Sony Cleans House, Refocuses

CIO Today reports on Sony's re-organization that will eliminate nearly 7 percent of its workforce. Roughly 10,000 jobs will be cut from Sony's 150,000 workforce by the end of the 2007 fiscal year. Sony will also shut down 11 of its 65 manufacturing plants, eliminate 15 product categories from its electronics division and discontinue 20 percent of existing products.

Michael Gartenberg at Jupiter Research said, "The first steps will be to reorganize what they need in terms of head count, and the second is to reinvigorate and revitalize the product lines." According to Gartenberg, Sony needs to "capture the hearts and minds of consumers" and "reestablish the company as the name synonymous with a particular product category in the much the same way that Sony was once able to make its name synonymous with the Walkman."

On the otherhand, Nitin Gupta at Yankee Group thought Sony "should form strategic partnerships to support core product categories, such as gaming, televisions, home audio and video." Gupta said, "Transformational ideas like the Walkman are hard to come by these days."

"Sony has tremendous brand strength in portable-audio players. And the digital-audio market is going to expand dramatically in the next few years," Gupta added

According to a recent Yankee Group survey, "Sony is at the top of the list in terms of all portable audio. That is a strength that Apple does not have." Gupta opined that "They have the potential if they can bring competitive products to market."

Over at CNET, Stephen Baker at The NPD Group suggested Sony cut some low-visibility categories such as non-MP3 portable music players, clock radios and car stereos. "These midtier categories, ones where Sony has a history and where they may have a large but not a dominant share, are the logical ones to cut," Baker said.

Forrester Research analyst Ted Schadler thought Sony needed to better coordinate its engineers and product planning or risk losing out on more sales. "Apple has accomplished this in music because it designs end-to-end and because they entered the market with a digital rights management-protected product (read: iPod) when no one else did. But it was a one-off, not to be repeated in television, personal video, mobile communications or photography," Schadler said.