Sony warns of $2.9 billion annual loss, reveals restructuring plan
by Ludwig Kietzmann 
{ Jan 22nd 2009 at 8:20AM } 
According to Reuters, the plan is to cut costs by 250 billion yen by March 2010, a move that would see the end of TV manufacturing and design at one plant in Japan and a worldwide reduction in TV design's headcount by 30 percent. Sony also plans to consolidate resources devoted to batteries (we hope the "anti-explosion" division won't be too hard hit) and small and mid-size LCDs. The salaries going to directors and managers are also expected to be cut.
See, we told you you'd be having a bad day.
Reader Comments (Page 1 of 1)
Phantom @ Jan 22nd 2009 8:25AM
I hope Sony doesn't die. They bring strong competion to MANY markets and industries.
Cash @ Jan 22nd 2009 2:33PM
How's that PS3 price cut looking now Sony?
Yes I know that was snarky, but I'm getting tired of their upity attitude and their just-out-of-my-reach pricing schemes. "It's because it plays blu ray." Whoopty doo... I have cable with video on demand, and an xbox that plays Divx and streams Netflix... the hell do I need a blu ray player for?
Sorry, end rant.
Sheppy (of the Fidlious Clan of Wong) @ Jan 22nd 2009 8:29AM
Main problem with Sony is they had too many competing inproducts. Hopefully as these losses come to light, it will allow Stringer to finally push some of his early agendas. There is no reason for Sony to have soooo many TVs competing with each other. But on the other hand, some of Stringers agendas make me nervous such as selling over 40% of their stake in the music business.
FNG @ Jan 22nd 2009 8:47AM
I agree. They have about 12 different 46" LCD's in 2008's product line. This can't be a cost effective manufacturing process.
PSN: Aggie_CEO @ Jan 22nd 2009 8:50AM
yea I dont understand that either......
When Stringer FIRST came in her basically had then cut features from TVs and axed a lot of models that were similar to others......yet now they seem to have started it back again.....they need to get it together
mr mobius @ Jan 22nd 2009 8:31AM
Seems a lot of money to recover if they plan to break even next fiscal year. I mean, to go from a loss that bad, to even, takes a lot of effort. I can't imagine cutting wages would make that big a step, although sorting out their various divisions, cutting off the dead branches, and keeping a bit of common sense, would make a lot of sense.
Now the question relating to this blog - is the PS3 one of those dead branches that needs trimming or does it just need some plant food?
meist3r @ Jan 22nd 2009 8:43AM
A price cut would be helpful. Compared to the 360 and the getting-cheaper-by-the-minute Blu-Ray players the PS3 is just not that good of a deal anymore. I don't think they can afford to give away, let alone lose, the Playstation business. They certainly won't make it with the PSP alone.
In the end fertilizer isn't as important as light. And when no light shines onto your branch it'll die. If you make it hard for the sun to shine on you ... you won't ever get anyone to sit on your branch ...
PSN: Aggie_CEO @ Jan 22nd 2009 8:48AM
yea price cut and get some people with a BRAIN to do the advertising.....I PRAY we see a PS3 Super Bowl Commercial.......and I mean a GOOD one....
Hell there was an HD-DVD commercial in the Super Bowl last year and not even a month later they folded....surely Sony will have a PS3 Commercial....that is IF they have a brain in there head.......
Noshino @ Jan 22nd 2009 8:53AM
Not likely, SCE had been supporting them for a while. Not only that, remember that PlayStation is Sony's way to dominate the living room entertainment...
The PS3 just needs better management, from production to marketing, they have made to many mistakes
ComicShaman @ Jan 22nd 2009 9:07AM
I think a price cut is inevitable, and smarter advertising would certainly help. Give you an example: I've seen several TV ads for Fallout 3, one of the biggest games of 2008. At the end of the ad, we get a couple seconds of X360 logo. No PS3 logo in sight.
Of course the game is on the PS3 as well. But Sony has somehow let Microsoft control the floor here, and thus they can convey the impression that Fallout 3 = X360. That's very inept of Sony, and very smart of Microsoft.
Mr Khan @ Jan 22nd 2009 9:45AM
Yeah, but Microsoft lends that false sense of exclusivity to quite a few things, most notably Madden.
In Sony's case, the PlayStation division used to be their main moneymaker, so they'll be hesitant to drop it completely anytime soon. What they will do, however, is focus on bringing the division back into the black post-haste. Get those manufacturing costs down, then drop price alongside it, watch sales climb while profiting
samfish @ Jan 22nd 2009 10:26AM
"Yeah, but Microsoft lends that false sense of exclusivity to quite a few things, most notably Madden. "
Yeah, but Sony did the same thing with the PS2. Most multi-plat games were seen as PS2 games first and foremost.
ComicShaman @ Jan 22nd 2009 10:50AM
"Yeah, but Microsoft lends that false sense of exclusivity to quite a few things..."
Yes, agreed. I only used Fallout 3 as an example, but it's hardly the only one.
From an advertising standpoint, Microsoft has outmaneuvered Sony at pretty much every turn in this generation. At least in the North American market.
Kodros @ Jan 22nd 2009 12:08PM
"At the end of the ad, we get a couple seconds of X360 logo. No PS3 logo in sight."
Probably because MS paid for the ad. Which, if you think about it, is an extremely stupid idea for any developer to allow to happen. Instead of letting the consumer know what platforms it is on, they only mention one. So, instead of letting the uninformed PS3 only user know that this game is indeed available on their system, they lose a sale.
BTW, Sony does this also with some Multiplatform titles.
PSN: Aggie_CEO @ Jan 22nd 2009 8:46AM
Well they CLAIM the Playstation Division won't be touched.....we'll see.....
It's not like anyone is going to be spending an Extra $400+ when a Vizio or Samsung can do the Same thing the Bravia can do minus a few features...not in this economic shitstorm...so thats the man reason they are acting those facilities.....
commen-cents @ Jan 23rd 2009 2:07AM
a vizio? you dont know a lot about the quality tiers with tvs do you? in no way should a sammy and vizio be put in the same sentence... let alone be mentioned around sony.
vizio< samsung and sony
PSN: Aggie_CEO @ Jan 22nd 2009 1:02PM
Clearly you havent seen the newer model Vizios.....
and I was speaking in reference to Vizio being compared to lower end Sony's for the price.......CLEARLY a high-end Sony blows anything else out of the water
commen-cents @ Jan 23rd 2009 2:20AM
blows anything else out of the water?
pioneer and panasonic might have something to say about that
PSN: Aggie_CEO @ Jan 23rd 2009 7:15AM
Pioneer & Panny have the best Plasmas.......at last check there LCDs were SHIT
Noshino @ Jan 22nd 2009 8:47AM
I love Sony but their products tend to be high end, and during economic problems, they are even less likely to be bought.
The thing is, this had been happening for a while, but now they don't have SCE there to support them....
Sony should be putting more money on SCE, its one of the sections of Sony that I think they could get the most money from
ScottG13 @ Jan 22nd 2009 8:53AM
Does this mean "synergy" is bad times equals devastating losses because of lack of benefit to far flung divisions? If Sony's gaming division ONLY made consoles and games, wouldn't it have a massive cash warchest from the last 12 years of success? Wouldn't it not be hampered with the pricey Blu-ray drive? Doesn't seem like Spider Man or Talledega Nights pack-ins are worth the trouble.
mcr @ Jan 22nd 2009 9:25AM
The problem with Sony is that they USED to hold an edge in terms of quality and technology over their less expensive rivals, which justified their price premium. Now that's no longer true, and it hasn't been for the better part of two DECADES. They've been operating on smug arrogance for far too long and now the crows are coming home to roost.
The PS3's problem isn't all marketing or superbowl ads. It's just not a standout product. Its strengths lie in areas that are of little importance to the marketplace or where it is matched by its less expensive rivals. In the areas that ARE truly important to the market, the PS3 is matched or surpassed by its rivals. For the price premium, it should offer SOMETHING tangible that makes it truly stand out.
Levi @ Jan 22nd 2009 9:45AM
That's not true. I'm not going to touch the PS3 in this reply, just to avoid flame, but their TVs have been nothing by the highest quality for a while now. With the advent of LCD backlit screens, they'll have to refresh their lineup, but for a couple years now, the LCD with the most impressive picture in Best Buy was the Sony 40" Bravia. It was overpriced at like $2400 compared to the $1200-$1400 of the closest competition, but it still had the best picture.
PSN: Aggie_CEO @ Jan 22nd 2009 9:47AM
now I agree that Sony's TV's have been lacking as far as features somewhat.....hell I dont even like Sony TVs because I feel the LOWER end models are FAR over priced compared to an equivalent Samsung or Sharp.....but the High End models do come with pretty good features such as Bravia Sync(even some lower models have that), built-n wifi, etc....
The PCs almost fail to standout as well(aside from the all-in-ones)
but the PS3 not a STAND OUT PRODUCT!?!?!?!?
Even WithOUT the Blu-ray player it is still a Gaming System with GREAT media capabilities.....
The 2 main problems ailing the PS3 right now is Price & Marketing......PERIOD.....there are plenty of games now so that no longer holds up....
but for you to say that it comes with nothing for the price premium is just straight BULL....
Countless various organizations have said that is is the BEST Blu-ray player out there....some have even said that the Upscaling capabilites for DVDs rival those one the 360, and high-end DVD upscalers...
and if you are Saying the Marketplace doesnt want that WHY is Blu-ray outpacing DVDs first 2 years in the market?? Sure people complain about the price of a BD disc.....but the SAME people fail to realize that the LIST price on most DVDs is like $25-30....hell when DVD first came out MOST DVDs sold for that price....I remember paying $25 for Mortal Kombat on DVD.....even with a downed economy, I still see people buying HDTVs, and they are going to need media for said TVs....so yea....they may go ahead and get the PS3 for a Blu-ray player.....why?? because they KNOW its better than that $200 Magnavox player AND it plays games as well.....
Not appealing to the marketplace.....laughable......
Pureshooter @ Jan 22nd 2009 9:39AM
With marketing slogans like:
"If the game is filmed on a Sony camera, so shouldn't you watch it on a Sony TV?"
How can they go wrong? Right?
Mr Khan @ Jan 22nd 2009 9:47AM
Oh yeah, that one was a real winner
Like saying cows should eat hamburgers or something
PSN: Aggie_CEO @ Jan 22nd 2009 9:48AM
LMAO@Khan
Markez (Sandwich Eating Crew) @ Jan 22nd 2009 11:28AM
Man, I always think that's one of the most ridiculous commercials I've seen. It's well done and all, but to infer that you should watch it on a Sony because it's recorded on a Sony is 12 shades of ridiculous.
Kodros @ Jan 22nd 2009 12:15PM
"but to infer that you should watch it on a Sony because it's recorded on a Sony is 12 shades of ridiculous."
Actually, no it's not. When designing and testing these TV's and Cameras, don't you think that they using all Sony products?
It may sound somewhat dumb, but when I buy photo paper for my Canon printer, I buy Canon photo paper. Simply because I'm pretty sure that when they are testing the quality of printer back in their labs or whatever, they aren't going out to the local Best Buy and picking up Kodak paper.
jackal @ Jan 22nd 2009 9:46AM
I'm not surprised, personally. Most of the tech giants are currently getting slammed right now; Intel's posting its first loss in 22 years, AMD just laid off a thousand workers to stay afloat, Micron's reducing employee wages, and Microsoft's going to kick 6,000-8,000 people to the curb very shortly in order to reduce operating costs. Things aren't currently rosy for Sony but, given everyone else's grim tidings for the new year. I think it's a little early for people to just lose their freaking minds in regards to the company's future; as long as Sony makes products people still want (TVs, audio equipment, videogames, and computers for the most part) they'll survive and endure. To what capacity, I'm not entirely certain of.
Having said all that, the initial manufacturing costs of the first two PS3 skus is still hurting them; losing $250-$350 per console sold for 6-8 months straight is unimaginably steep. If they're ever able to move their components down to a 45 nm manufacturing process (TMSC's 40 nm parts have taped out and they're racing Intel to 32 nm, so it is feasible) and reduce the amount of components on the motherboard (overall), they'll start making a small profit on the hardware.
IF they can't afford the die shrink, they could also push much harder than what they currently are in regards to SpursEngine adoption (which is effectively half a PS3 sans RSX); making the SpursEngine the primary choice for set-top boxes and mid-range laptops is one way to profit off of the PS3's technology. It's also probably just a bit more doable in the short term, since the only currently available SpursEngine product is a PCIeX1 card (a fraction of the size of the PS3's mainboard); integrate it, and it needs nowhere near that amount of real estate.
Professor Lario @ Jan 22nd 2009 10:04AM
Many companies take advantage of 'tough' economic times to make cuts that would have been very unpopular in boom years. Hopefully Sony re-establishes its original business ideals and gets back on track.
Zsavior @ Jan 22nd 2009 10:10AM
I am not going to pretend not to be shocked I am. I always thought with tech, that it was about market penetration and how many could be brought to your product. I always thought TVs are a broader market than Gaming, I am just really shocked they cut the TV division.
Were they really doing that bad? I always see Sony tvs selling for so much. How could they keep those price points if the Television line wasn't performing highly. I am just really shocked. Not that I own a Sony TV, I just thought it would reach more people than a game Console. Color me confused.
jonjon72 @ Jan 22nd 2009 10:14AM
Jackal. Your comment about Microsoft laying off is pure speculation at this point. Nothing has been confirmed. People were also saying the same thing about IBM laying off 16,000 employees. The recent press release indicates that they had a Q4 profit of $4.4 billion and these huge layoffs are no where in sight.
Back to the subject at hand. Sony does make products that people want, however the economic climate has affected them heavily. Discretionary spending is at a all time low. People are holding onto their laptops, tvs and mp3 players longer than usual. This is the time for Sony to reorganize and come out a leaner company. They have the brand recognition and deep pockets to come back stronger in the next few years. They also need to accept the fact that they are in 3rd place in the console wars. There is nothing wrong with that. Make great games for your current user base and the word will get out. My 360 got most of my attention in 2008, but I'll be picking up Street Fighter 4 (cuz of the controller) and Resident Evil (Special Edition) on the PS3 this year. Add Killzone 2 and God of War 3 to that and I'm a very happy gamer.
coffins outside the door @ Jan 22nd 2009 10:35AM
Speculation, huh?
http://money.cnn.com/2009/01/22/technology/microsoft_jobs/index.htm?postversion=2009012209
jackal @ Jan 22nd 2009 2:21PM
jonjon72,
Speculation? I don't quote a statistic (sales or layoffs) unless it's already happened or definitively will happen, barring an act of god or a major miracle. I've got nothing to gain from the misery of any corporate entity; I'm not selling a competing product or trying to get one on the market, nor do I have an extreme bias towards purchasing one product over another (unless it comes to cars, and I'll be damned if I'll accept DOHC ricers being superior to pushrods given the extra mass those engines require for a comparable internal displacement).
jumpshot @ Jan 22nd 2009 10:16AM
I hope Sony not only makes it out of this, but makes it out a lot wiser. They've lost touch with their market with a lot of their products. I don't mind them getting a few black eyes if they learn a lesson.
And no, I'm not just talking about the PS3. I'm talking about VIAO laptops and Bravia tvs etc.
Just please don't die Sony...
jumpshot @ Jan 22nd 2009 10:17AM
And I mean about pricing, not quality. Some of their quality has degraded in some product lines, but overall, they make excellent products
DEEZNUTZ @ Jan 22nd 2009 10:19AM
With TV's, Sony has always been a leader. The Trinitron tubes were arguably the best for your money... hell the 27" TV I bought about 18 yrs ago is still going strong at my mom's house. The WEGA's were also the best flat tube TV's.
Come the age of flatscreens, and Sony continues to offer high quality products... but at too high a price. Personally, I like plasmas better, which is why I don't own a Bravia, but I would definitely choose a Bravia over any other LCD right now.
Sony needs to mfg costs responsibly and cut prices.
heyo007 @ Jan 22nd 2009 10:44AM
You know, in that picture, Mr. Stringer kind of looks like a dressed up Emperor Palpatine. Just sayin', that's all.
Mr Khan @ Jan 22nd 2009 11:42AM
Now i totally see it. A lot like Episode III Palpatine (post lightning-fry)
Titanium @ Jan 22nd 2009 11:43AM
I really hope the best for Sony. Up until recently they have been an innovator in the electronics front (Blu-ray not included).
Their TV's are no longer the top TV's to purchase, divisions not communicating with other divisions,
Sony products competing with their own products, and Mismanagement have all led to this. Coupled with the souring economy and it is even worse.
I want Sony to get back to their old days where they were the brand everyone wanted. If not for me, do it for the kids.
bigsofty @ Jan 22nd 2009 11:49AM
Well my experience is the opposite, Sony is a name I avoid, expensive and cutting edge, yes, but once your just out of warranty... pow! its dead. 2 dead stereo's and 2 TV's have left me with a bad taste for the brand. I'll not shed a tear when they go belly up!
Alien Lord @ Jan 22nd 2009 1:16PM
This news is going to make me feel great all fucking day, and to top it off I get paid today, fuck yeah.
joeymoto @ Jan 22nd 2009 4:42PM
Sometimes I get the feeling you and Bill Gates are part of the Illuminati- you're secretly planning for a totalitarian state where Microsoft control every aspect of your life...
...Either that or Bill Gates has currently got a gun pointed to your head and is making you say what he pleases...
...Or you are Bill Gates...
...I say the latter.
Alien Lord @ Jan 23rd 2009 12:37AM
None of the above are true I just love an respect gaming and that compels me to do what I can to bring down $ony because they think gaming is a ho for them to beat up anytime they like.
joeymoto @ Jan 23rd 2009 4:13AM
I lol'd...