Sony’s New and Better Plan?

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Another new fiscal year, another new strategic plan. Sony (NYSE: SNE) has a new chief executive, and he means to prove that the collapse of the company is only temporary. The description of the firm’s future by CEO Kazuo Hirai sounds eerily similar to that put forward by his predecessor Sir Howard Stinger. “Sony has always been an entrepreneurial company. That spirit has not changed,” Hirai said. There is absolutely no reason to believe him.

The plan, in essence, is to take the weak parts of the company and partition them from the strong ones. The strong divisions will get resources, leaving the others behind.

The first order is to take the core of Sony’s sales — digital imaging, gaming and mobile — and get them growing again. The problem with the plan, particularly in mobile, is that the old Sony Ericsson — now owned entirely by Sony — must compete with market leaders Apple (NASDAQ: AAPL) and Samsung. Not to mention half a dozen other companies that want to dominate the smartphone market, particularly Nokia (NYSE: NOK), HTC and Motorola.

The second leg of the strategic plan is to turn around Sony’s television business. Unfortunately, screens have become a commodity with extremely low margins. It is hard to see what Sony can add any new gadgets or features that would make its products stand out in a sea of competing ones.

The next part of the plan is to expand business in emerging markets. This program can almost be dismissed. Sony wants a part of electronics sales in nations that include China, Brazil and India. It will find its competition is already present in these markets — in force.

Sony also plans to move further into the medical and medical imaging business. At the risk of sounding repetitive, Sony has no special product set or sales proposition to support these plans. As part of its statement about the future, the Japanese company admits, “Sony is largely a new entrant to the medical industry.” Enough said.

Finally, the Tokyo-based company stated:

Sony is accelerating its ongoing process of business selection and focus, and is concentrating its investments in core and new business areas. In terms of investment, core areas include the expansion of Sony’s image sensor manufacturing capacity, capital investment in mobile products and aggressive strategic investment in development or M&A relating to new business areas such as medical.

It is a mystery why Stringer did not do these things earlier, since they are so obvious. Or, perhaps he did, and the results were poor.

Hirai had a chance to stand in front of investors, employees and customers and speak about his vision of a “new Sony.” Nothing in his comments suggests that the new is much different from the old.

Douglas A. McIntyre

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