Sony’s Stringer puts a brave face on it
By Gareth Powell
Sir Howard Stringer is Welsh. No shame in that. So am I. He is used therefore to be flexible in the face of adversity. To use rat cunning and guile when the situation demands it. And, at Sony, the situation demands it.
Reading about Sony is like reading Shogun by James Clavell. There are warring factions within the company led by daimyos who would, yes, cut your head off if need be for a commercial advantage.
There is little doubt that most of them would like to see the gaijin removed from his post. But if Sir Howard Stringer goes now the person who joins will have to be a kamikaze, a Divine Wind hurtling to doom to save the company.
Sir Howard Stringer talks well — he is, after all, Welsh — and presents a brave face on things. But the truth is that Sony is in strife because of the warring factions within the organization. For him to succeed he must fight these factions to a standstill and then reunite them into a single, goal-driven company. Not an easy task.
So first he has to put his troubles behind him. These troubles include a quantity of notebook batteries which had a sad habit of catching fire when the owner wasn’t looking. Millions were recalled. Millions of dollars were lost.
Then there was PlayStation 3 which was massively outsold by the earlier PlayStation 2 simply because Sony could not get sufficient quantities out of the door in time. No one is arguing that this is not a magnificent machine. It is. But it is in short supply and even as it becomes available sales momentum is not picking up as might be hoped.
At the same time there is the war between Blu-ray and HD DVD which, first of all has the public bewitched, bothered and bewildered as to which to buy.
So they don’t. Mostly they don’t.
Yes, Sony is selling a fair amount of flat-panel TV sales but that is where prices are being cut to the bone and profit margins are being eroded.
Howard Stringer, CEO of Sony, is not at this time willing to do the Japanese thing and slit his belly. Indeed, at the CER show he was positively ebullient. But the Welsh can do that. Be cheerful in the face of disaster. They have had more experience than most people.
In a press conference he said, ‘We set out a year and half ago when I became the CEO to recover the electronics business to profitability. You will remember that for the first time the electronics side of Sony was unprofitable. Well, in the space of this time we are now at 4 percent margin on electronics, and that’s significant. The cost of the PlayStation has raised some challenges on the consolidated numbers that we have promised, but we have to find a way to reach those targets as well. And that’s what we’ll be working on over the next few months, deciding how to get to the 5 percent consolidated number.’
That is called whistling in the wind and I think some of those figures may be a tad optimistic. He told journalists: ‘You all know about the PlayStation delays because you all covered that thoughtfully and elegantly and unkindly — but we’ve now reached a million PlayStations shipped to the United States, as ultimately promised.’
And he thinks it will be six million units by the end of the quarter, worldwide depending on the European launch in spring. He said spring but you should remember that spring comes late in Wales, as in early August.
He said, truthfully, ‘Lost in the shuffle is the fact that the current games that are out there are only using about 20 percent to 25 percent of the bandwidth. Once the publishers’ excitement reaches a level of intensity that they start using more of the bandwidth, that will create additional excitement.’ That is an absolute truth.
Then he sank the slipper into the opposition — the Welsh like to do that. He said, ‘I did read all the HD DVD excitement, but I think they sold 60,000 players, and we actually put out a million Blu-ray players. So Blu-ray format is a strong format. You have to have a high-definition television; you have to have an HDMI link-up. But if you’ve seen the Blu-ray disc on the PlayStation, on the television set attached to PlayStation 3, it’s a remarkable image.’ Which, in truth, it is. But it still loses money. So when will it make money? ‘I think Kutaragi-san (PlayStation chief Ken Kutaragi) said that it would be break-even by the end of the year, at the end of ‘07. . . . in its second year PlayStation 3 will get profitability.’
Go that. Now he follows with something as elliptical as anything written by Shakespeare:
‘ Given the income that we’re expecting from PS3, there are other things that we’ll have to deal with in the corporate environment to achieve our margins, and we’re evaluating those right now.We have two or three months of discussions to figure out how to achieve the target that we promised everybody. You have to get the company used to the idea that the left hand can make the right hand money and vice versa, and that’s part of the cultural change that Sony United represents.’
That he has a job on his hands there is no doubt. Whether he can last the race is a question mark. But there is no doubt he is in there fighting.
Wales is proud of him.
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