Sony Corp Iwerwtn Consumer Electronics (World)

SONY CORP IN CONSUMER ELECTRONICS (WORLD)
November 2014
SCOPE OF THE REPORT
Scope
This report encompasses the operations of Sony Corp and its main competitors
within in-home and portable consumer electronics.
Consumer Electronics
In-Home Consumer
Electronics
In-Car
Entertainment
Portable Consumer
Electronics
LCD TVs
In-Dash Media
Players
Smartphones
Home Audio and

Cinema
In-Car Speakers
Cameras
Video Players
Euromonitor International
Wearable
Electronics
CONSUMER ELECTRONICS: SONY CORP
Disclaimer
Much of the information in this
briefing is of a statistical nature and,
while every attempt has been made
to ensure accuracy and reliability,
Euromonitor International cannot be
held responsible for omissions or
errors.
Figures in tables and analyses are
calculated from unrounded data and
may not sum. Analyses found in the
briefings may not totally reflect the
companies opinions, reader
discretion is advised.
Sony Corp has been

undergoing a prolonged
turnaround selling off its laptop
division to concentrate on
turning around its smartphones
business unit over 2013 and
2014. However, intensifying
competition and slowing growth
in the smartphones market,
particularly in the high-end
segment have derailed plans to
return to profitability in 2014. In
this profile Euromonitor
International examines the
companys prospects in
consumer electronics as it
attempts to complete a
turnaround.
PASSPORT 2
STRATEGIC EVALUATION
COMPETITIVE POSITIONING
MARKET ASSESSMENT
CATEGORY OPPORTUNITIES
BRAND STRATEGY
OPERATIONS
RECOMMENDATIONS
Key facts
Sony Corp
Headquarters:
Tokyo, Japan
Regional involvement:
Global
Category involvement:
Portable, in-car and in-home

consumer electronics
Net revenue (FY2014): 6,682 billion

Sony Corp: Revenue and Net Income
FY2012-FY2014
8,000
7,000
billion
6,000
5,000
4,000
3,000
2,000
1,000
0
-1,000
2012
2013
Revenue
2014
Sony Corp is one of the worlds largest consumer

electronics companies. Aside from consumer
electronics, the company also manufactures
professional use cameras and components such
as image sensors for third parties. Additionally, it
operates a music and film production company as
well as a financial services company operating in
Japan.
Sonys electronics business has struggled to
achieve profitability since 2007. Intensifying
competition in LCD TVs was the primary reason
for the difficulties. The company has been
attempting to mount a turnaround since 2012 by
divesting and winding down unprofitable units to
focus on smartphones.
However, by 2014 the operating environment in
smartphones deteriorated significantly as
competition intensified and growth rates started to
show significant signs of slowing.
Despite consistently making quality hardware and
a number of successful products, Sony as a
whole remains in a difficult situation.
Net income
PASSPORT 4
Financial assessment
2014 was a difficult period for Sony Corp as
the company struggled with expenses
stemming from the sale of its Vaio business
2013 unit. In Q2, the Mobile Communications
business unit recorded a 176.0 billion
impairment of good will as sales of Xperia
304.6 smartphones remained lower than the
company expected over 2014.
8.8
Outside smartphones, however, the
companys turnaround efforts have resulted in
rising profitability. Most importantly, operating
175.5
income and revenues from image sensors
-2.3 have driven growth in the Devices business
unit.
Performance Across Key Electronics Units for Q2 ended

30 September 2013-2014
billion
2014
Mobile Communications
Revenue
Operating income
308.4
-172.0
Imaging Products and Solutions

Revenue
Operating income
178.6
20.1
Home Entertainment and Sound

Revenue
Operating income
282.4
263.8
8.0
-12.1
247.7
201.3
29.6
11.9
Devices
Revenue
Operating income
Restructuring and lay-offs have also returned

Imaging Products and Solutions as well as
Home Entertainment and Sound to profitability
despite low revenue growth. Overall the
company has made progress in its turnaround
efforts but with a deteriorating environment in
the smartphones market, driving volume sales
and profitability with Xperia smartphones will
remain difficult.
PASSPORT 5
SWOT: Sony Corp

STRENGTHS
WEAKNESSES
High-value brand name
Vast manufacturing and

R&D resources
High prices
Despite the financial

struggles of the
company its Sony
brand name is still
highly valued and
enjoys a reputation for
high quality and
durability.
Sony is a major supplier

of image sensors and
other critical electronics
components in the
industry. Research and
production assets in
these areas are a key
strength of the
company.
Sony products across

Sonys product portfolio
most product
is skewed towards
categories are priced
categories with low
well above the category growth prospects and
average which has
falling pricing making
significantly slowed
long-term revenue
volume sales.
growth and profit growth
difficult to achieve.
OPPORTUNITIES
THREATS
Wearable electronics
Digital imaging
Wearable electronics is
one the biggest growth
prospects. However,
despite being one of the
first companies to market
Sony is yet to make a
device that resonates
with mainstream buyers.
Sonys strength in
digital imaging will
continue to drive
revenue. The imaging
technology can be a
differentiator in the
companys
smartphones.
Lack of growth prospects

in electronics
A significant slowdown
Yen appreciation
in smartphones
Sony Corp revenues
Sony Corp profits
and profitability has
remain highly reliant on
become increasingly
yen-denominated costs
reliant on smartphones
and an appreciation of
but a slowdown in
the currency would be
demand especially in
detrimental to the
developed markets is a
companys financial
significant risk.
standing.
PASSPORT 6
Key strategic objectives and challenges

Returning to profitability
The company is unlikely to return to profitability without significantly improving the performance of its
smartphone and TV line-ups as these are the single largest revenue generators in the companys electronics
portfolio. This has been the focus of turnaround efforts and will remain a priority as profitability in both
divisions has been hard to attain.
Sony faces a common problem in both categories. The companys products are positioned at the higher end
of the price spectrum, but demand is driven by lower-priced models. This limits volume sales causing capital
underutilisation and financial losses.
Therefore Sony needs to also pursue alternative sources of growth. The company looked to medical devices
and other areas, but within consumer electronics only wearable electronics offer any significant volume and
value growth rates. The Sony Smartwatch was among the first smartwatches to appear on the market, but
like many of its competitors it has struggled to gain mainstream acceptance.
At the company level, Sonys strategic vision of One Sony, at the centre of its turnaround, has not been
properly executed. The companys product portfolio and technologies lack continuity and often operate
separately from each other rather than creating synergies. Correcting this and achieving a company
structure with a narrower and more interconnected product portfolio remains Sonys greatest challenge and
opportunity.
PASSPORT 7
MARKET ASSESSMENT
BRAND STRATEGY
OPERATIONS
RECOMMENDATIONS
Sony Corp weighed down by LCD TVs in in-home electronics

Global Volume Share of Sony Corp in
Key In-Home Electronics Categories
2009-2013
25
% volume share
20
15
One of the biggest challenges in turning around

Sony Corp has been the consistent lack of
profitability in the companys home electronics
division. This is largely due to weakness in LCD
TVs where Sony Corp has been losing ground
since 2009. Over 2009-2013, demand for LCD TVs
became increasingly dependent on emerging
markets. However, Sonys models were priced
above competing Korean models rendering the
company unable to take advantage of dynamic
growth in emerging markets.
The shift in demand to emerging markets gave rise
to a large number of Chinese and local brands
which sold televisions at prices below those of the
competition. The trend spread to developed
markets where brands such as Vizio, in the US,
have become increasingly popular, squeezing out
more expensive competitors.
10
0
2009
2010
2011
2012
Home Audio and Cinema

LCD TVs
Video Players
2013
Sony Corp managed to increase its share in the

rapidly declining market for video players and
maintained a 20% share in home audio and
cinema, but this was insufficient to offset losses in
its TV business.
PASSPORT 9
Sony Corp loses ground in a shrinking cameras market

Global Volume Share of Top Five Camera
Manufacturers 2009-2013
80
70
Canon Inc
60
Nikon Corp
% volume share
50
40
Fuji Photo Film Co

Ltd
30
Sony Corp
20
Samsung Corp
10
0
2009
2010
2011
2012
2013
Camera-enabled smartphones have been

depressing demand for cameras over the
review period and have rendered
camcorders a niche category. Sales of point
and shoot cameras have been affected
most of all as the image quality and feature
set in most cases does not exceed those of
mid to high-end smartphones.
In this environment, companies with the
biggest presence in interchangeable lens
cameras have been most successful.
Therefore Canon Inc and Nikon Corp have
been gaining share in the shrinking
cameras market. While Sony Corp also has
a wide portfolio of interchangeable lens
cameras, sales have lagged behind due to
their higher prices compared to the
competition. Sonys cameras business
represents a small proportion of the
companys revenue, but remains a
significant part of its overall strength as a
leading image sensor supplier in
smartphones.
PASSPORT 10
Sony Corp in smartphones

Sony Corp bought out Sony Ericsson Mobile Communications AB in 2012 in the hopes of building a
company-wide turnaround on the back of rising smartphones sales. However, its global volume share in
smartphones stood at 3.6% in 2013, and it was a niche brand in some of the worlds largest and fastestgrowing smartphones markets.
Upon the buyout, Sony Corp drastically re-designed its line-up to be more competitive in terms of features
and aesthetics but pursued a pricing strategy similar to the one it employed in TVs and other product lines.
The product portfolio was skewed towards high-priced devices, and volume sales suffered as a
consequence. While the company saw some signs of recovering sales in 2013 intensifying competition has
made gaining share impossible in 2014.
Sony remains a niche brand across most markets with Japan and parts of Europe being its strongest
markets.
% volume share
Sony Corp: Volume Share in Smartphones in Selected Markets 2013

20
18
16
14
12
10
8
6
4
2
0
Japan
Spain
Hungary
Poland
Sweden
Taiwan
Portugal
Turkey
Singapore
Austria
PASSPORT 11
Early entrant into wearable electronics

Global Volume Share of Top Five
Manufacturers in Wearable Electronics 2013
100
90
Fitbit Inc
% volume share
80
Nike Inc
70
60
Jawbone
50
Pebble Technology
Corp
40
Sony Corp
30
Others
20
Like many of its biggest competitors Sony Corp

has entered the wearable electronics market in the
hopes of making this product line its next major
revenue generator.
In 2013, Sony Corp was among the first large
electronics companies to enter the market, but
through 2013 and into 2014 wearable electronics
was dominated by smaller companies focused on
wearable technology. Fitbit, Nike and Jawbone
lead volume sales with simple, relatively
inexpensive passive fitness trackers.
Within autonomous wearable electronics, Pebble
remained the biggest brand by retail volume share.
Sonys smartwatch as well as similar entries from
Samsung were not received well by the general
public and early adopters opted for products from
smaller manufacturers in 2013.
Lack of software specifically designed for wearable
electronics was largely to blame for the lack of
mainstream adoption of more complex devices
such as the Sony SmartWatch in 2013.
10
0
2013
PASSPORT 12
Sony Corp in in-car entertainment

Global Volume Share of Top Five In-Dash
Media Players Manufacturers 2013
100
90
% volume share
80
70
Pioneer Corp
JVC Kenwood Corp
60
Sony Corp
50
Alpine Electronics Inc
40
Coagent Electronic S&T Co Ltd
30
Others
20
10
0
Sony Corp was the third largest

manufacturer of aftermarket in-dash
media players in 2013. Its position in the
market has seen little change over the
review period. The competitive landscape
in in-car entertainment is far more stable
than in other categories largely due to the
very long replacement cycles in in-car
entertainment.
Unlike in its other product categories,
Sony Corp has a product portfolio that
spans a wide price spectrum. Its products
are priced on a par with most competing
brands and tend to be less expensive than
some similar Alpine and Pioneer models.
This has made the brand popular in both
developed and emerging markets.
In-dash media players are Sonys main

product in in-car entertainment but it also
had a 9% global volume share of in-car
speakers in 2013.
PASSPORT 13
MARKET ASSESSMENT
BRAND STRATEGY
OPERATIONS
RECOMMENDATIONS
MARKET ASSESSMENT
OLED TVs making inroads but LCD TVs remain in the lead
Digital TV Sales by Type 2013-2018

250
200
Million units
After a slight rise in LCD TV demand in 2014, due to

the FIFA World Cup, sales are expected to decline in
2015. However, overall digital TV volume sales are
predicted to grow by 6% over 2013-2018, with sales of
LCD TVs expected to show robust growth of 9% over
the period.
LCD will remain the dominant projection technology
for the foreseeable future, as plasma production falls
and OLED take-up will remain slow.
Panasonic Corp was first to announce the cessation of
plasma TV production in 2013. Samsung Corp
followed in 2014. LG Corp - the last remaining
manufacturer - is likely to follow suit in late 2014/early
2015. The proliferation of OLED TVs will be slowed as
panel makers focus on displays for fast-growing
categories such as smartphones and tablets. Sony
was the first company to launch an OLED TV, but by
2014 entries from Samsung and LG were dominating
the nascent market. Sony has since suspended
production of OLED TVs to focus on LCD models.
While sales of OLED TVs are expected to grow, the
low prices of LCD TVs will keep them the biggest TV
projection technology over the forecast period.
150
100
50
0
2013
2014
2015
Plasma TVs
2016
OLED TVs
2017
2018
LCD TVs
PASSPORT 15
MARKET ASSESSMENT
Video players declining across the board

Sales of video players continued to decline across both developed and emerging markets. There are
growing content consumption options for consumers. The rise of legal streaming services such as Netflix in
developed countries, along with content piracy prevalent in both developed and emerging markets are
depressing demand for video players globally.
Therefore, as sales of DVD players continue to plummet, BD players are falling short of making up the
difference. Volume sales of BD players are expected to peak in 2015 and start to decline thereafter.
Despite the decline in demand, video players will not vanish completely, as large segments of consumers
have DVD and BD collections that they would like to be able to continue viewing using optical media
players.
45
70
40
60
35
Million units
Million units
80
Global Sales of Video Players by Market

Type 2013-2018
50
40
30
Global Sales of Video Players by

Product Type 2013-2018
30
25
20
15
20
10
10
5
0
0
2013
2014
2015
Developed Markets
2016
2017
Emerging Markets
2018
2013
2014
BD Players
2015
2016
DVD Players
2017
2018
Others
PASSPORT 16
MARKET ASSESSMENT
Diverging underlying dynamics behind slow growth

Penetration Rates in In-Home
Electronics: China 2010-2014
60
Penetration Rates in In-Home

Electronics: US 2010-2014
160
140
% households
% households
50
40
30
20
Digital TVs
10
0
120
100
80
60
Digital TVs
40
20
0
2010
2011
2012
2013
2014
2010
2011
2012
2013
2014
In China, the availability of online content is making digital TVs less of a

Absolute Change in
necessity, which has slowed adoption rates, but consumers with digital Replacement Cycle Length:
TVs have been replacing them at a constant pace. This is prevalent
China vs US 2010-2014
across many emerging markets. Audio content consumption is
Home Audio and
becoming an increasingly personal experience, which has been
Cinema
depressing the penetration rates of home audio and cinema.
China
Digital TVs
Replacement rates have, however, picked up as the proportion of audio
enthusiasts in the installed base has increased.
US
In the US, penetration rates remained steady as online content
consumption gained popularity, but usage of home audio and cinema
has declined leading to longer replacement cycles. In digital TVs,
-10
-5
0
5
10
multiple set ownership drove sales of small, low-cost units, shortening
Months
the replacement cycle.
PASSPORT 17
MARKET ASSESSMENT
Diverging trends in in-car entertainment

Total Volume Sales of In-Car
Entertainment by Category in Developed
Markets 2013-2018
25
10
Million units
Million units
12
Total Volume Sales of In-Car

Entertainment by Category in Emerging
Markets 2013-2018
8
6
4
2
20
15
10
5
0
2013
2014
2015
In-Car Speakers
2016
2017
2018
0
2013
In-Dash Media Players
2014
2015
In-Car Speakers
2016
2017
2018
In-Dash Media Players
Upgrading speakers and in-dash media players gives consumers a way to upgrade their vehicles postpurchase at a relatively low cost compared to factory-installed options. This is especially true of in-dash
media players. Therefore, volume sales of in-dash media players and in-car speakers are expected to
continue growing in emerging markets over the forecast period.
Automotive circulation is stagnating in developed markets, while demand for aftermarket in-car
entertainment has been declining and is expected to continue to do so over the forecast period. The
number of vehicles with advanced in-car entertainment systems is growing rapidly, as features such as
navigation are becoming commonplace even in mid to economy vehicles in developed markets. The trend
is expected to accelerate in the US, where manufacturers are already expanding the availability of rear-view
cameras and centre console displays in the lead up to 2018, when these features will be mandatory. This
makes installing aftermarket in car entertainment equipment often redundant, thereby depressing demand.
PASSPORT 18
MARKET ASSESSMENT
Smartphones growth driven by Asia Pacific

By 2014, volume sales of smartphones in developed
markets started to stagnate, as there are few
consumers left who want a smartphone but do not
have one. Some growth is still likely though, as the
selection of feature phones in these markets declines,
along with smartphone prices. Further growth is likely
in North America due to a shortening of smartphone
replacement cycles as a consequence of the shift
towards pre-paid lines.
Growth in volume sales will be driven by middle- and

low-income households in emerging markets, leading
to an accelerating shift towards low-cost models. This
will benefit low-cost brands such as Huawei and ZTE,
as well as companies such as Samsung with product
portfolios spanning a wide price range. Apple Inc will
need to remain dominant in core developed markets.
2.0
1.8
Rest of the World
1.6
Middle East and
Africa
1.4
Rest of Asia
Billion units
Consequently, emerging markets will be the main

driving force in smartphones over the forecast period.
Even as volume sales growth in China slows in the
long run, vast populations in emerging markets in
Latin America, Asia Pacific, and the Middle East and
Africa will continue shifting from feature phones to
smartphones.
Sales of Smartphones by Region 2013-2018
1.2
China
1.0
Western Europe
0.8
North America
0.6
0.4
0.2
0.0
2013
2014
2015
2016
2017
2018
PASSPORT 19
MARKET ASSESSMENT
Windows gaining traction with highest growth

Global retail volume sales of smartphones are
expected to post a CAGR of 12% over 2013-2018 and
total volume sales will exceed 1.3 billion in 2015.
Windows smartphones are gaining traction as market

share for iPhones begins to slip. The product retains
users but high prices prevent it from gaining wider
audiences especially in emerging markets. From 2013
to 2015, volume sales of Windows smartphones are
expected to increase 95% to 107 million units. In
2014, Microsoft added nine new Windows Phone
partners with the majority originating from emerging
markets. As a result, the penetration of Windows
smartphones into the low-cost smartphones segment
may threaten to loosen the stronghold of Android over
the market.
100
90
80
70
% volume share
Android smartphones are expected to capture up to

77% of the market in 2015. However, compared to
2012-2013, the growth rate for Android smartphones
has significantly slowed to 19% in 2013-2014. In
emerging markets, growth of Android smartphones
has accelerated by capturing consumers who are
upgrading their mobile phones from feature phones to
smartphones.
Smartphones by OS Globally 2013-2015
60
50
40
30
20
10
0
2013
Windows
2014
iOS
Android
2015
Other
PASSPORT 20
MARKET ASSESSMENT
BRAND STRATEGY
OPERATIONS
RECOMMENDATIONS
Digital cameras remain important despite declining sales

As consumer camcorders become a niche market for enthusiasts, and fixed lens camera volume sales
decline, manufacturers have turned to interchangeable lens cameras for revenue growth. This has resulted
in price reductions for interchangeable lens SLR and compact system cameras, spurring uptake in both
developed and emerging markets. Sony and its competitors are also incorporating larger sensors and
advanced feature sets into their fixed-lens models to differentiate them from smartphones. The overall
effect of this has been an increase in unit prices and declining volume sales globally.
For Sony Corp, the importance of its camera business extends to a wide range of product categories as its
image sensor technology is incorporated into its smartphones as well as sold to other smartphone
manufacturers. Therefore growing capabilities in image capturing technology needs to be the companys
top priority. So despite slowing overall volume sales, cameras remain an important product line.
Volume Sales of Interchangeable Lens Cameras by Type 2014-2018
SLR Cameras 2014-2018
Compact System Cameras 2014-2018
4.5
4.0
Million units
Million units
5
4
3
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2014
2015
2016
2017
2018
2014
2015
2016
2017
2018
PASSPORT 22
Concentrate on sensor technology in wearable electronics

Initially, growth in wearable electronics will be
driven by simpler passive wearable electronics,
with a shift towards more capable autonomous
wearable electronics expected over the forecast
period. Both types of devices will collect user data,
but autonomous devices will also provide output
and allow users to interact directly with the device.
This represents a tremendous opportunity for

companies with sensor production and integration
capabilities. Through 2014 and 2015 passive
wearable electronics are expected to dominate the
market. These will mainly be fitness-orientated
devices utilising accelerometers and biometric
sensors. However more advanced, autonomous
devices will require a wider array of sensors
including light and imaging sensors to access
surroundings and deliver contextually relevant
content without user input.
180
160
140
120
Million units
For these products to gain mainstream acceptance

they will need to function with minimal input from
the user, relying on information about the
surroundings and the use case to generate output.
Global Volume Sales of Wearable

Electronics by Type 2012-2018
100
80
60
40
20
0
2012
2013
2014
2015
2016
2017
2018
Passive Wearable Electronics

Autonomous Wearable Electronics
PASSPORT 23
Imaging as a key differentiator in smartphones

Smartphones remain the largest growth driver in
consumer electronics despite slowing growth in
2014-2015. Volume sales of Android smartphones
are expected to reach over one billion units in
2015. However, as growth slows competition is
intensifying and product differentiation becomes
increasingly important.
This has been depressing prices and in the face of

growing competition declining prices are
unavoidable. Therefore to stay profitable Sony
Corp needs to grow volume sales and this can only
be achieved with significant expansion in low-cost
models and cutting prices in all price segments
Across the entire price range the company needs
to focus on camera quality to differentiate itself.
1,200
1,000
Million units
Sony Corp has had difficulties competing with

Samsung, Nokia, and other smartphone
manufacturers, but by 2014 a number of new
strong brands started to present a growing threat.
Chinese brands such as Xiaomi, Huawei and ZTE
started to expand in the global market with
increasingly high-quality smartphone models.
Sales of Android Smartphones 2011-2015
800
600
400
200
0
2011
2012
2013
2014
2015
PASSPORT 24
Expand in emerging markets

Retail Value Sales of Consumer Electronics: Emerging
vs Developed Markets 2009-2018
1,200
Emerging
Developed
1,000
US$ billion
800
In most of its product lines Sony

Corp has been focused on highpriced models prioritising product
quality and margin over volume
sales. This has rendered the
company unable to take
advantage of the dynamic
growth in demand for consumer
electronics in emerging markets.
To return to profitability the
company needs to grow volume
sales across all of its product
lines and with growth expected
to be driven by emerging
markets, products aimed at
mainstream consumers in
developing countries need to
take priority.
600
400
200
0
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Low-cost products are also

becoming increasingly popular in
developed markets especially as
replacement cycles continue to
shrink.
PASSPORT 25
MARKET ASSESSMENT
BRAND STRATEGY
OPERATIONS
RECOMMENDATIONS
BRAND STRATEGY
Key sub-brands and product lines

Bravia represents Sonys brand of LCD televisions. In 2014, the division was spun off into a wholly-owned
subsidiary as part of a turnaround plan. Sony Corp has struggled to turn a profit in televisions as its product
range tends to be priced above most competing brands, which has limited volume sales especially in
emerging markets.
Xperia covers Sonys range of smartphones and Android tablets. Products in these lines were meant to
drive growth at Sony Corp, but much as in televisions the products were well reviewed, but priced above
competing brands.
Vaio: This brand represented Sonys range of laptops and laptop-tablet hybrids through 2014 when it was
spun off into an independently-operated Vaio Inc, with a 95% stake sold to Japan Industrial Partners. The
new company does not compete on the global market, but maintains a presence in Japan.
Within cameras Sony Corp has three sub-brands, but across all three the companys products are priced
above most competing models. The main competitive advantage of Sony products is the companys
proprietary translucent sensor technology which allows for faster focusing especially in DSLR models.
Alpha: Originally representing DSLR cameras, the brand was expanded to micro-system cameras in
2013 after the NEX sub-brand was discontinued.
NEX: Until 2013, NEX covered Sonys range of micro-system cameras; this brand was discontinued in
2013 and products were marketed as Alpha E-mount.
CyberShot encompasses the companys fixed-lens cameras and unique lens-style cameras designed to
work with smartphones. While demand for fixed-lens cameras has been declining, Sony Corp has had
success with advanced, large-sensor, fixed-lens cameras in the RX range by marketing them as a
capable yet convenient-to-use alternative to interchangeable lens models.
PASSPORT 27
MARKET ASSESSMENT
BRAND STRATEGY
OPERATIONS
RECOMMENDATIONS
OPERATIONS
Scaling down at Sony Corp

Sony Corp has been struggling with low volume sales and underutilisation of capital in many of its product
lines. Consequently, the company has been selling off a number of assets and undertake a series of costcutting measures:
As part of its One Sony transformation plan, Sony closed its factory in Minokamo, Japan in 2012. In
addition, Sony has been selling off its television factories globally as part of its initiative to improve
profitability and reduce overheads.
Sony sold its factories in Slovakia and Spain to third parties in 2010, and the company continues to shed
manufacturing facilities globally as it looks towards original equipment manufacturers (OEM) to help
manufacture its products.
Sony has also shifted production of its SLRs (Alpha range) and compact system (NEX range) cameras
from Japan to Thailand, in a bid to reduce product costs and cater to the growing demand in the region.
In 2013, Sony Corp sold its US headquarters building in New York City to Chetrit Group for US$1.1 billion.
In 2014, Sony Corp spun off its computer business (excluding Xperia Android tablets) into an
independently-operating Vaio Inc and sold a 95% stake in the company to Japan Industrial Partners,
retaining a 5% interest in the company.
Also in 2014, Sony Corp spun off its television business into a wholly-owned subsidiary. As part of the sale
and reorganisation of Vaio and Bravia business units, the company reduced its workforce by 5,000.
PASSPORT 29
MARKET ASSESSMENT
BRAND STRATEGY
OPERATIONS
RECOMMENDATIONS
RECOMMENDATIONS
Build product lines around component lines

Sony Corp is a company that has been focused on high-quality, premium-priced products which has hurt its
volume sales as globally prices for televisions, cameras, computers and smartphones declined. Consumer
electronics has become a low-margin hardware business and returning to profitability requires growing
volume sales. To do so Sony Corp needs to produce critical components in quantities far exceeding its own
needs to provide revenues for research and development and lowering per unit costs for its own products.
Sony sensors in everything
OLED screens
Emerging markets
Image sensor technology is one

of Sony Corps most valuable
assets. Its image sensors are
used in a wide range of flagship
smartphones of competing
brands.
Sony Corp has decided to

suspend operations in OLED
TVs in 2014 to focus on LCD
TVs. With sales of digital TVs
showing few prospects for
growth in developed markets,
expensive OLED TVs have
limited short- to mid-term
revenue and profit generation
prospects.
Most crucial to Sonys short- to

mid-term performance is
increasing volume sales of
televisions and smartphones.
With volume demand
increasingly reliant on emerging
markets the company needs to
offer aggressively priced
products across all of its lines.
The technology needs to be

expanded to applications in
wearable electronics and in-car
entertainment moving beyond
image capturing and into
creating hardware for contextual
awareness-enabling sensor
arrays.
However, OLED screens are

proliferating in smartphones and
tablets. As OLED usage
increases Sony risks being left
behind.
This is especially true in

smartphones where a growing
number of low-cost brands have
not only come to dominate
emerging markets but are
starting to make inroads in
developed countries in 2014.
PASSPORT 31
REPORT DEFINITIONS
Data parameters
The forecast period under review subsumes the years 2014 through to 2018, inclusive.
All forecast retail value data cited in this report are expressed in constant terms unless otherwise stated;
inflationary effects are discounted. All historical data, country-specific, regional and global, through to 2013
are also expressed in constant value terms, with any inflationary effects discounted.
Historic value data are given in US dollar fixed 2013 exchange rates, unless otherwise stated.
Researched markets refers to the 46 markets directly researched by in-country analysts. Global and
regional data include sales in modelled markets.
PASSPORT 32
REPORT DEFINITIONS
Product definitions
Laptops: Personal computers (PCs) meant for mobile use and incorporating an external power source,
usually a rechargeable battery pack.
Tablets and Other Portable Computers: Portable computers primarily using touchscreen interfaces with
screens larger than 7.
LCD TVs: TVs that use liquid crystal display (LCD) panels with backlighting. Backlighting technology can be
via conventional fluorescent light or LED.
Smart TVs: Televisions with built-in internet connectivity, wired or wireless.
Home Audio and Cinema: Consists of audio separates, home cinema and speaker systems, hi-fi systems,
other home audio and cinema, digital media player docks and speakers.
In-Car Speakers: Permanently-mounted aftermarket speakers designed for automotive use.
In-Dash Media Players: Includes all aftermarket in-car radio cassette players, in-car radio players, in-car
CD players and in-car DVD players.
Smartphones: Any device capable of voice communication over a cellular network. A smartphone must
have an identifiable operating system (eg Android, BlackBerry OS, iOS, Symbian, Windows), allow
installation of software applications (apps), and a screen size of <7.
Digital Cameras: Cameras that store images in digital format. Point and shoot, micro-system and DSLR
cameras are all included. Accessories such as tripods, lens and memory cards are excluded.
Camcorders: Devices with the primary function of capturing video footage. Includes devices with added
secondary functionality of taking still photos
Wearable Electronics: Electronic devices designed to be worn by the user, typically on the wrist or head.
The category only covers products designed for retail sale and consumer usage. Excludes products
designed for use in medical, military and any other profession.
PASSPORT 33
FOR FURTHER INSIGHT PLEASE CONTACT

Mykola Golovko
Senior Analyst - Consumer Electronics
Mykola.golovko@euromonitor.com.sg
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PASSPORT 35

Sony Corp Iwerwtn Consumer Electronics (World)

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SONY CORP IN CONSUMER ELECTRONICS (WORLD)

SCOPE OF THE REPORT

Home Audio and

CONSUMER ELECTRONICS: SONY CORP

Sony Corp has been

Portable, in-car and in-home

Net revenue (FY2014): 6,682 billion

Sony Corp is one of the worlds largest consumer

CONSUMER ELECTRONICS: SONY CORP

Performance Across Key Electronics Units for Q2 ended

Imaging Products and Solutions

Home Entertainment and Sound

Restructuring and lay-offs have also returned

CONSUMER ELECTRONICS: SONY CORP

SWOT: Sony Corp

High-value brand name

Vast manufacturing and

Despite the financial

Sony is a major supplier

Sony products across

Lack of growth prospects

CONSUMER ELECTRONICS: SONY CORP

Key strategic objectives and challenges

CONSUMER ELECTRONICS: SONY CORP

Sony Corp weighed down by LCD TVs in in-home electronics

One of the biggest challenges in turning around

Home Audio and Cinema

Sony Corp managed to increase its share in the

CONSUMER ELECTRONICS: SONY CORP

Sony Corp loses ground in a shrinking cameras market

Fuji Photo Film Co

Camera-enabled smartphones have been

CONSUMER ELECTRONICS: SONY CORP

Sony Corp in smartphones

Sony Corp: Volume Share in Smartphones in Selected Markets 2013

CONSUMER ELECTRONICS: SONY CORP

Early entrant into wearable electronics

Like many of its biggest competitors Sony Corp

CONSUMER ELECTRONICS: SONY CORP

Sony Corp in in-car entertainment

JVC Kenwood Corp

Alpine Electronics Inc

Coagent Electronic S&T Co Ltd

Sony Corp was the third largest

In-dash media players are Sonys main

CONSUMER ELECTRONICS: SONY CORP

Digital TV Sales by Type 2013-2018

After a slight rise in LCD TV demand in 2014, due to

CONSUMER ELECTRONICS: SONY CORP

Video players declining across the board

Global Sales of Video Players by Market

Global Sales of Video Players by

CONSUMER ELECTRONICS: SONY CORP

Diverging underlying dynamics behind slow growth

Penetration Rates in In-Home

In China, the availability of online content is making digital TVs less of a

CONSUMER ELECTRONICS: SONY CORP

Diverging trends in in-car entertainment

Total Volume Sales of In-Car

In-Dash Media Players

In-Dash Media Players

CONSUMER ELECTRONICS: SONY CORP

Smartphones growth driven by Asia Pacific