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Originally featured on BroadcastEngineering.com
Feb 3

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2/3/2012 10:35 AM  RssIcon

Sony has picked Kazuo Hirai, the video game executive who turned around its PlayStation business, to be the company’s next president and chief executive. Hirai, 51, succeeds Howard Stringer, an American who prior to running Sony had a 30-year career at CBS where he was a journalist, producer and senior executive.

Sony is betting that Kazuo Hirai, a company veteran, is the right man for the job.

The move came just hours before Sony announced it was heading toward a $2.9 billion annual loss, surprising a market that had been expecting a full-year loss of barely half that amount. It will be the fourth straight year of Sony losses despite Stringer’s desperate efforts to turn the company around.

“It won’t be easy for Sony to regain its lost ground under new leadership, as its overall competitiveness has sharply weakened,” Kim Young-Chan, analyst at Shinhan Investment Corp in Seoul, told “Reuters.”

“It’s got structural problems that will take years to fix. It’s not just Sony, but Japanese IT firms have similar problems. They are failing to innovate and produce industry-leading products in almost every major area from TVs to displays, tablets and smartphones,” he added.

Sony kept its plunging LCD TV sales forecast unchanged, but cut its forecasts for digital camera and PlayStation 3 hardware sales. It did not provide sales figures for its broadcast division.

Sony is betting that Hirai, a company veteran, is the man for the job. He is unlikely to get a honeymoon and is under immediate pressure to fix Sony’s ailing television business and recapture the innovation that it has lost to Apple. “Reuters” reported sources that believe Sony will ultimately shut the TV business unless it quickly comes up with fresh ideas to revive it.

Hirai, whose tenure begins April 1, said last week that Sony needs to drive growth of its core electronics businesses, such as digital imaging, games and mobile devices, in order to turn around its TV set business and accelerate innovation.

Some observers familiar with Hirai’s plans said he will employ a centralized, top-down decision-making strategy and focus on software and services combined with hardware. This is similar to the way Apple works.

“We can’t just continue to be a great purveyor of hardware products,” Hirai told the Wall Street Journal, noting that he is looking to move on from past successes and focus more on software and services.

Appleinsider said it is only fitting that Sony draw inspiration from Apple, as Apple co-founder Steve Jobs said that Sony had an influence on him during his company’s early years. He was a friend of Sony co-founder Akio Morita and had said he was impressed by the company’s transistor radios and Trinitron TVs. Ultimately, however, Jobs went on to beat Sony at its own game.

Hirai expects to face resistance from his colleagues as he works from within to return Sony to its innovative roots. “I don’t think everybody is on board,” he said.

Stringer, whose major achievement was operations cost cutting, has run Sony since 2005. Sony lost nearly two-thirds of its value under his tenure. He will become non-executive chairman of the board.

Panasonic Reports Loss

In related news, Panasonic announced it too had sustained siginficant losses for the thrid quarter of 2011. The compnay reported that consolidated group sales for that period decreased by 14% to roughly $25.6 billion, compared with the same period a year ago. Of the consolidated group total, domestic (Janapese) sales were down 13% and overseas sales (including the U.S.) decreased to around $12 billion, down by 16% from slightly over $14 billion.

Although there were signs of recovery with the normalization of the supply chain, which had been disrupted by the Great East Japan Earthquake, the Japanese economy as a whole was still severely affected by the shortage in electricity distribution after the disaster, the global economic slowdown, appreciation of the yen, and declining stock prices.

In the meantime, the global economy continued to slow down, caused by the flooding in Thailand and the destabilization of the European finance market due to the government debt crisis, despite demand expansion in emerging markets including China.

In light of this, Panasonic said it has been working towards two themes: a Paradigm Shift to Growth and Laying Foundations to be a Green Innovation Company, in the second year of its three-year midterm management plan called "Green Transformation 2012 (GT12)." This is the first step towards its 100th anniversary vision of becoming the “No.1 Green Innovation Company in the Electronics Industry.”

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