Sony’s quarterly profit drops by nearly half

“Sony Corp. said Thursday its profit in the latest quarter dropped by nearly half from a year ago, as electronics sales stayed flat, its movies business stumbled and earnings suffered from a heavier tax burden and losses related to equity holdings. The electronics and entertainment company reported a net profit of 28.5 billion yen ($246 million) for the three months ended Sept. 30, down 46 percent from 53.2 billion yen the same period a year ago,” Yuri Kageyama reports for The Associated Press.

Kageyama reports, “Like other Japanese electronics makers, Sony has been struggling in the last several years amid falling prices in consumer electronics and the emergence of cheaper Asian rivals. Sony fell behind Apple Computer Inc.’s iPod in portable music players. It was also late in putting out flat-panel TVs, falling behind Japanese rivals Matsushita Electric Industrial Co. Ltd., which makes Panasonic brand products, and Sharp… Sony announced a revival plan last month under Chief Executive Howard Stringer, the first foreigner to head the Tokyo-based company.”

Full article here.

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Perhaps Sony ought to quit stalling and finally sign on the dotted lines for Apple’s iTunes Music Store Australia and Japan? It sounds like Sony could use all the revenue they can generate.

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Apple passes 600 million iTunes Music Store songs sold milestone – October 25, 2005
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Apple launches iTunes Music Store Australia – October 24, 2005
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Why aren’t Sony, BMG, Warner, Victor making their artists’ music available on Apple’s iTunes Japan? – October 06, 2005
Sony and Warner holding out on Apple iTunes Music Store Australia – September 08, 2005
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21 Comments

  1. Apple makes their own markets.

    Sony charges a premium for products. The Chinese churn out “good enough” products for peanuts. The unwashed knuckle dragging masses think good enough is good enough. This is the same mentality that keeps Dell and Microsoft raking in the cash. If it’s “good enough” people will pay…

    Although, we may be seeing the tide turn.

  2. What about the idea that as disposable income shrinks, people decide to shop on value instead of price? Buy one good thing instead of a couple of cheap ones! Especially if the good thing has some extra benefits? iPod not the cheapest by itself, but combined with the rest of the package (iTunes and iTMS, free and just buy what you want), it is a powerful incentive.

    MW-average. Sony earnings are below average, Aple’s are above average

  3. Which kind of explains why Apple is now worth over $14.75 billion more than Sony (or just over 46% more, to put it another way).

    Sony could learn some valuable lessons from the post-Second Coming Apple, particularly in the area of focus. Apple no longer tries to make/re-market cameras, printers or any other peripherals to which it cannot add a unique selling proposition that ties into the whole Apple experience.

    Having a mere handful of products (pro computing, consumer computing, pro software, music) means that time and care can be taken on design, to the point that the product actually embodies the value of the brand. In comparison, Sony – with a desire to compete at every point in the CE marketplace – doesn’t have the capacity to express that care [B]throughout[/B] the portfolio, which means that the well-designed, carefully developed product is compromised by the “me too” products, which in turn devalues the brand.

    As a result of the chaos at the heart of Sony, it is now seen as expensive, but no longer seen as exclusive. And the costs of maintaining the brand’s profile are no longer viable, when you’re dealing with highly commoditised products.

    Rationalisation is the answer here: get out of CRT televisions globally, likewise VCRs, and cheap/cheerful home theatre packages. Whilst you’re at it – get the hell out selling entry-level CD players, or DVD-players. Every single one of these products are done cheaper by someone else, and the game isn’t worth the candle.

    Keep the following: –

    Playstation
    Broadcast & Professional
    Film, TV & Music

    And start developing and selling premium-quality product that has genuine innovation, as opposed to merely throwing a Memory Stick slot in everything. And if you can, find out if you can find some of Akio Morita’s DNA and have him cloned, because – without someone like him – Sony appears to have become sclerotic, bureaucratic and directionless.

    And before we Apple-headz get too jubilant, we should see the decline of Sony post-Morita as a warning of what might happen as and when Steve Jobs decides to retire.

  4. The problem with companies like Dell and Sony etc, who are making generic products, where the only real differentiating factor is the price is that when other people come in cheaper than you, you have nothing to fall back on.

    Sony used to have a reputation for quality, now they’re just like any other company. Apple have earned a reputation for quality and style and are also cementing that with ever more reasonable prices for their products. They also have the advantage that more and more people are realising that cheap crap is cheap crap so their perceived expense is less of a factor anyway.

  5. M.X.N.T.4.1:

    I couldn’t agree more. I used to buy Sony exclusively for many electronic needs, despite their higher prices, expressly because you could see a build quality difference between their products and others. Most of my stereo components are over 10 year old Sony products, my bedroom phone is even older. I have a 5 disc DVD carosel that’s only a couple years old, but that’s the last Sony branded item I’ve picked up recently.

    The thing I’ve noticed is not only have the competitors gotten better, but that Sony’s stuff isn’t quite up to their typical ‘snuff’. And, in my observations, this declining trend in quality has followed their increasing relaiance on China as a manufacturer. It’s really confusing, since other brands don’t seem to have that problem vis a vis Chinese manufacturing, but it sure seems like Sony does. My guess is that they took the whole ‘cost savings’ aspect of moving to China and went too far with it. The design, materials, and so forth seem just as cheap as the labor that goes into some of their products these days.

    When the product looks cheap, feels cheap, doesn’t last as long, and their STILL charging Sony-prices … well, I guess it’s true: You reap what you sow.

  6. Every Sony product i’ve ever owned (since the 1970’s) has eventually died on me before i was ready to retire it. They performed well at first, and lasted long enough that i felt i got most (but not all) of my money’s worth out of it, but they have never gone the distance. By contrast, i’ve only had one Apple product (a 17″ multi-scan CRT) fail. And i’ve been buying Apple products since the late 1970’s.

    I don’t buy Sony anymore.

  7. I think people are slowly expecting more from there products, some of us always have and thats why we use and buy apple products but i think the masses are starting to expect more.
    steve has always maintained an extremely high level from himself and his staff and his products.
    he was ahead of his time a bit, now people are demanding and willing to pay a little more for the best, i think i see it slowly changing. and if im wrong about people willing to pay more, im not wrong that apple is on such a different trajectory in terms of vision and imagination that they have no equal guys. i just wished i worked for them.

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