Kapnek+J.+strategy+report

Kapnek J

TO: Proximity video team FROM: Joshua Kapnek DATE: February 17, 2010 SUBJECT: Sony's strategy report

Although Sony has been innovating the home entertainment and consumer electronic industries, they are falling behind competitors. Sony must find a solution for the decrease in Blu-ray sales, whether that means selling Blu-ray burners or take what analyst say is the more lucrative direction, capitalizing on streaming high definition content to television sets. The PS3 is Sony's game console that plays Blu-ray discs as well as connects to the internet. If they decide to use a platform to stream content, the PS3 will provide their base model. Gen Y users accepting Sony's PS3 as their prime source of online entertainment depends how fast Sony can manufacture a functional product.

Sony was founded in Tokyo after WWII in 1946 by Masaru Ibuka and Akio Morita. Through the 1960s and 1970s Sony expanded into the United States, United Kingdom, Spain, France, and Germany while developing innovative products for consumers. By 2009 Sony employed over 171,000 people, made almost $8 million in annual revenue, and close to $1.5 million in profit (Kennan, 2010)
 * Profile**

Sony has diversified into a huge corporation that has products and services in many different fields. Accounting for 65% of total sales, the electronics department develops, designs, makes, and distributes audio visual, communication, and informational devices and equipment worldwide (Standard & Poor’s, 2010). The remainder of Sony’s sales comes from image based software such as video, television, and film; as well as recorded music, various financial services and other small businesses (Standard & Poor’s, 2010).

Sony started developing the Blu-ray technology in 2000. By 2006 they had finished the player, mounted it inside the Playstation 3, and put the first models on sale. As of June 2009, "PlayStation had more than 24 million registered accounts worldwide, through which more than 450 million pieces of content have been downloaded, and more than 500 game titles, nearly 1,900 movies and more than 9,400 episodes of TV shows can be enjoyed" (Stringer, 2009).

There are two major forces shaping the competitive landscape for this market:
 * Competitive Landscape**

- Direct head to head competition between Sony’s PS3 and Microsoft’s Xbox 360 - The users ease and ability to switch from one console to another


 * Sony Strategy**

Technology and the customers' desire to stream premium quality video from the internet has created an opportunity for new advances. It will restructure the entire home entertainment industry, possibly bypassing the need for Comcast or Direct TV as well as physically buying and storing Blu-ray and DVD discs. This is a highly volatile market because many companies view this approach as the future of home entertainment and it is unclear which company's technology consumers will favor.

Sony has not stated any plans or strategy in regards to streaming premium content in the near future. Sony's Playstation 3 users are able to watch Blu-ray discs, play all available games, and access the internet through the television. Although all the technology and know-how are there, Sony has left consumers clueless as to what to expect. It is unclear which approach Sony will take in order to capitalize on this technology. One of their goals is to, “ increase network and wireless connectivity across electronics devices to provide customers a more seamless experience” (Standard & Poor’s, 2010), which really tells the customer nothing about the future.


 * Gen-Y implications**

Although Sony historically has been a reliable and innovative company, recently they have fallen a step behind their leading competitors. The Gen-Y public prefers the X-Box over the PS3, so clients who want to target Gen-Y should focus on Sony's need to improve its online contection and game play. Paying close attention to Sony's innovations will benefit the Gen-Y public. The competition between Sony and Microsoft will certainly compel one or both of them to put out an amazing product with many additional features. Giving these companies time to manufacture the product is the only way to compare the advantages and disadvantages.

//Sony corporation history & background// [] Standard & Poor’s. (2010, March 01). //Sony Corp//. Standard & Poor’s Stock Reports. Retrieved February 19, 2010, from [|http://www.netadvantage.standardandpoors.com.proxy-tu.researchport.umd.edu/NASApp/NetAdvantage/simpleSearchRun.do?ControlName=HomePageSearch] Stringer, H. (2009, June 19). //Letter to shareholders: a message from Howard Stringer, CEO//. Retrieved February 19, 2010, from [] Williams, M. (2010, February 18). //HD dvd vs. blu-ray disc: a history//. Retrieved February 19, 2010, from []