Sony Corporation has announced it is going to revitalize
and grow the electronics business to generate new value,
while further strengthening the stable business foundations
of the Entertainment and Financial Service businesses.
Below is the details it has announced in its release:
Key initiatives to transform the electronics business are:
1. Strengthening core businesses (Digital Imaging, Game,
Mobile)
2. Turning around the television business
3. Expanding business in emerging markets
4. Creating new businesses and accelerating innovation
5. Realigning the business portfolio and optimizing resources
By implementing the above measures, Sony will target sales
of 6 trillion yen and operating income margin of 5% in its
electronics business, and sales of 8.5 trillion yen, operating
income margin of more than 5%, and return on equity (ROE)
of 10% for the Sony Group overall, in the fiscal year ending
March 31, 2015 (FY14).
Details of these five core initiatives to revitalize the
electronics business and drive new growth are as follows.
Strengthening core businesses (Digital Imaging, Game, Mobile):
Sony is positioning digital imaging, game and mobile as
the three main focus areas of its electronics business and
plans to concentrate investment and technology development
resources in these areas. By growing these three businesses,
Sony aims to generate approximately 70% of total sales and
85% of operating income for the entire electronics business
from these categories by FY14.
Digital Imaging – Sony is reinforcing its development of
image sensors, signal processing technologies, lenses and
other key digital imaging technologies in which it excels,
and plans to leverage these technologies in both its consumer
products (such as compact digital still cameras, digital
video cameras and interchangeable lens digital cameras)
and broadcast and professional products (such as professional
use cameras and security cameras) in order to further strengthen
and differentiate Sony overall product line. The Company
also plans to extend the use of these key technologies across
a wide range of business applications, from security to
medical, to further expand the scope of its digital imaging
business. Sony will target total sales of 1.5 trillion yen
and double-digit operating income margin from the consumer,
professional and image sensor businesses by FY14.
Game – In the game business, Sony continues to deliver
exhilarating entertainment experiences through PlayStation3,
PlayStationVita, and its unique combination of hardware,
software, PlayStationNetwork (PSN), and range
of accessories and peripherals. These will form the foundations
on which Sony will target further sales and profit expansion
in the game business. The Company also aims to increase
sales by enriching its catalog of downloadable game titles
and subscription services available through the PSN platform,
and also by expanding the lineup of PlayStationSuite compatible
devices and content. Sony will target game business sales
of one trillion yen and operating income margin of 8% by
FY14.
Mobile – In the area of mobile, Sony is integrating the
Ramp;D, design engineering, and sales and marketing operations
of its smartphone business (operated by Sony Mobile Communications,
now a wholly-owned subsidiary of Sony), Sony Tablet
and VAIO businesses in order to quickly develop
and deliver compelling products to market. Sony also plans
to aggressively leverage its many technologies in areas
such as digital imaging and game, its rich content assets
including pictures, music and game, its Sony Entertainment
Network network service platform, as well as the communications
technology expertise and knowhow accumulated through its
experience in the mobile phone industry, to launch new mobile
products and establish new business models. Additionally,
by integrating operations across its entire mobile product
lineup, Sony aims to achieve further efficiencies and optimization.
As a result of these measures, Sony will target sales of
1.8 trillion yen in FY14 from the mobile business, and significant
profitability improvement.
2. Turning around the television business: Sony is already
engaged in a comprehensive television profitability improvement
plan (announced November 2, 2011), which aims to return
the television business to profitability in the fiscal year
ending March 31, 2014 (FY13), and intends to
accelerate these measures going forward. The sale of Sonys
share in its LCD panel manufacturing joint venture with
Samsung Electronics has been completed, resulting in panel-related
cost reductions. Additionally, Sony is taking further measures
to change the business structure, for example by improving
design engineering efficiency and reducing the number of
product models (targeting a 40% reduction from the fiscal
year ended March 31, 2012 (FY11) to the fiscal
year ending March 31, 2013 (FY12)), with the
aim of reducing fixed business costs related to the television
business by 60% and operating costs by 30% in FY13 compared
to FY11.
Sony is additionally taking steps to enhance the image
and audio quality of its BRAVIA range of LCD
televisions that form the cornerstone of its current television
lineup and to tailor its product offering to meet specific
regional market needs. Going forward, Sony intends to advance
the development and commercialization of next-generation
display technologies such as OLED and Crystal LED
Display, as well as enhance the integration of televisions
with Sonys mobile products, with content such as movies
and music, and with other assets across the Sony Group to
improve product competitiveness, drive hardware differentiation
and enhance the attractiveness of Sonys product lineup.
3. Expanding business in emerging markets
Sony will continue to leverage its strong global operations
and brand strength to drive sales growth in rapidly expanding
emerging markets.
Sony has already established strong foundations in emerging
markets. For instance, in India and Mexico, among others,
Sony has secured the largest share of the consumer AV/IT
market. Sony will continue to concentrate its sales and
marketing resources in these markets, and expects to strengthen
sales operations, introduce products tailored to local needs
and leverage the Sony Groups entertainment assets, including
pictures, music and television networks, to further enhance
its market presence.
Sony generated 1.8 trillion yen through sales of electronics
products in emerging markets* in FY11, and aims to increase
this figure to 2.6 trillion yen in FY14. The Company will
also aim for consumer AV/IT sales in emerging markets to
represent 60% of total anticipated global sales of these
products by FY14.
*Regions other than Japan, North America and Europe.
4. Creating new businesses and accelerating innovation
Sony will continue to aggressively promote innovation intended
to deliver mid- to long-term growth, as well as the development
of differentiating technologies that enhance core product
value.
Specific examples of business areas in which Sony will
target mid- to long-term growth are medical and 4K-related
technologies.
Sony is largely a new entrant to the medical industry.
In the medical peripherals business Sony has already successfully
launched a range of medical printers, monitors, cameras,
recorders and other medical-use products, and will target
sales of 50 billion yen in this market in FY14. Sony also
plans to enter the market for medical equipment components,
where its strengths in various core digital imaging technologies
offer significant competitive advantages in applications
such as endoscopes. Furthermore, Sony plans to enter the
life science industry, where the Company can leverage its
expertise in technologies such as semiconductor lasers,
image sensors and microfabrication. In the life science
industry, Sony has acquired iCyt, a manufacturer of cellular
analysis equipment, and Micronics, which manufactures medical
and diagnostics equipment. Sony plans to continue to aggressively
pursue other Mamp;A opportunities to expand its medical
business consistently with Sonys own strengths, with the
aim of developing the business into a key pillar of Sonys
overall business portfolio.
Sony is also drawing on its comprehensive strengths in
audio and visual technologies to aggressively promote the
growth of 4K technology, which delivers more
than four times the resolution of Full HD. Incorporation
of Sony-developed technologies, such as image sensors, image
processing compression LSIs and high-speed optical transmission
modules into its professional-use and high-end consumer
products will pave the way for Sony to continue to expand
and enrich its 4K-compatible product lineup.
5. Realigning the business portfolio and optimizing resources
Sony is accelerating its ongoing process of business selection
and focus, and is concentrating its investments in core
and new business areas. In terms of investment, core areas
include the expansion of Sonys image sensor manufacturing
capacity, capital investment in mobile products and aggressive
strategic investment in development or Mamp;A relating
to new business areas such as medical. Other existing business
areas will be evaluated according to the following four
criteria, so that Sony can determine the optimum strategy
for these businesses, including proactive consideration
of alliances and business transfers in order to optimize
its overall business portfolio:
- Loss generating, negative operating cash flow or low
revenue businesses
– Limited synergies with core businesses
– Businesses where commoditization is advanced and prospects
for growth are limited
– Businesses where opportunities for revitalization and
growth are enhanced through collaboration with partners
rather than independent operation by Sony.