Sony is cutting 10,000 jobs and selling off assets as Hirai focuses on mobile devices, games and digital imaging after four consecutive years of annual losses. Still, on November 8, Moody’s cut its rating on Sony’s debt to the lowest level above junk, warning of possible further downgrades. “Overall earnings will stay weak, due largely to prolonged operating losses in TVs and mobile phones as well as a significant decline in earnings from digital imaging products and gaming,” the ratings agency said in a statement.
Samsung had a 32% world smartphone market share in the third quarter, followed by Apple with a 15.5% market share and Sony with a 5.1% market share in terms of shipments, according to market research firm Canalys.
Hoping to ‘roar back’
CEO Hirai seems confident, though, that Sony will manage a comeback, just as Apple did. “You know, there have been ups and downs for a lot of brands that are in the leadership position today, but may have lost that edge during their history.
“A great example is obviously a great competitor of ours, Apple. If you look at their situation maybe 10, 12, 15 years ago, it is quite different from the leadership position they had in a certain sense back in the 1970s or 1980s. Now they have obviously roared back and it is a premium brand once again,” Hirai said in an interview with Business Week in August. “I’m fully confident that given the imaginative team I have in place as of the first of April, … the renewed commitment … to product development and bringing quality products that really excite our customers, we can take the brand to a higher level,” he added.
Time will tell. The key to Samsung’s recent success was strong leadership that makes decisions very quickly, says Choong Y Lee, a professor of marketing and management at Pittsburg State University. “Samsung is owned by Mr Lee Kun-hee, his other companies and his family members. So it is practically ‘his’ company. Samsung can make quick decisions,” Lee says. Chang agrees: “Samsung’s speed comes from decisive leadership, which is top-down and very centralised.” Samsung’s success also comes from manufacturing different types of commodity products. For certain types of commodities speed is very important. “This is true of all the products Samsung is good at, such as memory, flash memory, LCD panels and mobile phones,” says Chang of NUS.
Decisiveness, however, can carry risks, says Benjamin Cavender, an associate principal and senior analyst on the electronics sector at China Market Research Group, based in Shanghai. “That works if they are making good choices, but if they make bad choices, they could become very bad quickly.” Samsung is well positioned in the markets they are strongest in at the moment. “They are doing well in televisions and doing well in appliances in some markets. They are doing quite well in their smart phones, but their cameras are pretty much disasters,” Cavender says.
The ‘early bird’
Samsung’s main strength lies in its process technology: The overall processing power of its computers doubles every 18 months, notes Chang. “They a have clear technological trajectory,” he says. “Every 18 months there is a new product in DRAM (dynamic random access memory) – a 1G DRAM, 4G DRAM, 16G DRAM. In that kind of market Samsung is always first. Its strength is speed.” Samsung takes the “early-bird” premium by being first in the market every time.
Samsung is weaker, though, in product technology, where Japanese companies tend to excel – for example, in OLED (organic light emitting diode) technology. “The OLED technology comes from all different sources, and Samsung did not invent any OLED technology. It has been mastered by many competitors. But Samsung can make them quickly and efficiently with higher yields,” Chang says.
