Friday, April 12, 2013

Sony’s (Intelligent?) bet on The Idiot Box

Sony India has been Focussing Big Time on its Television Business in India. And it seems to have paid it off well. But then, it will Certainly have to come with Some Innovative Strategies soon if it wants to continue rising up The Ranks.

“It’s a time of transition, which makes things even more difficult”. These words from Osamu Katayama’s book These are our future (which details Sony Corporation’s recent history) aptly describe the phase that this Japanese multinational is going through at the moment. First, a devastating earthquake in Japan. Then, a cyber-attack on its network. And finally, a colossal net loss of $3.1 billion for the financial year ending March 31, 2011 (Sony’s second worst financial performance ever). All this has not only made its share price tumble over 25% since the turn of the year, but has also put an enormous pressure on its chief executive Howard Stringer who is striving hard to win the battle against the odds, one after the other.

In fact, when Howard Stringer, Chairman, CEO & President, Sony Corporation, took over the reins of this Japanese conglomerate in June 2005, its three major businesses – gaming, mobile phones and television – were already losing momentum, globally. Thus, the task ahead for Stringer was not only to save these businesses from collapsing, but also identify functions and markets that could serve as alternative sources of revenue for Sony, at least till the time these businesses were back on track, live and kicking.

Although Sony had been in India since 1994, it was only then that the Indian consumers saw Sony recognising the real potential of this ‘Asian Tiger’. Thus, everything from more launches, slightly more affordable prices, to more stores, to even zero-interest finance schemes, to things which Sony had never done before, were all suddenly happening, and not just in India, but across the globe. Result: Sony’s CPD division, which sells televisions, digital imaging, audio and video products, semiconductors, components and business services, recorded a respectable profit of $35.4 million in FY2010-11, up 1.6% y-o-y, at a time when the core divisions were bleeding losses.

No doubt, the strategy paid it off well across countries, but then India seems to be special, so much so that the company is now looking at the country as a priority market and expects it to become the fourth largest market for its products in the world, contributing as much as 10% to the group’s sales in the next couple of years. In fact, Sony, which started off slow in the Indian market, is now rising up fast in a market dominated by chaebols like LG and Samsung.

Cut to the chase, the focus for the time being is on its television business, particularly the Flat Panel Display (FPD) TV market in India. In fact, as per the US-based market research firm DisplaySearch, Sony has already overtaken Samsung Electronics and LG Electronics for the top position, with 22.1% of flat panel TVs shipped in the Indian market in 2010. Even according to the GFK Nielsen Urban India Panel TV (LCD + Plasma TV) Report (for April-June 2010 period), Sony Bravia (Sony’s flagship FPD product) had become the market leader in Flat Panel Display segment in the first quarter of FY2010. It had grabbed a market share of 32% by value, and 29.5% by units sold. The company had sold more than 1,00,000 units during this quarter, more than the number of units sold by any other brand in the market. For the month of June alone, Sony had captured a significant market share, 33% by value and 29.5% by units. The company reported maximum sales in the states of Maharashtra, Delhi, Tamil Nadu & West Bengal during this quarter. For starters, under the FPD TV market, the 22-inch, 32-inch & 40-42 inch segment comprises of more than 75% of LCD units sold in the country. And interestingly, Bravia was the leader in all the three categories.

Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
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