Kazuo Hirai Announces His New Plan to Revitalize the Company

In response to Sony’s recent announcement that it suffered a $6.4 billion net loss, new president Kazuo Hirai set out immediately to refocus the multimedia giant’s efforts.

In his first official act as CEO of Sony, Hirai confirmed that the company would now work on developing its “five core initiatives.”

The first of these initiatives is revitalizing its core businesses. Sony intends to take its three biggest moneymakers, its gaming, mobile phone, and digital imaging departments, and turn them into Sony’s primary revenue engines. The company hopes to generate 70% of its total sales and 85% of its operating income from these three sectors by fiscal year 2014.

They intend to do this by taking what works with these sectors and amplifying them at the expense of what isn’t working. This means that their digital imaging business will now focus mostly on just image sensors, lenses, and signal processing; the gaming business will now work on expanding its downloadable game titles and subscription services; and its mobile business will streamline its VAIO, smartphone, and tablet products into a single cohesive product family. They will also cut development time for these products in half.

Another key initiative by Sony is its commitment to drastically restructuring its unprofitable television business by cutting its fixed business costs by 60%, reducing the number of available models by 40%, and enhancing its LCD television quality to make them more competitive. Other core initiatives by Sony include increasing Sony’s efforts to monetize emerging markets, with the company aiming to increase sales by more than 40% in developing countries, and creating new businesses and accelerating innovation.

Hirai seemed confident in his new strategy to fix the ailing corporation.

I am Hirai and I will definitely change Sony and revive it. There is no time but now to change.

Analysis: It’s hard to look at Sony’s recent problems without being reminded of a similar situation some years back with another Japanese industry giant: Nissan. Back in the late nineties and even as far as 2009, Nissan was where Sony is now: cutting tens of thousands of jobs from its workforce worldwide, recording net losses that totaled into billions and billions of yen, and losing vast swaths of valuable ground to hungry, ruthless competitors. Just like Sony today, it was hard to look at Nissan back then without assuming that the company was on the express train to bankruptcy.

However, just like Sony, at the depth of Nissan’s crisis, there was a man with a plan at the helm. Carlos Ghosn, CEO of Nissan, took the company when it was at its most fragile and turned it around single-handedly. Making several huge economic gambles, such as the now critically acclaimed Nissan Leaf, Ghosn managed to revitalize the car company and turn it into one of the most profitible firms in the industry today. If Nissan has taught us anything, it’s that one good entrepreneur can save even one of the most failing companies from financial ruin.

Is Hirai the next Ghosn? It’s hard to tell. Although statements like “I am Hirai!” get your blood pumping, it’s going to take more than a nice pep-talk to save Sony from the mess its made for itself. Indeed, it becomes easy to roll your eyes when Hirai starts talking about investing in developing markets, which is the latest fashion amongst Japanese corporations. What if those markets don’t turn out to be as successful as they think? What if Sony can’t get the impressive 40% sales increase out of those nations anytime soon? Furthermore, should Sony really be looking into innovating new industries when it’s running amok with the industries it’s already in? Maybe the company’s time would be better spent getting its act together with its existing line of products before it focuses on adding new products to its portfolio.

On the other hand, though, Hirai does seem to understand why the company has been taking so much heat lately. He’s cutting away the excesses of the past, including 60% of the fixed costs on the television business, which is important since Sony’s television sector has long been bleeding money out of every pore. Hirai’s also forcing the company to put its primary focus on what’s actually making money for the business, including its very successful digital imaging sector and the part of the company you might be most familiar with, its gaming business. By returning Sony to its roots, maybe they can turn this disaster into a success in the coming years.

Time will tell whether Hirai manages to salvage Sony from the poor business practices of the past. As a gamer, there’s a lot to hope for in this new turn-around. Back in its glory days, Sony was making the best platforms out there, period. (Sure, maybe the N64 had better games, but you can’t deny that the PlayStation was the superior console.) It’s clear that there’s some good left in a company that’s being renounced as evil today. So if Hirai can give Sony a second heyday, then doesn’t everyone win?

Connor Horn

About Connor Horn

Connor is a laid-back long-haired California hipster who listens to music "you'll never find on the radio" and who voted for Ron Paul to "make a difference." His favorite kind of games are MOBAs and rogue-likes, and he is a huge fan of PC gaming and the future of digital distribution.