Sony shake-up reflects a shift in focus to games, mobile, imaging
Sony Corp. unveiled a top-level organizational shake-up that signals key shifts in the Japanese company’s priorities in consumer electronics as incoming Chief Executive Kazuo Hirai works to turn around massive losses.
Hirai, promoted a month ago to replace Howard Stringer as the company’s top officer effective Sunday, has restructured the electronics business around three “pillars”: mobile, games and digital imaging.
As of Sunday, the new mobile group will include both Vaio laptops and the Sony Ericsson cellphone business, while the games segment will include all PlayStation products. Digital imaging will encompass Sony’s camera business, including its entry-level point-and-shoot cameras as well as professional-grade cameras and projectors. Tuesday’s announcement represents the most thorough organizational restructuring since 2009, when Stringer sought to streamline the company and help cut costs.
The company’s troubled television business was not included among the three pillars as areas of growth for Sony, which for decades had prided itself on being a premier TV brand dating back to the 1970s when the Sony Trinitron represented the industry’s gold standard.
In recent years, however, Sony’s lead in the TV business has been eroded by low-cost manufacturers such as Irvine-based Vizio Inc. as well as high-end South Korean companies such as Samsung. As a result, Sony’s TV business saw a 43% drop in revenue to just more than $3 billion in the crucial Christmas quarter, contributing to a $2-billion overall loss for the company in the three months ended Dec. 31. Sony’s electronics business accounted for more than 71% of its revenue in the period between April 1 and Dec. 31, 2011.
“It was TVs that put Sony on the map,” said Richard Doherty, a technology analyst with the Envisioneering Group in New York. “To not have TVs at the very top of the list is clearly a massive shift for the company. But the world is changing, and Kaz is changing with it.”
Sony is not jettisoning the TV business. Instead, Hirai indicated that turning around the division was a top priority -- by putting the TV unit directly under his control.
Although the shuffle affects only executives in Japan, Doherty believes the announcement is the start of a series of changes, including layoffs and adjustments in leadership elsewhere in the company.
“This is just the beginning,” he said.
One round of musical chairs has already occurred in Sony’s U.S. entertainment properties. The company last week promoted Sony Pictures Entertainment Co-President Michael Lynton to be president of Sony Corp. of America, giving him oversight of the company’s music business as well as its movie and television properties. Lynton will assume the title held by outgoing CEO Stringer.
Meanwhile, European antitrust regulators Tuesday said they were assessing a proposal from Sony to divest certain assets to receive approval for its proposed $2.2-billion acquisition of EMI Group’s music publishing business.
The European Commission in Brussels said it would review Sony’s plan and make a decision by April 19 on whether to pursue more rigorous scrutiny of the deal. Sony -- whose songwriters include Lady Gaga, the Beatles and Taylor Swift -- is considered the fourth largest music publisher in Europe with a little more than 10% of the market, while EMI is the second largest with a 15% to 20% share.
The bid, announced in November, involves Sony/ATV, a joint venture between Sony and the Michael Jackson estate. EMI also agreed to sell its music label business to Universal Music Group for $1.9 billion. That transaction is also under government antitrust review -- in the U.S. and in Europe.