How did Sony lose its mojo?

Before the iPod, everyone's headphones were plugged into the Sony Walkman. But as the Walkman lost its relevance, Sony seemed to, as well.

By Apr 2, 2012 1:41PM

Like Xerox (XRX), Kleenex, and Google (GOOG), Sony's (SNE) Walkman was the rare brand that was so popular it became the thing itself. The Japanese electronics giant was ubiquitous in other ways, too, and there was a time when it seemed as if everyone owned a Sony device, whether it was a television, a camcorder, or a stereo. But in the Apple (AAPL) iPad age, Sony seems to have all but disappeared from the marketplace for must-have gadgets.

What happened? And how can its new CEO, Kazuo Hirai, turn the company around? Here, a guide to Sony's woes:

How badly is Sony struggling? 

It's not pretty. The company is set to post a loss of $2.7 billion for the current fiscal year. It was worth $100 billion in 2000, but since then has lost 80% of its value. And it's even struggling in its native Japan, where Apple for the first time was just voted the country's top consumer brand.

Where did Sony go wrong? 
Sony is an enormous company, and its movie unit (which produced the "Spiderman" movies) and music business (which distributes Adele and Taylor Swift) post profits. In fact, its biggest moneymaker is Sony Life, an insurance company. The problem is lackluster gadgets. Consumer electronics still account for half of Sony's sales, and the company's once-unrivaled television division, for example, "is drowning in red ink," says Matt Burns at TechCrunch.

Why can't it make another Walkman? 
Sony's "gift for innovation" came more easily when the company was "young and streamlined, not sprawling," says Chico Harlan at The Washington Post. Sony has become an "unwieldy multiheaded beast," says Burns, and is simply less focused on product development. Furthermore, Sony is reluctant to take the draconian steps -- firing workers, for example -- that are often necessary to make companies more nimble. Like other struggling Japanese companies, Sony still adheres "to cultural expectations of lifetime employment," says Harlan.

What is Sony's new CEO planning to do? 
Hirai, who took the helm on April 1, is proposing a new business structure called "Sony One," which will see the company focus on gaming, mobile devices, and digital imaging. For a company that missed out "completely on the iPod era of portable music devices," it's hoping to "make up for lost time" with a big splash in the smartphone industry, says Devindra Hardawar at VentureBeat. Gaming is still a "cash cow" for Sony, and its digital cameras are "better" than most, so the Sony One plan seems solid.

Can it make a comeback? 
Hirai says he's willing to take the "painful" necessary steps, says Cliff Edwards at Bloomberg Businessweek, including cutting costs. But Sony will also have to do a better job of wedding its gadgets with the vast music and movie content at its disposal. Sony's "engineers were slow to weave it all together, as Apple did seamlessly with its iPod and iTunes," says Harlan. It's an ironic twist of fate for the reigning company "Apple and Steve Jobs were aiming to dethrone 15 years ago," says Burns.

Sources: Bloomberg BusinessweekTheNextWebTechCrunch,VentureBeatThe Washington Post

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