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Sony CEO Pressured By Investors, And A Legacy

Thursday, 31 Jul 2014 05:06 AM

07/31/14 5:06:12 AM

(Reuters) – Sony CEO Kazuo Hirai has picked new executives and strategies to cement the tech giant’s turnaround, but some say he shouldn’t be too quick to discard the past. Yonggi Kang reports.

It’s never an easy job to be the CEO of a world-famous brand, especially if it’s an icon that’s now struggling like Sony.

The leaders of the Japanese tech giant have to follow in the footsteps of legendary founder Akio Morita, the man behind the creation of its mega-hit Walkman.

Kazuo Hirai in his third year at the helm is still faced with the daunting task of putting Sony’s house in order.

In its latest quarterly earnings report, despite a jump in operating profit the company stuck to its forecast for a 50 billion yen net loss for the current business year.

Brought up in the U.S., Canada and Japan, Hirai’s international background, fluent English and a knack for music, software and gaming should make him the perfect fit to support Sony’s international ambitions.

Hirai was long involved in Sony’s entertainment business and was even in charge of selling PlayStations in the U.S.

So, what’s missing in his management?

I asked Atsushi Osanai, a business professor at Tokyo’s Waseda University, who worked at Sony for 10 years.


“There’s always been a motto within Sony that Sony’s corporate identity is equal to its product identity. And that philosophy is well understood by the markets. So what the markets, and investors, are demanding is that that they want to see proof with the products that it delivers. And I feel that the problem now is that Sony is not being able to deliver concrete proof of that.”

That could change with Hirai’s new dream team. He appointed Kenichiro Yoshida, former head of Sony’s Internet services unit, as the company’s CFO and his right-hand man.

That goes well with Hirai’s growth strategy of selling digital content online, like Apple does with iTunes.

Hirai’s convinced streaming movies, music and games could be the next money spinner, using the closest thing Sony now has to a blockbuster – the PlayStation – as the hub.

He’s been quick to jettison or downsize sluggish legacy businesses like personal computers or TVs. But Osanai says that may not always be the best approach.


“In turbulent times such as these, not rushing is vital. Within Japanese companies, there are a large number which have abandoned various businesses. However, once you withdraw from a business, re-entry is very difficult. And there have been many cases where companies regretted not staying in that business. We are in a turbulent period right now, but a business that isn’t profitable now won’t necessarily remain so in a few years. For example, in the television sector there is profit for the remaining players because TVs won’t go away.”


“Sony’s struggle is often compared unfavourably with rival Panasonic’s V-shaped recovery. And in this fast-paced sector, investors are unlikely to give Hirai any more chances to turn things around.”

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  • Published: 1 year ago on July 31, 2014
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  • Last Modified: July 31, 2014 @ 8:37 am
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