Sony Corporation (TYO: 6758; NYSE: SNE) is an international corporation with major businesses in electronics, video games, movies, and finance. The Japan-based company is one of the world's largest media conglomerates with revenue of ¥7.2 trillion in FY2010. The Sony conglomerate is responsible for many well-known consumer electronics products, ranging from CyberShot digital cameras to VAIO computers.
Sony began as a small Japanese electronics company, catapulted to success after it produced the first successful pocket-sized transistor radio in the 1950's. Today, Sony Corporation is one of the world's largest media conglomerate companies. Based in Minato, Tokyo, it operates in the U.S. under the umbrella company, Sony Corporation of America. Sony is a leading manufacturer in electronics, video equipment, televisions, video games, information and communications technology, and semiconductors. Its business operations also span motion pictures, computers, music, and finance.
Electronics is still Sony's most important business segment, bringing in 66.8% of its revenue. Sony is a well-recognized and respected brand with consumers, and its products cover a wide spectrum of the entertainment and industrial markets. However, the electronics division has averaged a break-even operating profit over the last five years.
Sony's previous generation console, the PlayStation 2 (PS2), is the video game system with the largest installed base of over 120 million units. The company's next-generation system, the PlayStation 3 (PS3), is more computationally powerful than competitors, offering cutting-edge graphics. Since its release in November 2006, the PS3 has lagged behind both Microsoft's Xbox 360 and Nintendo's Wii in terms of overall unit sales. The PS3 had sold approximately 4.5 million units as of the end of May 2008 compared to about 10.2 million for the Wii and 10.3 million for the Xbox 360, which was released 12 months before the other two consoles. However, in 2008 the PS3 has outsold the Xbox360 with 1.2 million units compared to 1.1 million units.
The video game business not only represents a significant portion of its business, but the company is using the PS3 as a platform to propagate its high-definition DVD format, Blu-Ray. If the PS3 succeeds, then the company will likely profit from the adoption of this format, as Sony would be making significant licensing fees from movies, games and other media which utilize it. The PS3 is also the first major application to utilize Sony's CELL processor. It has been widely reported that Sony was subsidizing the cost of its hardware in order to gain market penetration, losing up to $300 per console, which retails for $599. This loss is expected to decrease with the increased production of CELL processors and Blu-Ray drives, the two major bottlenecks for the PS3.
In 2005, Sony released its entry into the portable gaming market, the PlayStation Portable (PSP). The PSP features a large LCD screen, wireless network connectivity, music playback, and uses Sony's proprietary Universal Media Disc format. In an effort to expand the system's market, Sony has added peripherals, such as a GPS receiver (Garmin (GRMN)) and a hard drive storage adapter. In addition, a new version of the PSP, the PSP 3000 is set to debut in the US and Europe in mid-october, will feature a built in microphone and upgraded screen. The new PSP will be able to used as a phone. PSP's main competitor is Nintendo's DS.
For the 2007 fiscal year, PS2 out sold PS3 consoles by about 4.5 million units (13.73 M vs. 9.24 M). Sony was forced to release the PS3 prematurely in comparison to the PS2's production cycle and this caused competition not only from other next gen consoles, but also from the PS2. The PS3 faces the following challenges in its transition:
The sales of the PS2 is both a good and bad indicator for Sony. Sales from the PS2 are masking just how big the losses from the PS3 actually are, however, it also shows that future sales of the PS3, and next gen consoles in general, still have a lot of room to grow. It is plausible that PS3 sales are lagging because the quality to price ratio of the PS2 is delaying many future PS3 customers from buying the console..
Sony Pictures Entertainment makes, markets, and distributes feature films in both U.S. and international markets. Sony's Motion Picture Group, which includes the production houses Columbia Pictures and Sony Pictures Classics, makes around 30 feature films annually and brings in 9.7% of the company's total revenue. Major recent releases include Spiderman, The Da Vinci Code, Crouching Tiger Hidden Dragon, and Capote.
However, due to the nature of movie production, even successful blockbusters generally break even in theaters, with the majority of profits coming from subsequent home-entertainment sales. Significant resources are spent on advertising feature releases before and after their entry into theatres. The company, however, continues to benefit from the film's popularity and DVD sales, long after it has left theatres. Sony Pictures Home Entertainment generates a high operating margin of 20%, compared to a loss for the motion pictures segment.
Sony also controls a strong portfolio of television programming, including Seinfeld, Jeopardy, and Days of Our Lives. International television operations have experienced fast growth as foreign language markets are opened.
Sony's financial services, which are offered only in Japan, include Sony Life offering life insurance, Sony Assurance offering home, automotive, and medical insurance, and Sony Bank, an internet-based bank. This division is usually very profitable.
Joint venture relationships allow companies to combine their knowledge and resources to increase exposure in new and existing markets. Sony's major joint ventures include:
The company must spend significant resources on research and development to keep up with rapidly advancing technology and shifting consumer demand. In 2007, Sony spent a total of ¥543.9 billion, or 7.1% of its total revenue on R&D. One of Sony's new products with is the organic light-emitting diode (OLED) display, which is thinner and more efficient than traditional LCD displays.
Like other major manufacturers of consumer products, Sony may face liabilities for defective products. Over the last year, Sony recalled a substantial number of laptop batteries, which may catch fire due to an internal short circuit. Sony BMG faced intense controversy for including DRM software on its music CDs that used questionable means to modify customers' computers. The company settled to pay affected customers $150 in compensation. Such lawsuits can be extremely costly, both in terms of financial resources and negative publicity. Most recently, on July 9, 2009, SNE along with Panasonic was sued over some of its thermal and power management for its notebook computers by IpVenture. The plaintiff alleges that Sony infringed on four patents it held. This is a risk that a technology company who develops new products will run into from time to time. This could prove very costly to the company as a loss in court could result in a large cash settlement in addition to the loss of a technology integral to their business.
C'est une excellente rrqeamue. En fait le titre que je suis est cf4te9 au NYSE, pour des raisons de commodite9 d'acce8s aux donne9es. Mais si tu regardes la sensibilite9 du titre cf4te9 e0 Londres au GBP/CHF, elle est similaire, meame si les pertes en CHF au final sur cinq ans sont moindres, avec 38%, contre 45% pour le titre US.
Yep, one entry is enough. Mark your caaednlr.In other news, it would be nice to get a regular drip of the 5.1 remixes/remasters on DVD-A/Blu-ray. Moving Pictures was very well done and a lot of fans are probably waiting for more titles. If they could reissue the catalog like the current King Crimson is being done, they could surely lock up a lot of re-sales.They only have 16 studio albums left to do (if you include the disappointing Snakes MVI). They could batch some of them out to Steven Wilson to expedite matters .One can dream!!!
No other media conglomerate has a presence in all of Sony Corporation's four business segments. However, each one of Sony's businesses faces intense competition in its respective market.
Even within the electronics division, there is an enormous variety of products and specialized markets.
Sony's previous generation console, the PlayStation 2 (PS2), is the video game system with the largest installed base of over 120 million units. The company's next-generation system, the PlayStation 3 (PS3), is more computationally powerful than competitors, offering cutting-edge graphics. However, since its release in November 2006, the PS3 has lagged behind both Microsoft's Xbox 360 (during the 2006 holiday season) and Nintendo's Wii in terms of overall unit sales. The PS3 had sold approximately 4.5 million units as of the end of May 2008 compared to about 10.2 million for the Wii and 10.3 million for the Xbox 360, which was released 12 months before the other two consoles. In May, total software sales and hardware sales for industry were 37% and 34%, respectively.
In 2005, Sony released its entry into the portable gaming market, the PlayStation Portable (PSP). The PSP features a large LCD screen, wireless network connectivity, music playback, and uses Sony's proprietary Universal Media Disc format. In an effort to expand the system's market, Sony has recently announced new peripherals, such as a GPS receiver and a hard drive storage adaptor. PSP's main competitor is Nintendo's DS, which offers a unique touch-screen input interface and two-screen display.
Sony has been criticized for relying too much on improving traditional specifications for its game systems. Although more powerful than competitors, the PS3 costs $599, even after a $300 subsidy by Sony, compared to the $399 Xbox 360 and $249 Wii. Nintendo, on the other hand, has focused on changing gaming interfaces, with a motion-sensor based controller for the Wii and a touch-screen input for the DS. In comparison, both Nintendo systems have experienced faster sales than Sony's PS3 and PSP, respectively.
Along with the purchase of the Xbox 360 comes the option to connect to what is known as Xbox Live through either Ethernet or WiFi connectivity. Xbox live provides 360 users with network game interfaces, but also allows for the purchase of all sorts of media content such as movies and music. The push my Microsoft to have the Xbox 360 as the end all media station signifies the beginning of the end for traditional brick and mortar stores such as Blockbuster. In an effort to compete with this service, Sony will be offering a similar service through its newest PS 3 devices in addition to its televisions, hoping to have 90% of its products PlayStation Network compataible by 2011. Playstation Network is expected to afford PS 3 and Sony televsion users connectivity to nearly all of its licenced media starting in the summer of 2008.
Major movie studios Buena Vista, 20th Century Fox, Warner Bros., Paramount, and Universal are the main competitors of Sony's movie business. This market relies on a few blockbusters for most of its revenue, and such hits may be difficult to predict. Sony's portfolio of successful films includes Spiderman, The Da Vinci Code, Crouching Tiger Hidden Dragon, and Capote.
Sony established its financial services in Japan in 2004. At the time, the Japanese insurance and banking market was underserved. Sony Financial Holdings have been one of the most profitable segments for the company, with an operating margin of 13% in 2007. However, due to increasing privatization in the Japanese market and decreasing total value of insurance policies, Sony's financial business will be negatively affected, as indicated by the segment's 9.1% decrease in operating margin in 2007.