It is hard to look at Sony, the company that Apple was modeled on, and wonder why Sony doesn’t get it. You see Apple is the most profitable and successful company in its segment and Sony is on its 3rd consecutive year of losses (7 for the TV division). I think this is kind of amazing; Apple in the 1990s was failing. Steve Jobs takes his perception of Sony, which at the time is doing very well, and copies it to great success while, at the same time the company he copies goes in the opposite direction. So what makes Apple so successful and Sony such a disaster? In short Apple doesn’t do that many things that are stupid, while Sony is a company plagued with stupid decisions. Let’s contrast the two companies.
Apple a Better Sony
When Steve Jobs recreated Apple he supposedly used his perception of Sony at the time as his template but he also modified Apple to fit his skill set. This last is virtually never done and it represents a best practice. Steve is an obsessive/compulsive personality type which means he tends to micro-manage and while is excellent with few things, complexity can easily overwhelm him. As a result on taking over Apple he cut the company to the bone eliminating any product area he wasn’t in love with and that was pretty much everything but the PCs. Once the PCs were stabilized he slowly added products like the iPod, iPhone, and iPad built each upon the success of the other and developed a cookie cutter method of announcing, marketing, and supporting each offering that optimized revenue and maintained high quality and high customer satisfaction and these products eventually overshadowed the PCs he started with.
At no time did he forget who his customers were, where his price points needed to be, and he aggressively controlled the image of the products and company even through times when he had problems. So while he looked to Sony for his consumer focus and product design, the design of Apple was uniquely Jobs and Apple was redesigned in order to optimize Steve’s unique skill set.
Sony Complexity Squared
Sony, on paper, should be vastly more successful than Apple is. Sony makes more of its own parts like the panels that go into TVs. They control a massive amount of music and movie content and they have an end to end structure going from the devices that create media (professional cameras and content management) to the devices that consume that media (game systems, TVs, PCs, phones). The firm should be able to get content to consumers more quickly on Sony devices than Apple can because they control more of their own eco-system. Yet the exact opposite occurs.
Sony was so concerned about piracy around the birth of the iPod that they wrapped their own MP3 players which heavy DRM making these very attractive products impossible to use. They spent hundreds of millions of dollars and sacrificed leadership and profit in the game console business to assure that Blu-Ray beat out the vastly cheaper and easier to use HDDVD. Rather than allowing their Vaio PCs to play PlayStation games which would have increased game sales and reduced dramatically their costs they killed that technology. Most recently they pulled a feature out of their PS3, Linux support, and took a guy to court who tried to recreate and provide that feature. This resulted in a massive data breach, apparently triggered by Sony’s foolish action, with losses currently estimated at $170M in hard costs but likely several times this in lost revenues now that Sony says they can’t protect customer financial data.
The core problem with Sony is complexity. Sony has too many different divisions in conflict with each other and losing track of the customer as a result making Sony into its own worst enemy.
Wrapping Up: Lessons Learned
Looking at Sony vs. Apple it isn’t potential that wins the fight. It is leadership and focus companies competing. Apple is tightly focused on their customer while Sony is in constant conflict with itself to such a degree I doubt they really know who their customer is. Ironically Apple, organizationally, had been drifting to where Sony is before Steve Jobs took over, his example, the one Sony should adopt if it wants to survive, is to cut the company back to a manageable core and get everyone on the same page and marching in the same direction. If this is done Sony could rival Apple, if it isn’t, Sony will likely be gone by the end of this decade if not through financial attrition than through yet another avoidable mistake.
For some reason that scene in the second Terminator movie comes to mind, you know where the Terminator says “come with me if you want to live”, now picture Steve Jobs as the Terminator and Sony as Sara Conner. If Sony wants to live it needs to follow Apple.
President and Principal Analyst, Enderle Group
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