Sony's CES announcements this year are neatly summarized by the void of nothingness between COO Mike Fasulo's hands in the photo above. The Japanese company that helped define mainstream consumer electronics in the '90s basically didn't bother to introduce any marquee products at the biggest consumer electronics show. And, judging by Sony's latest reported earnings, that was a good thing.
Every January at CES, I witness Sony launching more devices, more things, and more promises. And every spring after CES, I watch those same products failing to make a dent in the hyper-competitive markets that Sony is trying to penetrate. Whether it's an update to the Xperia smartphone line or a new Hi-Res Walkman, Sony's new devices launched at CES have never gone on to become commercial blockbusters. So when I saw the dearth of big new launches this time around, I was actually a little relieved. Sony won't have any new product tearing up the sales charts this spring, but it hasn't had one of those in many years of trying.
A humbler Sony is resisting the temptation of launching new stuff just because it can
The start to Sony's 2016 is unencumbered by new sins. There's no albatross hanging around Sony's neck, no moonshot that it has to figure out ways to sell and promote. And the end of the company's 2015 indicates that this more focused and limited Sony is a company that can thrive. The last three months of the year churned out a healthy $1 billion profit off $21.5 billion in revenue. Sony's no longer in the big leagues with Apple and Google, and it seems to be coming to terms with that reality well. It has spent the past few years shrinking down to only its most essential and potentially profitable businesses.
As far as the mainstream technology market is concerned, Sony might as well be known as PlayStation Inc. Sales of PS4 hardware and software account for nearly a quarter of Sony's income and continue to bolster the company's bottom line. But beyond the PlayStation? Sony offloaded its PC division in 2014 and spent much of 2015 trimming down its expenditure on mobile devices. Sony's smartphone portfolio is now smaller and focused on the premium end. The company still considers its TV and camera sales important, but neither is as much of a linchpin as the PlayStation.
Sony Pictures had a healthy last quarter to 2015 and Sony's insurance products remained a reliable profit driver. The universal thread tying together the positives to Sony's recent success has been a reduced reliance on hardware sales. The more hardware products that Sony and companies like it introduce, the more trouble they eventually find themselves in. TVs are commoditized. Cameras are commoditized. Headphones are commoditized. Smartphones are ridiculously commoditized. There are companies who find success in each of those spheres, but the profit tends to be concentrated into the hands of very few.
Sony is no longer a leader in consumer electronics hardware. It makes great camera sensors, and it supports one of the leading gaming ecosystems in the world, but it's not able to set its own price and rules the way it once could or that Apple now does with the iPhone. So now Sony has to be wiser and more sober. It has to pick its fights wisely, like it's doing with the PlayStation VR project where the new hardware is intimately tied to Sony's established PlayStation success.
Escaping commoditized markets is hard, but doable
At the same time, Sony isn't giving up on mass-market innovation entirely, as it continues to nurture projects like Life Space UX and its internal crowdfunding initiatives that produce things like the FES Watch. Those ideas, along with the one highlight to Sony's CES presser, the Hi-Res turntable, represent controlled experimentation — they are efforts by Sony to reassert its design and engineering acumen in a unique manner and in a way that people can relate to emotionally. None of them require the same grand ecosystem play that smartphones do, and though unlikely, each of them could be a success in a vacuum.
Significant reductions in marketing and research and development for Sony's mobile division may also signal further streamlining in the months ahead. Having been a perpetual also-ran in an Android smartphone market that's barely profitable even in good times, Sony could decide it's had enough of trying.
Sony quit trying to live up to its storied name and reputation at CES this year and now it has a blank slate to work with. If 2016 continues along the same path as 2015, the Sony brand may grow less visible, but the leaner and more focused company could well become stronger as a result.