A discussion of factors behind SONY's decline in key areas
SONY is a famous brand known worldwide for its PlayStations and much more, including televisions and cameras. However, the company has kept losing its attractiveness in key areas. Its market share declined, and sales of several SONY products fell. Why has SONY declined? It is not a lack of innovation. Sony is still an innovative company, but it has failed in terms of understanding customer expectations and getting its branding strategy right. Consumers are still interested in SONY products, but they are getting better products at lower prices.
Sony has kept losing market share to others, including South Korean and Chinese brands. Its consumer electronics business was particularly hurt in 2019. It exited from the Indian smartphone market due to the heavy competition and fast decline in sales. Meanwhile, its sales of PS4 also fell in 2019, and so did its sales of televisions and cameras.
Its imaging and sensing business (imaging equipment for smartphone brands) grew in 2019 but again took a hit in 2020.
While some of it can be attributed to SONY’s premium pricing strategy and lack of competitiveness, it can also be attributed to a lack of marketing strategy. SONY is pitted against Apple and Samsung in the premium smartphone industry, but when it comes to marketing, it is nowhere even close to these brands. SONY also seems to be not targeting the middle class. So, it is also missing a key market segment. Instead of making great products, SONY's focus should be on establishing great customer relationships.
SONY could have performed better if it had managed its pricing strategy in response to the growing competition, but it also needed to have a focused marketing strategy, which it does not have yet. The result is fluctuating sales and loss of market share. After exiting PCs, it might be time for smartphones. It also needs to understand customer needs better.
Rather than just making excellent products that do not sell, it must make products customers want and are easier to sell. It also feels like SONY is caught in an innovation gap and fails to grab any of the opportunities that it comes against entirely. So, if it gets the product right, it fails in terms of marketing and sales strategy. Retaining market share is difficult because of these gaps and because competitors benefit from the gaps SONY leaves behind.
Apple versus SONY: Why is Apple more profitable?
Well, one clear answer is innovation but there are more reasons behind it. Apple’s pace of innovation is much higher than SONY’s. However, Apple also excels in terms of customer experience; something that SONY does not seem to care much for. SONY does make great products. It has always made great products but the focus has shifted to the customer and that’s what SONY cannot seem to adapt to.
Apple makes the customer win and therefore it wins. Its marketing and branding strategies are also clearly superior to SONY. While SONY has tried its best to compete, it has not been as innovative in terms of production or marketing. So, SONY could not survive the competition from smaller brands either. Apple has done its job well in the smartphone market and also in terms of services.
Another major factor is branding. Apple is a bigger brand because it always focused on the big picture and kept the customer at the center. Its response to changing market dynamics is much better and faster. However, SONY does not seem to read the customers’ pulse like either Apple or Samsung which are clearly better brands. Apple has won in the smartphone market and remains one of the largest players in this industry but SONY is at the bottom with other less known players. Apple’s best bet is its iPhone which accounts for most of its revenue and SONY’s is its PlayStation.
Apple’s innovation has always targeted the customer, whereas SONY has mainly focused on products. Overall, SONY has missed in many critical areas, and that’s why Apple is many times bigger than SONY with its $2.3 trillion market cap. SONY needs to chart its path for the future and formulate a better strategy that is up to date and in line with the time's needs. It needs to adjust the course before it is too late. As Sohrab Vossoughi highlighted about SONY in his 2012 HBR article," What is missing is the strategic vision is to emphasize the delivery of powerful and resonant user experiences".
SONY also has a diversified product portfolio like Samsung but Samsung has targeted both the middle class consumers and affluent consumers with higher precision and efficiency. Apple's target are only the affluent customers but it is a master in terms of marketing and differentiation and therefore it is much more profitable compared to either SONY or Samsung despite a limited product portfolio.