Over the past couple of years, Sony has been moving away from the ailing consumer electronics industry and focusing on its strong components business. The company has found particular success in image sensors, where it now owns a reported 40 percent of the market and powers the cameras in devices like the iPhone 6 and Galaxy S6.
It’s not quite the consumer-focused innovation that made millions fall in love with Sony throughout the ‘80s and ’90s. But, in an extensive Wall Street Journal story published late last night, CEO Kaz Hirai made the case that this pivot is just as compelling as the company’s glory days.
“Whether it’s a device that goes into other manufacturers’ products or sometimes our own, if there’s innovation there... that’s something I get excited about,” he says. The WSJ goes onto state that Sony has “stopped trying to replicate its glorious past as a creator of era-defining consumer-electronics gadgets” in favor of pursuing image sensors as a major concern alongside video games and entertainment.
It’s not just Sony: Japanese companies like NEC, Toshiba, and Panasonic are increasing their focus on enterprise rather than consumers. And it’s not just Japan, either: European brands like Nokia, Siemens, and Philips have all wound down consumer operations to varying extents. If you’re not based in South Korea or Silicon Valley, it’s hard to make an impact with your own devices these days.
Sony’s success with image sensors is a victory for innovation, but on a much smaller scale than the PlayStation or Walkman. Yes, the company has a technical edge on its competitors at the moment. But components are commodities, and supplying others puts Sony in a far more vulnerable position than when it won customers with its own designs and brand. While Sony now provides the muscle behind the most popular camera in the world, there’d be little stopping Apple from switching parts for price or performance reasons.
Sony is set to report its year-end earnings tomorrow; expectations are that it’ll turn a moderate operating profit but record a net loss due to smartphone business write-downs. The real thing to look out for is whether the company gives any hints as to how it plans to handle its wildly disparate divisions. Sony offloaded VAIO last year —could Bravia or Xperia be next?
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