So the big news this week, for me, was both the restructuring of Microsoft (a phenomenal, phenomenal blog, btw), and the restructuring of Sony. There’s a bunch of parallels here on the surface, but at their core, Sony doesn’t have a business model that investors can count on, whereas Microsoft’s business model of selling software is still working for them.
The Microsoft announcement this week was pretty interesting in that the cracks in their armor are really starting to show. I think there is a lot of denial in the executive suite, and Ballmer, like Idei at Sony, won’t be the person to lead the company out of the current mess. The stock has stalled, and while the company is richer than many small nations, money alone won’t do anything but buy time. 2006 is a critical year for many reasons, including XBOX360 (which launches in late 05 but will either live or die in 06) and of course Windows Vista. I think everyone has learned to never underestimate Redmond, but it is incredible to see the company struggling while trying to maintain an image of strength.
Sony on the other hand is bleeding badly. 10,000 employees to be cut (out of 151,400 worldwide), 4000 in Japan. I was expecting, no hoping, for actually more radical cuts than that. I think Sony needs to cut a lot more than 1/15th of it’s workforce to become competitive.
I’m ABSOLUTELY ELATED to see that Qualia is getting the AXE. I always HATED Qualia both as a brand and as an idea when I was a Sony employee. The products were awful. It was everything that Sony should not have been doing: going after a small niche of customers instead of the mass market, targeting the rich expecing them to pay more when they are often more price/quality conscious, relying on the brand when the product quality wasn’t there. Remember all the product recalls for those multi-thousand-dollar Qualia products? No? Good- because that means you were smart enough to stay away from those idiotic products.
In any case, the Bloomberg article is blunt and effective. There was no announcement of new products. Only cuts and those cuts were seen as less than is necessary.
Stringer is off to a bad start. He should have come in with stronger cuts, maybe even something radical like the sale of the game unit or the movie unit. A new CEO gets a few months in which s/he has the leeway to make radical moves and set an agenda for his/her tenure. This is a poor start.
Good luck Sony- if you were expecting for better management from Stringer than Idei, I don’t see it yet.