PSP, PS3 Priority in Sony Reorganization

“Company to cut jobs, close plants and reprioritize.”

Source: IGN

Sony Chief Executive Howard Stringer unveiled plans to reorganize Sony at a recent conference in Tokyo, Japan. Stringer acknowledged that smaller electronics companies had chipped away at Sony’s hold over the television and portable audio markets, while also promising that Sony would once again bring “champion products” to the marketplace.

Best known for its Walkman line of music devices and Trinitron TVs, Sony has lost its place in the market due in part to Apple Computer’s iPod players and low-cost Chinese TVs. And since consumer electronics makes up 70% of Sony’s annual $67 billion revenue, Stringer has said that the division has now become Sony’s number one priority. The restructuring will result in a 6.6% reduction of Sony’s global workforce and the closing of 11 of the company’s 65 manufacturing plants. Furthermore, Sony plans on nixing 15 of its 130 product categories and 20% of its 3,000 product models.

Some analysts are skeptical the proposed changes will have much effect.

“We all went through this more than a year ago,” said Richard Doherty, an analyst with Envisioneering Group. “There isn’t a radical difference between what was said today and what was said last year under a different chairman and CEO.”

Stringer plans on doing more than closing plants and laying-off employees. He pointed to Apple’s joining of the iPod players to the iTunes music store as an example of the kind and level of integration Sony itself needs.

“Apple would not have sold its devices if they didn’t have their agreements with music companies,” said Stringer, “Sony did not do that, even though we own the music business.”

He went on to highlight the PSP as a good example for company cooperation. It’s designed to play games, listen to music and watch movies. And its online capabilities will allow Sony to sell music and other products or services directly to the user whether home, or not.

While certain analysts doubted Stringer’s plans for company organization, others agreed with Stringer’s praise of the PSP and its potential.

“Creating a seamless link between the device and the service is crucial,” said Mike McGuire, an analyst with Gartner Inc. “That’s what Apple has done, and that’s what Sony wants to do with the PSP. Consumers are nothing if not foragers of digital content. With the PSP, you can connect to the Internet, browse and download content other than games.”

Analysts also chimed in on the PS3.

“Given the fact that PS3 means much more than just video gaming, it’s going to be important to all their media studios,” said P.J. McNealy, an analyst at American Technology Research. “This comes at a time when all internal content — whether or not it’s music, movies or games — will be important to the PS3.”

“Company to cut jobs, close plants and reprioritize.”

Source: IGN

Sony Chief Executive Howard Stringer unveiled plans to reorganize Sony at a recent conference in Tokyo, Japan. Stringer acknowledged that smaller electronics companies had chipped away at Sony’s hold over the television and portable audio markets, while also promising that Sony would once again bring “champion products” to the marketplace.

Best known for its Walkman line of music devices and Trinitron TVs, Sony has lost its place in the market due in part to Apple Computer’s iPod players and low-cost Chinese TVs. And since consumer electronics makes up 70% of Sony’s annual $67 billion revenue, Stringer has said that the division has now become Sony’s number one priority. The restructuring will result in a 6.6% reduction of Sony’s global workforce and the closing of 11 of the company’s 65 manufacturing plants. Furthermore, Sony plans on nixing 15 of its 130 product categories and 20% of its 3,000 product models.

Some analysts are skeptical the proposed changes will have much effect.

“We all went through this more than a year ago,” said Richard Doherty, an analyst with Envisioneering Group. “There isn’t a radical difference between what was said today and what was said last year under a different chairman and CEO.”

Stringer plans on doing more than closing plants and laying-off employees. He pointed to Apple’s joining of the iPod players to the iTunes music store as an example of the kind and level of integration Sony itself needs.

“Apple would not have sold its devices if they didn’t have their agreements with music companies,” said Stringer, “Sony did not do that, even though we own the music business.”

He went on to highlight the PSP as a good example for company cooperation. It’s designed to play games, listen to music and watch movies. And its online capabilities will allow Sony to sell music and other products or services directly to the user whether home, or not.

While certain analysts doubted Stringer’s plans for company organization, others agreed with Stringer’s praise of the PSP and its potential.

“Creating a seamless link between the device and the service is crucial,” said Mike McGuire, an analyst with Gartner Inc. “That’s what Apple has done, and that’s what Sony wants to do with the PSP. Consumers are nothing if not foragers of digital content. With the PSP, you can connect to the Internet, browse and download content other than games.”

Analysts also chimed in on the PS3.

“Given the fact that PS3 means much more than just video gaming, it’s going to be important to all their media studios,” said P.J. McNealy, an analyst at American Technology Research. “This comes at a time when all internal content — whether or not it’s music, movies or games — will be important to the PS3.”