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Sony Corp in Global Consumer Electronics

9/27/2017
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Sony Corp is one of the world’s largest consumer electronics companies. Aside from consumer electronics, the company also manufactures professional use cameras and components, such as image sensors for third-parties. In addition, it operates a music and film production company, as well as a financial services company in Japan. Sony’s electronics business has struggled to achieve profitability since 2007. Intensifying competition in LCD TVs was the primary reason for its difficulties. Despite the struggles of the company, its Sony brand name is still highly valued, and enjoys a reputation for high quality and durability.

Two main threats to the company is Cyber attacks and Chinese manufacturers. Cyber attacks are only going to become more prevalent and damaging. Sony needs to prevent another repeat of the Sony Pictures hack, which resulted in a loss of over USD15 million. Chinese manufacturers have gained a considerable share in the low-end market. Companies like Huawei and Oppo are making a stronger push into the high-end market as well. These competitive manufacturers have been penetrating untapped emerging markets in Asia Pacific and the Middle East and Africa at an early stage. Their affordable price points and aggressive retail strategies are key in their rise to the top within these markets. The number of middle-class households in emerging markets such as China, India and Indonesia is set to increase exponentially over the forecast period. As disposable incomes increase, there will be a growing appetite for discretionary items such as electronics.

Weakness in sales of its LCD TVs placed a major dent in the company’s business, as it incurred over JPY800 billion in losses over the 10 years since 2005. With the company not producing its own LCD panels, it was at the mercy of its competitors in terms of its price-competitiveness. While camera-enabled smartphones are a major contributor to the drastic fall in demand for entry-level fixed lens cameras, and have rendered camcorders a niche category. Despite the company being recognised for the quality of its products, including its smartphones, it failed to make any significant gains.

Wireless speakers demonstrates growth potential: Consumers are more willing to pay for products with good audio quality. It has invested in offering support for hi-resolution audio, and was quick to jump on the smart assistants bandwagon by being compatible with Google Home speakers, while its competitors, such as Bose Corp, have remained largely conservative.

Sony Corp remained the third largest manufacturer of aftermarket in-dash media players in 2017. Its position in the market has seen little change over the years, as the competitive landscape within in-car entertainment is far more stable than in other categories, largely due to the long replacement cycle for in-car entertainment.

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