There Are Two Ways To Do This, And Your Way Isn’t One Of Them

Sony made the camera she’s holding. No it isn’t very relevant, but I was getting nothing else except pictures of old videotape players. (Photo credit:

Sony Corporation has just filed a record loss of $6.4 billion. How does anyone lose that much money? Particularly, how does one of the biggest makers of electronics, movies and music lose that much money? Maybe it’s piracy. After all when they lobby governments for new media-control legislation, record companies talk as if every download is a loss of a sale. Perhaps they’re actually putting that on their balance sheet now.

OK, the real reasons are probably more complicated. Sony is a complicated company. (Did you know it has a financial services arm?) But I think this in itself causes much of their problems. Making the content and the equipment to play it on is a strategy born of the format wars. Sony’s technically superior Betamax design lost out to VHS, in part because its rivals had better deals for film distribution. So when it came to the the battle between Blu-Ray and HD DVD, Sony was better prepared; it now owns about one sixth of Hollywood.

But format is now irrelevant, an anachronism. Sony won a war over a wasteland.

The makers of audio and video equipment are, to put it crudely, on our side. They know we don’t want the machines we buy hobbled to suit Big Entertainment. So hardware makers quietly let slip the codes that region-unlock their DVD players, Apple decides to sell only DRM-free music through iTunes, so on. But as a maker of both content and equipment, Sony is a house divided against itself. The most notorious example: the day one of the world’s bigger PC builders also became a distributor of malware. If you bought music from them, they returned the favour by taking control of your PC. I haven’t bought a Sony product since.

They must choose now. Only by getting out of entertainment production – an industry already past its best days anyway – will they be able to return to doing what they always did best: Shiny things.

4 replies on “There Are Two Ways To Do This, And Your Way Isn’t One Of Them”

Apologies to subscribers and swift readers who caught a poorly fact-checked version of this piece earlier. No, Sony didn’t win the VHS-Betamax war.

Hey, it was the 80s. If you can remember the 80s, you… have my sympathy.

Video2000 was even better than both of those! (Okay, maybe I’m biased simply based on the fact that Philips is a Dutch company).

That said, I haven’t heard the problem with Sony put so succinct as you just did. The whole “consumers don’t know what a rootkit is, so they shouldn’t worry” line was the worst of the worst of Sony compressed all into one.

Since then, I’ve slipped in my non-Sonyness just once. I bought a Sony e-reader. The device itself is pretty sweet. But, you feel it coming, the software is DRM hell. In fact, it combines the worst parts of Adobe, Sony and the publishing industry. Half the time it just wipes the books on your device, simply because it’s decided that you might not be authorized.

Oh, and it wants to install a kernel extension too, before it runs. (Why?!!!!)

After wrestling with that for a week, I threw out the software, switched to lovely, open source Calibre, and have sworn to never buy a DRM protected book ever again. Or a Sony product.

Which really shuts me out of console gaming, though. Would it be ethically sound to make an exception for Sony PS 3? Even if their network has more leaks than the Titanic?

Although I agree with the description of Sony’s naughty business model the article suggests Sony’s making more money on the entertainment side than the hardware side. It says an industry wide slump is affecting manufacturers. The article says Sharp also lost money selling TVs. I did a check and LG made a profit but in 2011 they raked less than 20% compared to 2010. That’s net income.

I doubt at this junction Sony will look at their empire and arrive at the conclusion that doing only shiny things will get them out of the red. From their point of view the entertainment content is saving them, not sinking them. Even if they discarded their proprietary business models they would still be a Japanese manufacturer competing with South Korean and Chinese outfits. It used to be that Japan had an edge on quality compared to these two nations. That technological gap has been significantly narrowed in the case of electronic consumer products. So concentrating on hardware only would not be a return to safety for them; it would actually be trapping themselves in a dilemma that is affecting Japan’s export capability.

Japan exports cheaply but now others do the same with equal quality and cheaper. If the same competition from China ever arose on the automotive sector you’d see how the content and copyright aspect are not the real causes of Japan’s woes. South Korea is already doing this but their volume and quality hasn’t reached the competitive level that they have already achieve on electronics.

All the Japanese consumer goods producers do seem to be in some degree of trouble. The article mentions Sharp, though it’s not really in the same league, but I’ve heard Matsushita (Panasonic, etc.) is in financial difficulties and of course we know Olympus is fairly buggered. But Sony, with its diversity and brand strength, ought to be doing better than most rather than worse. Four years of losses in a row sounds more than unfortunate.

Maybe they will just have to stick with what it does less well, and become a media company. My thesis is just that it can’t continue to be both. But it would be sad, and I hope they stick it out.

Even more sadly though. it sounds like they plan on doing exactly what I think they shouldn’t:

A key concept in Hirai’s strategy hinges on merging Sony’s robust roster of entertainment properties – including singers Kelly Clarkson and Michael Jackson, and the “Spider-Man” and “Men in Black” film franchises – with its Vaio, Bravia and other electronics brands, in an effort to boost sales.

When one of your main assets is a dead person, you perhaps need a better long-term strategy.

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