Sony Corporation, also commonly known as Sony, is one of the leading manufacturers of electronics products for both consumer and professional markets that headquartered in Minato, Tokyo, Japan. The electronics giant was founded after World War II, on 7 May, 1946, by Masaru Ibuka and Akio Morita. It is considered as one of the most comprehensive entertainment companies in the world due to its involvement in four operating segments: Electronics, Game, Entertainment and Financial services. Currently, Sony ranked 38th in the world’s most powerful brands ranking of Forbes. As a wholly owned subsidiary of Sony, Sony Computer Entertainment Inc., which was established on 16 November, 1993, is a major video game company that specializing in video game industry. The company is in charge of research and development (R&D), production, and sales of hardware and software for PlayStation, which is a series of video game consoles.
The brand of PlayStation was first introduced on December 3, 1994 in Japan. It consists of three home consoles (PS, PS2, PS3), a media center (PSX), an online service (PlayStation Network), a line of controllers, two handhelds (PSP, PSV) and a phone (SE Xperia Play), as well as several magazines. PS2 is considered as representative product to the company as it is best-selling home console of all time worldwide. With the decent technologies from Sony, PS3 managed to attract the eyes of gamers by delivering outstanding gaming experience. For instance, the strong processing power of Cell processor gives PS3 the ability to render gorgeous and stunning 3D graphics. Currently, Xbox 360 and Nintendo Wii from Microsoft and Nintendo respectively are the competitors to PS3 in home console category while Nintendo 3DS competes with PSV in handheld console category. PS3 is dominating the market with a leading market share, which is about 44.7%. The two competitors, Nintendo Wii and Xbox 360, acquired 20.9% and 34.3% respectively.
Sony is a company which is established and well-known by consumers. Some of the well-known brands which are under Sony are Sony Ericsson, Vaio and PlayStation (PS). Based on the index by Brand Key, Sony is having rankings in different categories in 2009. For example, Sony’s computer, Vaio is having the 5th ranking, 4th ranking for Sony’s digital camera and 2nd ranking for Sony’s DVD players. Sony is not only a well-known brand product but also a good quality product. Their product can last long longer compare to others brand. With these ranking and product quality, more people will get to know about Sony and they will be more confident on Sony’s product and thus choose to purchase Sony product.
Best raw computing power and graphics
Sony PlayStation is built in with NVIDIA RSX graphics processor, with 25g MB XDR main memory and 256 GDDR3 video memories. While for their competitor which is Microsoft Xbox 360, they have ATI Xenos with 10MB embedded eDRAM and 512 MG DDR3 video ram. Sony have 256MB XDR RSX RAM which is as much as 10 times faster than the 512MB dedicated RAM on the Xenos, meaning that the PS3 can fill textures faster. Besides, Sony PlayStation that together with NVIDIA graphics processor has also allows the system to perform two trillion calculations per second. As concluded, Sony is having a stronger multimedia support compare to their competitor.
The only system that incorporate with Blu-ray
Sony PlayStation is the only system that adopts Blu-ray. Blu-ray is a system that allows user to having a better TV experience by giving user the best high-definition viewing experience. Besides, Blu-ray will also give us a theater-quality audio, huge storage capacity, BD – live and Backward compatible. With huge capacity, it allows for uncompressed textures. Meaning that the RSX does not have to decompress textures and this will allow more speed to the graphics card for doing the others things.
Most of the products of Sony Corporation are targeting the middle-high income customers and thus they set a higher price to their products compared to other brands. Such price level may become a burden to middle-low income customer group. For the Sony’s video game console product, PlayStation series, Sony’s competitors such as Nintendo Wii and Microsoft Xbox 360 are having competitive advantage as they are charging a lower price to customers. The selling price for each brand’s video game console set which included the wireless controller and built-in games are $149.99 for Nintendo Wii, $199.99 for Microsoft Xbox 360 and $249.99 for the latest Sony PlayStation 3. From the above information, we can conclude that Sony PS 3 charged the highest price among these top 3 video game console brands. This may causes customers to change brand and the annual revenue of Sony will decline. At the end this may make Sony’s investors to lose their confident toward the brand.
Diversified business strategies
Sony Corporation is using the diversification strategy. This strategy is basically about being involved in simultaneous industries in the market. Sony are manufacturing and marketing various types of products in the global market. It is a profitable but also risky strategy because the company will find it more difficult to focus on the research and development (R&D) section to improve a single product. This may also increase the chances of formulating defect units. The evidence to support my point is the incident of Sony apologizes to their customers who purchased PlayStation Vita and reported unresponsive touchscreens, crashes and freezes (“Sony Apologizes,” 2011). Such business strategy provides an opportunity for Sony’s competitors to leapfrog the PlayStation products. For example, Nintendo will be able to improve their Wii more efficiently and effectively as they merely focused on the development of video gaming products. This may lead to a critical impact on Sony PlayStation sales when Nintendo announced a more innovative product with better specifications.
Weakness in the PlayStation Store
As a global organization, Sony Corporation is having separate Sony Company Entertainment divisions in different countries. Each of this division operates in an independent way and thus the contents in the PlayStation Store are different in different region. This means that whatever apps or movies released on U.S. Store may not release on European Store. According to Shuhei Yoshida (2012) who is the president of Sony’s Worldwide Studios for Sony Computer Entertainment Incorporation, users are able to access the PlayStation Store from other countries by having multiple PlayStation Network IDs. However, it is inconvenient to some users as it is wasting time to create and log in with different IDs. In addition, it may cause users confused with their IDs and password.
Selling in lower price
As discussed in the weakness, the prices of Sony’s product are too high to be purchase, and this had become a burden for their customers. Thus to attract more customers and draw them into the PlayStation Platform, Sony is trying to sell their high quality product at lower price. Once their customers invested in Sony’s hardware and media, it will be easier for Sony to up sell those PS3 owners on PS Vita or later on. Furthermore, with lower price of Sony’s product, the middle-low income customer will have more ability to purchase. Most of the customers will choose Sony rather than other brand. This is because Sony can be classified as a branded product. Sony is not only trying to sell their product at lower price but also Sony’s game. This is also one of the strategies to attract customers.
More content to be added
Sony is trying to add more content in their PlayStation. This is also one of the strategic that taken by Sony to attract more customers. The content that added by Sony included games, movies, music, comics, TV shows, social networking and other online services. All of these are offering by Sony PlayStation Network which is beefing by Sony. Besides, they are also having a deal with Netflix which offering unlimited streaming video and movies to the estimated 9 million of PS3 users. If compare with their competitor, Xbox 360, they are just having a system which is the Netflix.
High storage of capacity
To fulfill nowadays customers, Sony is trying to build in higher storage of capacity for their system. Before that, Sony PlayStation is only accumulating with 120GB of storage, but now Sony is trying to replace it with 160GB of storage. Based on Sony, the price will remain the same, the only changes made is the increased in hard drive capacity. Besides, Sony is also trying to produce another higher storage capacity of PlayStation. This PlayStation is having storage of 320 GB hard drive. With higher storage capacity, it can put both a full length high definition film and PlayStation game.
The two main competitors of Sony PlayStation are Nintendo Wii and Microsoft Xbox 360. Both brands are threatening the Sony PlayStation in the price competition as Sony charged the highest price on their products. Nintendo Wii is the first-mover for the video game console with motion control feature. As the first-mover, Nintendo obtained advantage in protecting their technology with patents to keep it as trade secret. Another advantage is Nintendo accumulated enough market shares because they owned a group of loyal customers who supported Nintendo since the very first launch of Wii. Microsoft Xbox 360 is another competitor for Sony PlayStation. Although the first generation of Xbox is a late entrant who enter the market after PlayStation, but the Microsoft charged the lower price and successfully attracted the customers. Some attractive enhancement features of the Xbox 360 such as Kinect and SmartGlass lead the console to its glory. The latest Xbox 360 continues to be the best selling console in the U.S. for over 20 consecutive months (“Xbox 360,” 2012).
PlayStation Network Outage
The PSN is an internet-based retail service used by player of PS3 and PlayStation Portable Device to purchase and download games, films and music. Moreover, it also enable multiplayer to play game and chat online. In April of 2011, a serious PSN system outage occurred due to being hacked by a group of hackers (“PlayStation Outage,”2011). This accident caused over 70 million of registered users’ personal data being stolen .Personal data being stolen including users’ credit card and personal information. The outage lasted for nearly a month. Users were unable to access to the PSN during the outage period and this caused many Sony’s loyal customers to lose their confident toward the PSN security.
Nowadays, the selling price of the smartphone is getting more and more affordable and it became a necessity in our lives. As the smartphone became a very common belonging to everyone, it is another threatening competitor to the Sony PlayStation due to the existence of the apps store. The Apple’s App Store and Android’s Google Play provided many free or chargeable game apps. Users can download and play it on their smartphones. It became a trend for today’s game players to choose to invest in a better smartphone rather than to purchase a video game console. This is because it is more convenient to have a multifunction device and yet the price of a game app is cheaper than a video game disc.
Forces – chapter 5
Sony corporate had implemented the Forces-timing of Sun Zi’s Art of War during the first deal with Nintendo. Although Sony hungry for some actions to get involved in this video game market, but they waited for a timing to find a way to enter the arena with the minimum risk.
In 1988, the contract between Nintendo was a good opportunity for Sony to step in the market by worked with one of the biggest gaming companies. Sony needs to develop a CD-ROM that attached to the Super Nintendo Game (Super NES) that soon released to the market. Due to some reasons, this Super Disc had never released to the market while Sony and Nintendo parted ways. Sony chose to use the same technology and modified it to a brand new version of game console – Sony Play Station.
Nintendo started to get worried because Sony was given “sole worldwide licenser” that stated in the contract before. In addition, Sony can manufacture their own game console and also CDs that can play either SNES carts or play Sony CDs.
In this “war” between Nintendo and Sony, Sony had choose the right timing to enter this video game market and finally won with their CD-ROM technology that do not owned by Nintendo. From this lesson, we learned that a leader must have a higher sense of timing than others to exploit better opportunities.
Weaknesses and Strengths – chapter 6
In 2005, Microsoft had released the newest model of gaming console, Xbox 360. Although Xbox had the advantage of being the first mover that capture almost all market shares however their hardware malfunctions, “red ring effect” had stopped them.
After this incident, Sony decided to launch their new PS3. They applied the Weaknesses and Strengths in Sun Zi’s Art of War because they knew what the advantages of being a later entrant are. They avoid mistakes made by Microsoft and develop PS3 that having a better hardware malfunction than Xbox 360.
Sony also familiar with gamers’ need and try to meet their needs with the new PS3 in this video game market. Hence, Sony offered no charge on the online service while their competitor, Xbox 360 have to pay an amount yearly to the Microsoft online service called Xbox Live. PS3 also will automatic checked for software updated, downloaded directly from the PlayStation Network to the PS3 and installed every time the game console had been started. Other than that, PS3 supported live and recorded HDTV over your home network, and also TV show and movie downloads.
Sony had won back their customers from Xbox 360 by creating a superior product that meets customers’ needs. They taught us that how important of applying Sun Zi’s Art of War to business.
The Nine Battlegrounds – Chapter 11
In Sun Zi Art of War, the nine battlegrounds indicates organization should not enter into unfamiliar markets or industry where it has no expertise or experience. In other words, organizations should not compete in product and services where it has no skill. Organizations should focus on its core products or core competency to excel in market. According to Kazuo Hirai, Sony CEO, Sony is planning to extend the business model he employed for Sony Computer Entertainment, the home of the PlayStation, to the whole company. Sony has applied Sun Zi business application which is to focus on strength an organization possesses. Sony desires to strengthen its core businesses which are Digital Imaging, Game and Mobile. Sony sold off its unprofitable and low-growth departments, such as chemical products business to cut cost. Sony will be better off Instead of focusing on so many area of business.
Moreover, by focusing on its core competency, Sony expects 70% of total sales and 85% of operating income originate from its core products. This indicates PlayStation brand represent Sony’s future. This focusing strategy will better equip Sony to face its tough competitors such as Nintendo and Microsoft. Sony has taken the right move or step to respond quickly to its tough competitors move as they have launched their profitable products such as from Nintendo’s Wii and Microsoft’s Xbox 360.
As we know, Sony Corporation had been diversifying into many business segments over the years and this had resulted the consumer electronics giant to have shifted its focus from its core of competency that is making great consumer-electronic products. On the other hand, it also causes bias in Sony’s brand. We suggest that Sony can put more effort and focus in developing few of the popular Sony’s brand products such as PlayStation. For example, the successful management in Microsoft which is only focusing on just a few products to build up their competency in the electronics business.
We suggest Sony Corporation to speed up more on innovation. Example, Sony should expand its business areas in 4K-related technologies. In addition Sony should have progress in the growth of 4K technology which enhanced the strengths of audio and visual so that it can deliver four times the resolution of Full HD. This should be the aim for Sony to improvise and to imply into the latest gaming console of Sony which is the PlayStation Vita.
For your information, Sony is confronting a serious threat to its business which is price competition from its competitors such as Nintendo and Microsoft, who are gaining more and more traction with lower-price products such as Wii and Xbox 360. We recommend Sony to realign its business portfolio and also optimize the usage of resources to reduce wastage in allocating its resource and to minimize the cost of Sony’s production for PlayStation. As an example of how can this actually be carried out is to have proactive consideration of alliances.
As a common threat feared by most of the well-known company’s online network which is the threat by hackers. Stated that the company’s PlayStation network being hacked, resulting in leakage of customer personal data such as information regarding credit card data. We highly recommend Sony to enforce in the security of the network system such as personal data protection precaution act. For example of the solution made by Sony to secure PlayStation network is by launching the latest firmware 3.61 on the platform of Playstation3 as a security patch to prevent hacking issue.
Sony Corporation have been using a pricing strategy for PlayStation 3 that is continuously changing in European, Middle Eastern, African and Australasian markets; and the Share Keeping Units (SKUs) could leave customer being confuse regardless to where they stay. Sony has done a bad job in managing its PlayStation 3 SKUs because the new 40GB PlayStation 3 have been released in Europe but never been announced in U.S. Furthermore, the price of the 40GB PlayStation 3 also resulted a very frustrating manner by the gamers because the same game console cost differently in different country such as in Europe 40GB PS3 is selling for £399 ($520) but in USA, it is selling for $399. This issue will cause gamers to on hold their purchase until Sony has announced the reason behind this. We suggest that Sony Corporation to standardize all price of PlayStation 3 in all country or at least with minimum difference in price. This will ease and calm the anger of all gamers and allow them to buy PS3 with no doubt, confusion and question.
As a multinational conglomerate corporation, Sony has done a remarkable job in building up their reputation by convincing their customers with their superior quality product. Nowadays, Sony products can be seen all around the world, making it a renowned and trusted brand to the public. However, Sony PlayStation is also facing fierce competition from Microsoft and Nintendo in aspects of prices, features as well as business strategies besides hacking attack from hackers. In order to enhance its competency, Sony needs to put more effort on bettering their management system so that the current products can be improved and turn out to be more competitive. Innovation on products should be done regularly based on the consumer behavior in the market. Other than that, Sony requires experienced personnel that have expertise in system security and protection to deal with any attacks in future. These improvements will help Sony to secure larger market share.
To conclude, Sony is ought to take action now to overcome its weaknesses if the electronics giant wishes to dominate the market in the future. The recommendations suggested are believed to be helpful in resolving the weaknesses of Sony. This will ensure the position of Sony in the industry remains intact and continues to take the lead at future.
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