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Ed Driscoll

Sony Says Sayonara to Vaio

February 17th, 2014 - 7:08 pm

“Sony Now Predicts a $1.1 Billion Loss, Shuts Down PC Business,” Reuters reports:

Sony is shuttering its computer business, refocusing its TV division on high-end units and laying off 5,000 people. It is also predicting a massive loss of 110 billion yen, or $1.1 billion, for the fiscal year, a drastic change from its prediction three months ago of a 30-billion yen profit ($294 million).

There was a time, long ago, when it looked as if Japanese electronics companies — and foremost among them Sony — would take over the world. But no longer. Apple and Samsung dominate the consumer market for tablets and smartphones, and Sony is now being forced to undergo costly restructuring to survive.

At the Chicago Boyz econo-blog, David Foster quotes from posts he wrote on Sony in 2005 and 2012, predicting trouble to come. In the latter post, he noted:

In his Financial Times article Why Sony did not invent the iPod, John Kay notes that there have been many cases in which large corporations saw correctly that massive structural changes were about to hit their industries–attempted to position themselves for these changes by executing acquisitions or joint ventures–and failed utterly. As examples he cites Sony’s purchase of CBC Records and Columbia Pictures, the AT&T acquisition of NCR, and the dreadful AOL/Time Warner affair. He summarizes the reason why these things don’t tend to work:

A collection of all the businesses which might be transformed by disruptive innovation might at first sight appear to be a means of assembling the capabilities needed to manage change. In practice, it is a means of gathering together everyone who has an incentive to resist change.

Read the whole thing; no Vaio Required.

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