SI: Sony Gets Real, Defines Business Strategy For 2010 And Beyond

[Christopher]

Under the leadership of its new executive management team established in April of this year, Sony has reformed its organizational structure in order to bolster profitability and transform its operations, with the aim of accelerating innovation and growth and optimizing business processes, particularly within its electronics and networked service businesses. As a result, approximately 80% of Sony’s targeted 330 billion yen (3.7 billion USD) of group-wide cost reductions for the current fiscal year ending March 31, 2010 compared to the previous fiscal year have been achieved in the first half of the current fiscal year. Furthermore, Sony is now positioned to launch a succession of competitive products from the end of this calendar year and into 2010.

This also means that Sony is becoming a quicker, leaner organization which is more responsive to the market. They have promised that they will no longer develop products based on underlying technologies, but rather focus on the user experience. Please keep an eye out for some exciting developments we’ve spotted in this presentation in future posts. In this blog post, I will simply outline their goals.

In order to permit further growth and continue to enhance profitability, Sony is implementing additional transformation measures centering on the following four initiatives:

- Target consistent profitability in core hardware businesses (TV, game and digital imaging)

- Provide new user experiences integrating innovative hardware, software and services

- Reach out to new customers and develop new geographic markets

- Increase Sony’s focus on environmentally conscious products and processes

Through these measures, Sony targets an annual 5% operating income margin and a 10% return on equity by the end of the fiscal year ending March 31, 2013.

Details of these initiatives are as follows:

Target consistent profitability in core hardware businesses (TV, game and digital imaging)

Regain the leading market position in LCD TV business

• Target returning the LCD TV business to profitability in the fiscal year ending March 31, 2011 and achieving a 20% worldwide market share on a unit basis in the fiscal year ending March 31, 2013.

• Create a new revenue model beyond conventional TV business models.

- Introduce “Evolving” TV that delivers new applications over the network.

- Develop new generation displays using proprietary Sony devices.

Strengthen profitability of game business

• Target returning to profitability in the fiscal year ending March 31, 2011.

• Increase revenues by expanding hardware/software sales and enrichment of PlayStation