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TECH 2/09/2014 @ 9:00AM 23,771 views Forbes.com
Sony Spins Off TV Business In Bid To Reconquer Market
BY mark Sparrow
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If you’re of a certain age you’ll probably remember growing up with a Sony Trinitron TV in your living room. Back in the late 1970s when I grew up in England, when Europe still produced most of its own televisions, Sony dominated the TV market with its superbly sharp Trinitron screens boasting rich blacks and saturated colours. Indeed, at one time there really was no alternative. Gradually the likes of Philips ,Hitachi , Grundig and countless other small European producers fell by the wayside, even with the help of high import tariffs to protect the European TV business. To get around this protection, Sony set up an EU television factory in the UK and soon cornered the market.
For a decade or more the huge lumbering CRT screens with their shiny Sony name badges stared back at viewers. If you didn’t have a Sony it was probably because you couldn’t afford one; and that’s the way the market looked until the advent of flat-screen technology. The problem for Sony was that it was caught unawares by the sudden popularity of flat screens, perhaps because it was too busy enjoying its dominance in the conventional CRT market.

Sony intends to spin off it TV business by the summer and concentrate on high quality 4K screens.
Without the facility to produce its own LCD panels Sony found itself forced to buy in components from the likes of Samsung and Sharp. However, sourcing panels from third parties meant there was very little control over the main component of the product line and therefore picture quality. Buying in panels from other manufacturers also seriously impacted on costs and profitability just at the time when it needed to be really competitive to gain market share. High production costs and a strong Yen meant the company simply couldn’t compete and in 2011 it saw a massive 24% drop in TV sales.
The following year Sony realised it needed to have a complete rethink. It decided to go back to basics and concentrate on developing the highest possible picture quality. The secret weapon in this strategy was Sony’s X-Reality Pro engine that offered better noise reduction and a big boost in picture quality. Sony also developed its range of new Triluminos Displays that the company claims offers more natural colours and a much wider colour gamut on screen. At the same time, the aesthetics of its tvs were overhauled to bring them into line with its South Korean competitors. When you’re concentrating on producing larger models for family viewing, it’s vitally important to have sorted out form as well as function. Let’s face it; if you’re going to have a 50-inch monster in your living room, you’ll probably want it to look as elegant and as slim as possible.
So despite the huge task ahead, Sony is sticking to its strategy of producing larger TVs with the best-possible picture and sound quality, followed very closely by ease-of-use and good looks. To help it do this, Sony is going to spin off its TV division and turn it into a wholly-owned subsidiary run separately from the rest of the business. The thinking behind this move is to enhance the profit Sony derives from selling TVs. The company expects to have completed the transition by July 2014. As result of its restructuring in both the PC and TV businesses, Sony expects to lay off around 5,000 employees by the end of the financial year.
This turnaround clearly won’t happen overnight and meanwhile Sony still intends to sell competitively priced smaller screens in emerging markets using contract manufacturers. The company must know it has a mighty struggle to regain the stranglehold it once enjoyed but with the help of 4K Ultra-HD and 2K high-definition technologies, coupled with a weaker Yen, it seems determined to get there
Sony sees 25-fold profit jump by 2018; could exit TVs, phones
TOKYO | BY RITSUKO ANDO * * * * * *

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2 of 2 right Sony Corp's President and Chief Executive Officer Kazuo Hirai speaks during its corporate strategy meeting at the company's headquarters in Tokyo February 18, 2015.
REUTERS/ISSEI KATO left 1 of 2 right left
2 of 2 right left
1 of 2 right Sony Corp (6758.T) aims to boost operating profit 25-fold within three years by growing its camera sensors and PlayStation units, its chief executive said, outlining a strategy that could see the company exit the cut-throat TV and smartphone sectors.
CEO Kazuo Hirai said on Wednesday the Japanese consumer electronics firm would no longer pursue sales growth in areas such as smartphones where its has suffered competition from cheaper Asian rivals as well as industry leaders like Apple Inc (AAPL.O) and Samsung Electronics (005930.KS).
Sony would instead focus its spending on more profitable businesses such as camera sensors, videogames and entertainment as it seeks to return to growth after forecasting for this financial year its sixth net loss in seven years.
The comments, made just as the Tokyo market was closing, helped Sony's shares (SNE.N) rise 1.4 percent in New York.
"The strategy starting from the next business year will be about generating profit and investing for growth," Hirai told a briefing, adding that Sony's units would be given greater autonomy to make their own business decisions.
Asked about the TV and mobile phone units, Hirai said he would not "rule out considering an exit strategy", Sony's clearest statement to date about the possibility of selling or finding partners for these struggling units.
Sony is in the midst of a restructuring that has so far seen it sell off its personal computer division and spin off the TV business. It has also axed thousands of jobs.
Sony shares have risen more than 80 percent over the past year as investors applauded the restructuring, which accelerated since Hirai appointed Kenichiro Yoshida as his chief strategy officer in late 2013.
Hirai said Sony would target return on equity of more than 10 percent by the end of March 2018, adopting a yardstick Prime Minister Shinzo Abe has been promoting as a way to attract foreign investors.
He also said Sony aimed to post an operating profit of at least 500 billion yen ($4.2 billion) for 2017/18, a jump from the 20 billion yen forecast for the year ending March 31.
Sony's revamp is starting to pay off. This month, it forecast an operating profit instead of a loss for the financial year ending March 31. But it still expects to book a net loss in 2014/15, albeit a smaller amount than previously estimated.
Few expect Sony to return to the days when its Walkman and Trinitron TV defined how people around the world consumed entertainment. Analysts, however, have said it could make better use of its gadgets and access to Hollywood content.
Hirai said Sony will push to expand its PlayStation network user base, while focusing on areas such as streaming music.
($1 = 118.9800 yen)
(Editing by Miral Fahmy)