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A man walks past an advertisement for Sony Walkmans at an electronic shop in Tokyo May 5, 2011. Sony, despite its iconic brand, remains out of step with the rest of the global technology world and its talent for crowd-pleasing innovation has largely evaporated. (KIM KYUNG-HOON/REUTERS)
A man walks past an advertisement for Sony Walkmans at an electronic shop in Tokyo May 5, 2011. Sony, despite its iconic brand, remains out of step with the rest of the global technology world and its talent for crowd-pleasing innovation has largely evaporated. (KIM KYUNG-HOON/REUTERS)

SPECIAL REPORT

Sony stumbles: Did Stringer's makeover fail? Add to ...

The company was forced to shut down a site it set up to help users affected by April's breach after it found what it called a "security hole".

Then, Internet security firm F-Secure disclosed that a hacked page on a Sony website in Thailand directed users to a fake site posing as an Italian credit card company. And, separately, Sony's So-Net unit that provides Internet service in Japan alerted customers that an intruder had broken into its system and stole virtual points worth $1,225 from account holders.

It all adds to the loss of appeal compared with Apple and other rivals.

Apple's suite of products - from its iMac PCs, its iPod digital music players and content-providing iTunes stores, plus its wildly successful iPhone and iPad tablet computers - have won legions of fans for their integration and sleek designs.

This is much less the case for Sony's Vaio computers, PlayStation games, Sony Ericsson mobile phones, MP3 players, Bravia televisions and trove of music and movies.

"The standard has to be, 'Where is the product I'm going to line up the night before to buy?'" says Steve Jacobs, a former vice president of broadband strategy and alliances at Sony Electronics in the United States, alluding to the throngs that wait hours and days ahead of Apple gadget launches.

Sony's stumbling is happening in a world where companies like Apple and Google are moving at an astonishing speed. "Sony has to change if it's to compete in that race," says Geoff Blaber, an analyst with UK-based technology research firm CCS Insight. "Sony is seeking to deliver content and services across multiple devices and platforms, but product groups and corporate structure is very, very fragmented compared to Apple."

Sony declined to make Stringer or another top executive available for interviews for this story.

Its head of corporate communications, Shiro Kambe, said in a statement the company "will continue to aim to capitalize on the unique strengths our rivals do not have - such as the broad deployment of our products globally and our diverse business line."

He said that a realignment in March and some other initiatives would "further integrate the full range of Sony's assets" and allow for the next phases of the company's growth and development.

Kambe also said that Sony's founding principles - "creating an environment that stresses a spirit of freedom and open-mindedness, where employees could fully exercise their skills and abilities" - was still true today. The company had unveiled numerous exciting products in the past few months, he added.

GUSHING PRAISE

Most at risk of taking the blame for Sony's latest debacle is Stringer's right-hand man, Kazuo Hirai, who was anointed by Stringer in March to eventually carry the CEO baton.

"Since he is in charge of networks, he is the obvious candidate to take charge of sorting this out," Katayama said. "Of course, if he can't manage that the way up will be blocked."

For the moment, Hirai is getting gushing praise from Stringer. While he was being piped in through a video conferencing connection into the New York roundtable last Tuesday, Stringer described him as "very helpful and very demonstrative." Gamers, insisted Stringer, "like Kaz."

Yet it is difficult to think that Hirai won't have to take some of the blame, potentially damaging his chances of being the next CEO.

Stringer's next best choice, said an analyst who declined to be identified because of the sensitivity of the issue, could be Hiroshi Yoshioka. He is an executive, who along with Kunimasa Suzuki, Yoshihisa Ishida and Hirai, is a member of Sony's elite management team. Stringer refers to them as the four musketeers.

Yoshioka is an engineer by training and the executive who runs Sony's non-consumer businesses, including semiconductors, batteries and other key components. The analyst suggests he would have difficulty in struggling to unite Sony's non-cooperating units.

An alternative figure who may play a key role is George Bailey. Stringer hired the former IBM technology guru in 2009, for the newly created post of Chief Transformation Officer.

Bailey, who reports directly to Stringer, was brought in to help accelerate Sony's turnaround.

"While the groundbreaking iPod was only launched in October 2001, Jobs initially built a team, restructured the supply-chain and partnered with value-chain companies," CLSA analyst Atul Goyal said in a report comparing Sony and Apple. "Now, we believe it is Bailey's turn to do the same at Sony. We argue that Sony is just such a turnaround or transformation story."

Whoever follows Stringer to the top of Sony, pressure will be on the new boss to quickly exit from thin-margin or loss-making operations such as phones, televisions, and peripheral businesses, including financial services, analysts predict.

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