Japanese electronics firms adapt

06 April 2012

TOKYO: Sony, Panasonic and Sharp, the electronics manufacturers, are all changing their business models due to challenging trading conditions at home and abroad.

Sony recently undertook a management shake-up, and Kazuo Hirai, the firm's new CEO, has announced plans to foster closer co-operations between its entertainment, business and consumer divisions.

"We will speed up development of products and promote cooperation," he told Bloomberg. "Sony's high-quality, advanced products for business use can help our consumer unit lead the market,"

Due to a similar impetus, the company has also taken full control of Sony Ericsson, previously a joint venture, in the mobile category. "Cutting costs will not improve everything," said Hirai. "We have to release products that are appreciated by users."

Kazuharu Miura, a senior analyst at SMBC Nikko Securities, argued that Sony would benefit from reducing its emphasis on the mass market, and instead target a more niche audience.

"Even when innovative products are launched, customers have no way of finding out what their characteristics are," he said. "The company needs to let customers recognize them and to lure them into purchasing the products ... That is what marketing is for."

Elsewhere, Panasonic expects to post its largest group net loss ever, of ¥780bn, for the year to March 31, 2012. Kazuhiro Tsuga, currently senior managing director, will take over as president in June.

Panasonic, as is the case with Sony, is facing a pressing need to transform the fortunes of its television manufacturing operations, having fallen behind rivals like Samsung, based in South Korea.

"It would not be an advantage if technology is elusive," Yoshio Takahashi, an analyst at Moody's Japan, said. "It is important for them to create convenient and attractive products by connecting hardware and software technology as Apple Inc. is said to have done."

In an effort to enhance its position, Sharp has allied with Hon Hai, the Taiwanese firm trading under the name of Foxconn. As a result, Hon Hai has taken around a 10% share in the Japanese organisation.

Jamie Wang, an analyst at Gartner, the research group, suggested this will boost the two companies' chances of working with Apple on its hotly-anticipated next TV project.

"Sharp is also one of the suppliers to Apple, the deal will help Hon Hai to tighten its relationship with Apple and give a boost to its capability," she said. "Sharp will have the ability to compete for Apple orders; with Hon Hai's involvement it will be more competitive because they can offer better pricing."

Data sourced from Bloomberg/Japan Times; additional content by Warc staff