Big Changes for Sony

Sony Electronics will soon institute some big changes in an effort to become more efficient.

Early in October, the company announced that it would move most of its consumer electronics marketing operations from Park Ridge, NJ to offices in San Diego and San Jose, CA. The move should begin in April of 2004, and will come in the wake of last summer's consolidation of Sony's consumer divisions under new president and chief operating officer Hideki "Dick" Komiyama. Park Ridge employees, now numbering about 1600, will be reduced to about 1000. The goal of the reorganization is to "bring Sony's consumer businesses together in one place," said spokesman Rick Clancy.

Sony Corporation last year announced cutbacks in its workforce. On October 5, the company announced plans to do likewise with its massive parts inventory, currently 840,000 individual parts. By the end of 2005, Sony hopes to have reduced that number to approximately 100,000, with a core base of 20,000 items defined as "Sony standard parts." The parts inventory reduction is expected to cut the number of parts suppliers to about 1000 from the present 4700. In September, Toshiba Corporation announced a similar but less aggressive plan aimed at reducing the number of parts by 20%.

For the first fiscal quarter ended June 30, Sony Corporation's net profit dropped a staggering 98% to ¥1.1 billion ($9.9 million), with sales down 6.9% to ¥1.6 trillion. ($14. billion). Streamlining its operations, including potential further cutbacks in personnel, could help the company regain profitability. So could a new generation of intelligent products, such as the PSX entertainment system, built on a Playstation platform but incorporating Digital Video Recorder (DVR), DVD recorder/player, and satellite TV tuner, in addition to video game capabilities. Two versions of the PSX should appear later this year, one with a 160GB hard drive at $727 and one with a 250GB hard drive at $910. The PSX will lead Sony's drive into the market for "smart" interactive devices, emulating many of the functions now found on personal computers.

Despite what is probably a brief glitch in Sony's long-term profitability, the company is the most widely recognized brandname in both the UK and the US, according to Harris polls conducted earlier this year. On October 7, the Wall Street Journal reported that in a survey of 4000 consumers over the age of 15 in the UK, Sony was rated the "best brand." A similar poll of Americans published June 23 yielded an identical result. The responses were spontaneous, rather than being selected from a list of brandnames, Harris pollsters noted. The second most-recognized brand in the UK was Heinz food products; in the US it was Kraft. Coca-Cola was the seventh most-recognized brand in both countries.