SONYthe problem with

SONY were once the biggest electronics company in the world

Sony. like.no.other

with the walkman

Sony OWNED and INVENTED the personal music player market

Between 1979 and 1999, Sony sold… 186 million units of the cassette tape Walkman, 46 million units of the CD Walkman, and 4.6 million units of the MD Walkman

In 2000, the market value of Sony was $100 billion

But SONY has a problem in its corporate culture

NOT INVENTED HERE”

“

Sony was reluctant to adopt industry standards they didn’t invent: Not Invented Here (NIH) Syndrome

Sony’s standard for the home video recorder was Betamax

But Betamax failed in the consumer market – VHS was preferred - why?

In a rare case of industry collaboration, Sony worked with Philips to introduce the Compact Disc in 1983

But their own invention, the MiniDisc was another market failure (e.g. only 4.6 million units of the MiniDisc Walkman sold)

SONY also failed with DAT (digital audio tape). Meanwhile, Philips failed with DCC (digital compact cassette)

While most camera manufacturers use SD storage, Sony cameras use Sony Memory Sticks, which are more expensive

Sony was late to market with DVD players and flat-screen TVs - because of NIH syndrome

In 2001, Apple introduced the Tunes and the iPod

Sony had introduced its own digital music players, but refused to let them play MP3 files.

Instead, Sony tried to foist ATRAC audio files on users – which could only be bought through SONY.

This would be like Sony, in the 70s, selling a vinyl record player that would only play music from ONE record label.

“defective by design”

Sony’s “intelle©tual property” lawyers in its re©ord label division prevented the ©onsumer hardware division from supporting MP3

When a user of the Aibo, Sony’s robot dog, wrote appli©ations that would allow the Aibo to dan©e to musi©, Sony threatened the man with a lawsuit.

By 2010, Apple had sold 275 million iPods

(Sony had sold 186 million cassette Walkmans over 20 years)

In 2011 alone, Apple also sold 72 million iPhones

(Since its launch in 2007, Apple has sold 250 million iPhone units)

250 million phones 275 million iPods = 525 million music-players

This “high-end” music player market had once belonged to Sony.

In 2011, Sony’s market value had fallen to $18 billion

In April 2012, Sony cut its workforce by 10,000

They had just announced a financial LOSS of $6.36 billion

In the four years to 2012, they lost ¥919 billion ($9.4 billion)

In January 2013, Sony sold its US HQ building

Not Invented Here cost Sony its dominance in the consumer electronics market.

Sony’s profits allowed it to expand into entertainment (music, films). But then panic over illegal downloading destroyed its core business.