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Sony's Growing Pains

Doug Caverly
Staff Writer
Published: 2006-05-31

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Sony may have gotten too big for its own good. The company has spread well beyond its traditional specialty of high-end electronics into many other business fields. This is evident to some degree in the U.S., but is particularly obvious in Japan, where Sony hawks such things as skin lotion, online banking services, and life insurance.

The Sony group includes about 1,000 subsidiaries and affiliates. About one-third of these are unrelated to the electronics that comprise the company's core. Some analysts believe this diversification has confused Sony's identity as an electronics innovator. Slipping sales, perhaps due to this murkiness, have forced a decrease in the "Sony premium" - the higher-than-average prices often attached to Sony products.

Hitoshi Kuriyama, an analyst with Merrill Lynch, supports with this theory. "What is Sony?" he asked. "We don't even know anymore. Consumers used to pay more because the brand meant something special."

Since taking over Sony about a year ago, Sir Howard Stringer has begun to prune down the giant, cutting roughly 600 of Sony's 3,000 products. And there are rumors that he might sell larger noncore businesses, including the three big finance units.

Whether that happens or not, many feel that Sir Howard is moving in the right direction. "Howard Stringer is doing what his predecessors were unable to do," said Iwao Nakatani, a former Sony board member and dean of Tama University in Tokyo. "Sony was just too diversified."

Many consumers are already lamenting the loss of Sony's Aibo robot dogs. Before long, people missing Sony car insurance may join them. And although it should go without saying - the upcoming Playstation 3 would be unaffected by any changes.

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About the Author:
Doug is a staff writer for WebProNews. Visit WebProNews for the latest ebusiness news.

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