (both movies and Music) and LCD screens. In 2007, that kind of a portfolio was something that even a Apple couldnot think of for itself. Sony needed Brand extension of its venerable consumer brands into mobility and many believed that Sony had the secret sauce … except that the secret sauce did not happen. In 2009, Sony launched its last big sub brand- Xperia which would stand for its line of smartphones and one hoped that Xperia would marry the Sony heritage of consumer durable brands – 3 years on, the promise is un-fulfilled and Sony is fast fading into “has been” territory in smartphones.

Sony

Where did Sony Loose it? Like Nokia, it misread the writing on the wall as a war of features. It did not recognize the importance of putting all this together on a platform and innovate on the platform – something that Apple and Google pioneered with their App stores. Instead it played the marksmanship on device features bettering one sec with another and still with other. The most appalling realization is that Sony hasn’t still done anything to leverage these sub-brands to build a proposition in Mobility even now. That’s where Sony Experia C660 Yuga Smartphone comes in. All hardware, device and specs – no real platform innovation.

Sony has to get its content platform strategy in place – to really cause a dent in the device space. However, I don’t see a platform play happening at Sony which is a little sad given that there is very little profit pool left to maneuver only on the basis of devices. Neither has Sony been able to leverage its sub brands positively to create compelling propositions.

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End of road for Sony?

Posted in Mobile Devices and Company Updates by Manas Ganguly on June 4, 2012

Technology companies keep a lot of cash and investments for a reason, to tide them over in bad times, and to fuel turnaround strategies. When the cash starts to run out, however, that’s a clear sign that we’re no longer talking about a turnaround.

A headline that caught my eyes today, was that Sony shares had breached the 1000 yen level in Nikkei. This was the first time after 1984 (28 yrs) that Sony has seen such a valuation. Worse, Sony now has less cash than a quarter’s sales.

Compare that with Microsoft which could get by for three quarters on its cash, if sales fell to zero. Or Cisco, which could live for a year on its cash and short-term investments.

Kazuo Hirai’s turnaround plan for Sony has yet to show any results whatsoever. There is a point in the life of every technology company’s lifecycle where you go from turnaround mode to survival mode. At that point it’s usually too late to do much of anything. The next best option is then to sell the non-core assets of the holdings and draw money to support core operations. 

Read my earlier posts about Sony: The choices for Sony, Of lost opportunities and bygone glories, Profiling Sony’s accumulated losses across categories

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The choices for Sony!

Posted in Industry updates by Manas Ganguly on April 18, 2012

Presenting the final profile of the decline at Sony. Read the first and second posts.This post examines the options that Kirai provides Sony.

Sony had all the makings of a winner with great competence and expertise across all key categories. However, the typical Steve Job’esy intellect to connect all elements into one wholesome synergistic company has been missing with different parts of the company working in silos which impeded the emergence of a coherent strategy. By the time the different divisions had been corralled into cooperating, Sony had lost its foothold in two crucial product categories: televisions and portable music devices. It was late to flat-panel displays, as well as to digital music players like the iPod. After disappointing sales, Sony pulled the plug on its answer to Apple’s iTunes, the Sony Connect online store, after just three years. It has not been able to offer up a comprehensive alternative since.

Sony’s woes mirror a wider decline in Japanese electronics and many of the Japanese giants have lost their technology leadership in many areas. A strong Yen has hurt exports, but a deeper issue is that the economy and the businesses has simply run out of innovative ideas. Mr. Hirai, the new C.E.O., has said that the company will focus on three businesses: mobile devices, including smartphones and tablets; cameras and camcorders; and games. Analysts and Industry watchers are already writing Sony off from the TV space. However, Mr Hirai says that Sony will not retreat in TVs.

Hirai is very keen to focus on its Xperia line of smartphones, which according to Sony is fast becoming a hub in the technology ecosystem. He said he would make Sony a leader in the mobile field and triple sales in that business in three years, to 1.8 trillion yen, or $22 billion. Sony’s purchase of Ericsson stake in Mobile venture for $1.5bn is a step in the direction of getting serious and full control of the mobile domain. The intent is to integrate its Xperia smartphones with Sony tablets, personal computers and game consoles, allowing users seamless access to content across devices — a long-trumpeted but so far largely elusive strategy.

Sony is also keen to leverage its vast catalog of music, movies and games to differentiate its content business,and hopefully replicate the success of the Apple iTunes online store. Sony has said it intends to expand its popular PlayStation game network to offer music and video, replacing the disjointed lineup of content delivery platforms it now operates. Sony hopes to increase Sales in games to 1 trillion yen ($12 billion) by the end of March 2015, from slightly more than 800 billion yen ($10 billion), and to more than double operating profit.

Sony’s digital imaging business which includes digital cameras and camcorders will also see considerable step up of action to multiply sales from $12 billion currently to $19 billion by 2015. Interestingly enough, Kirai is also scouting growth in the medical field and is looking at acquisitions and investments. Sony has emerged as one suitor for the medical equipment maker Olympus

On the ailing Televisions, Analysts are of the view that Sony needs to exit the business after 8 straight years of losses. However, Hirai has very different thoughts on that. According to Mr. Hirai -TV’s are at the center of every home and a part of Sony’s DNA. Sony would try breaking in back to profitability by 60% reduction in fixed costs (and possibly work force cust). Sometimes letting go is the hardest feat.

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Profiling Sony’s accumulated losses across categories

Posted in Industry updates by Manas Ganguly on April 16, 2012

Sony’s loss in key categories such as Music and Televisions is the key to a accelerated downward spiral. The second part of the three series (Read part 1 here) blog examines the losses by the electronics giant across its key categories.

Music
With its catalog of music and foundation in electronics, Sony had the tools to create a version of the iPod long before Apple introduced it in 2001. The Sony co-founder, Akio Morita, envisioned as early as the 1980s marrying digital technology with media content for a completely new user experience. It didn’t happen. Initially, Sony engineers resisted the power of the company’s media divisions. Then Sony wrestled with how to build devices that let consumers download and copy music without undermining music sales or agreements with its artists. The company went its own way: its early digital music players, for instance, used proprietary files and were incompatible with the fast-growing MP3 format.

Television
Sony held aces in Televisions till about middle of last decade with impressive technologies such as Trinitron. However, lower-cost manufacturers from South Korea, China and elsewhere, are increasingly undercutting Sony. As TV’s shifted to larger and typically thinner formats, Samsung truly leveraged its expertise in thin panel screens to dislodge Sony and take the top mantle in Televisions. As Sony’s brand started losing much of its luster, the company found that it had a harder time charging a premium for its products.

The conundrum of many
Sony still makes a confusing catalog of gadgets that overlap or even cannibalize one another. It has also continued to let its product lines mushroom: 10 different consumer-level camcorders and almost 30 different TVs, for instance, crowd and confuse consumers. The diffused attention on multiple product lines has led to a divergence in focus (in sharp contrast to Apple’s focused strategy)

Gaming
An area where Sony has found success — and perhaps one that most crystallizes the transition from stand-alone consumer electronics into a digital, Internet-centered world — is video games. Sony marketed its PlayStation 3 console, for example as an integrated entertainment system that serves as a hub in the living room, connecting the Internet and television. But Sony’s obsession with hardware has marred that strategy. A delay in developing the console’s Blu-ray DVD player forced Sony to push back its release. Sales suffered because the PlayStation 3 cost much more than rival models from Nintendo and Microsoft. Sony was also slow to move into the world of online games, giving Microsoft a head start.

Online
Sony’s online strategy is problematic as well. The company has yet to come up with an integrated common platform to deliver music, movies and games, each of which, until recently, had its own network, with other platforms like the PlayMemories photo- and video-sharing services to boot. Now, these disjointed services, developed by far-flung units, are being forced into the Sony Entertainment Network, which Sony says will be its overarching content delivery platform. Experts say it will have to start exiting some product lines. It has already spun off a chemicals business, for instance, and some analysts wonder about its money-losing TV business.

to be continued

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Sony: Of lost opportunities and bygone glories

Posted in Industry updates by Manas Ganguly on April 13, 2012

Profiling the fall in Sony in a series of three posts. This is Part I of the series

In an event on April 12th, Kazuo Hirai, Sony’s executive officer heralded change in Sony saying that “The time for Sony to change is now.I believe Sony can change.” In-spite of Sony’s impressive tech credentials – not many outside and inside of Sony believe that “Change” could happen. Sony which once defined itself as vanguard of technological prowess is suddenly faced with a deficit of strong ideas to keep it relevant. Coupled with the rising Asian rivals and a strong Yen, Sony suddenly has seen a huge dip in competitiveness. Sony has not turned profit since 2008, is expected to return a loss of $6.4 billion this year and hasn’t delivered a hit product in years.

Sony’s stock value has been on the dip for most of the last decade and is 89% off its historic highs. It is trading at a quarter of the price of last decade. Sony’s m-cap is 1/9th of Samsung’s and 1/13th of Apple’s.


Sony’s stock price

What went wrong is a tale of lost opportunities and disastrous infighting. It is also the story of a proud company that was unwilling or unable to adapt to realities of the global marketplace. Sony’s gravest mistake was that it failed to ride some of the biggest waves of technological innovation in recent decades: digitalization, a shift toward software and the importance of the Internet. One by one, every sphere where the company competed — from hardware to software to communications to content — was turned topsy-turvy by disruptive new technology and unforeseen rivals. And these changes only highlighted the conflicts and divisions within Sony.

to be continued

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Sony: Of lost opportunities and bygone glories

Posted in Industry updates by Manas Ganguly on April 13, 2012

In an event on April 12th, Kazuo Hirai, Sony’s executive officer heralded change in Sony saying that “The time for Sony to change is now.I believe Sony can change.” In-spite of Sony’s impressive tech credentials – not many outside and inside of Sony believe that “Change” could happen. Sony which once defined itself as vanguard of technological prowess is suddenly faced with a deficit of strong ideas to keep it relevant. Coupled with the rising Asian rivals and a strong Yen, Sony suddenly has seen a huge dip in competitiveness. Sony has not turned profit since 2008, is expected to return a loss of $6.4 billion this year and hasn’t delivered a hit product in years.

Sony’s stock value has been on the dip for most of the last decade and is 89% off its historic highs. It is trading at a quarter of the price of last decade. Sony’s m-cap is 1/9th of Samsung’s and 1/13th of Apple’s.

What went wrong is a tale of lost opportunities and disastrous infighting. It is also the story of a proud company that was unwilling or unable to adapt to realities of the global marketplace. Sony’s gravest mistake was that it failed to ride some of the biggest waves of technological innovation in recent decades: digitalization, a shift toward software and the importance of the Internet. One by one, every sphere where the company competed — from hardware to software to communications to content — was turned topsy-turvy by disruptive new technology and unforeseen rivals. And these changes only highlighted the conflicts and divisions within Sony.

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Sony Data breach: User backlash and lessons in security

Posted in Industry updates by Manas Ganguly on May 4, 2011

The data breach at Sony obviously has left the corporation a bit shaken and stirred and on its part Sony has been trying to make good on the losses both on credibility and services. While, Customers will get complimentary downloads and 30 days of free premium services as a make good, it raises fundamental questions on user-data security. A few questions to be answered in transparency by Sony are

1. Even though, the initial analyses saw that Credit card data wasn’t stolen, what kept Sony waiting for 7 days before they made this event public. The ensuing 7 days did not record any fraudulent activities but then the possibility of frauds in these 7 days were the maximum. All that Sony did was to shut down its Playstation network on learning of the crime which stopped further leaks but did not address lost information adequately.
2. Sony probably did not pay enough attention to security when it was developing the software that runs its network. In the rush to get out innovative new products, security can sometimes take a back seat. Also, New software has errors in it. So they expose code with errors in it to large numbers of people, which is a catastrophe in the making. Sony would have to do with explaining the lack of adequate security in guarding sensitive information.
3. Data storage is categorized into sensitive credit card information which is given higher class of access security versus other details such as name, password, age, gender, family details etc. These layers in security may cause larger ripples in terms of individual email based phishing scams and attacks. ALL USER DATA NEEDS TO BE ACCORDED FORTRESS SECURITY SET UP.
4. The second data breach has reportedly happened from a 2007 out-dated database. If that be the case, the question arises how is out-dated data treated and accorded security. Shouldn’t that be well secured as well?

Sony has been more forthcoming on the security breaches given that bulk of attacks on corporate and governmental computer networks go unreported because victims want to avoid the embarrassment and public scrutiny that come with acknowledging that their systems have been hacked. In many cases companies seek to keep the matter quiet by telling individual customers of the problem without issuing a public statement like the one from Sony this week. For example, 85 percent of some 200 companies in electricity-producing industries said that their networks had been hacked, according to a survey released this month by security software maker McAfee Inc and the non-profit Center for Strategic and International Studies. Yet utilities rarely disclose such attacks. In many cases, intrusions go undetected by the victim company, leaving the firm and its customers completely unaware that criminals have access to their sensitive data.

The hacking of Sony Corp’s PlayStation Network,Sony Online entertainment, Qriosity and has earned a place in the annals of Internet crime. It is one of the biggest online data infiltrations ever and is a sign that the industry may face new threats. It also serves a reminder that as we move into the digital world, we put more and more of our digital identity into the cloud, or digital devices … Security is going to be a tremendously important part of what we do. Payments security is evolving along with intelligent devices, like smartphones and contactless cards, and technologies such as NFC. Security standards and their up gradation is a key component to maintaining data privacy and data integrity.

How safe is user data online? (The Sony episode)

Posted in Industry updates by Manas Ganguly on May 3, 2011

Julian Assange in an interview some time back alleged Facebook to be the “most appalling spying machine” which exposes private information of over 600 million subscribers to law makers and other national security agencies in a breach of fair rules of user privacy. Inside days of Assange’s interview, we heard from Sony Corp, a leading Durable and Gaming brand about 2 counts of security breaches of its online networks. The first attack on Sony’s play-station video game network and Qriosity online music and film service which happened between 17th-19th April exposed names, addresses, passwords and possibly credit card numbers of its 77 million customers. The second attack (which preceded the first one but was discovered later possibly 16th-17th April) had drilled a hole through Sony Online entertainment network and had compromised credit card data relating to 24.6 million of its consumers and debit card data of around 10,700 more customers in Austria, Germany, the Netherlands and Spain. Sony in a statement has said that the main credit card database had not been compromised as it is housed in a safe and secure environment.

What saves the day for Sony corp is that second level security data – The three- and four- digit codes are used as a second source of authentication for many online vendors. The network passwords were also protected by a level of security called hash algorithm in which the word users type in is converted on Sony’s servers to a string of characters entirely unrelated to the original password. With passage of time, the value of this stolen information diminishes greatly as banks and users increase security precautions around such credit card data or altogether cancel it. However, hackers may be trying to hijack e-mail accounts by attempting to access ones provided to Sony, and plugging in PSN passwords to see if they were re-used for both, and spear fishing for data through fraudulent emails that contain enough personal information to persuade the victim to let down their defenses, which can be enough to get them to click on a link that downloads malicious software onto their personal computer.

The financial impact of this security incident for Sony depends on how well the company convinces customers it “will make things right”. The outflow for Sony in terms of credit card fraud, network repair and marketing costs is $50 million. The cost of legal suites would add to that figure in some measure. The impact for Credit card majors could be around $500 million. How about user faith and confidence on Sony? The loss of that (in Mastercards’ tag line) is priceless.

An icon fades away: Walkman

Posted in Industry updates by Manas Ganguly on October 28, 2010

A Walkman was the ultimate device to have back in 1990s. I remember my first experience with a Walkman: That effect has not been matched by a lot of other experiences. I carried 3 of them during my teens and college years. Here’s a tribute to the iconic Walkman which is now history.

Almost precisely on the ninth birthday of the iPod, Sony Corp. announced that it will cease production of the Walkman, the iconic portable cassette player once seen clipped onto belts or waistbands of joggers around the world. The timing may be sheer coincidence, but its significance is unmistakable. The iPod may not have laughtered the Walkman on its own, but just as the Walkman did in a previous era, the iPod has become almost a generic term to refer to the portable music players of its time.

On the surface, the demise of the Walkman seems really to be about the demise of its medium of music delivery: the cassette. In 2009, only 9% of all the music sold was carried on cassettes, and most major companies have stopped producing pre-recorded tapes. But the Walkman was about more than just the cassette; we don’t remember, for instance, the brand of an LP player the way we do the Walkman.

Perhaps it was because the Walkman pulled off the ultimate human dream for music: to free it from the constraints of space and time, to be accessed wherever and whenever the urge strikes. That is singularly the Walkman’s legacy; the iPod, for all its innovation, has merely carried that legacy forward.

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