Sony to call quits on Vaio, BraviaBy Robin-Leigh Chetty 10 February 2014 | Categories: news
Sony chief executive, Kazuo Hirai, has announced that the Japanese tech giants will be forced to cut its losses as the company’s PC and TV divisions’ steady decline has proved too great to handle. The PC, notebook and television manufacturer has decided to sell-off its Vaio PC and notebook division in a bid to stem major losses in the past several financial quarters.
The company has also opted to end affiliations with its Bravia television division, with separate company being created to take over distribution and marketing. Sony will still retain a 5% ownership in this yet-to-be-disclosed company, but have not ruled out a complete sale at a later stage. Sony is now said to be re-focusing its efforts towards its mobile, movies, music console and handheld gaming.
In order to absorb an estimated loss of $980 million the company will take in this latest purge, Sony will also be laying off close to 5000 employees. According to Sony this development is a direct result of the poor earnings the company has been posting over the past two years. It is a known fact that the PC industry as a whole has taken a major sales dip, partly due to the growing tablet and smartphone markets.
As far as Sony’s Bravia division goes, the company has posted similar losses over the past several quarters, despite Sony occupying third place amongst television manufacturers. Sony’s latest quarterly market share sits at 7.5%, dropping from 8.1%. This continued decline has forced Sony to make drastic changes if the company still wish to remain relevant.
Sony’s new direction is aimed towards high-value content. Sony Pictures Entertainment has been the one few shining gems in the company’s tarnished crown, having a strong year and releasing movies that garnered both critical and commercial success (Captain Phillips, American Hustle, Amazing Spiderman).
It might be that Sony’s Vaio division will not be the only PC casualty this year, as smaller PC manufacturers may also fall to the wayside as tablet and smartphone markets strengthen. Over the past two years, PC sales has seen a marked decrease in profits, falling from 361 million units in 2011 to 315 million units in 2013. The average price of PCs among the top 5 companies (Lenovo, HP, Dell, Acer and Asus) has also dropped from $610 in 2010 to $544 in 2013.
Research firm, Gartner, has predicted that a few other companies will be fighting for survival this year. Gartner currently ranks Toshiba, Samsung, Sony and Fujitsu as the bottom four, with a combined market share of 12%. With Sony now out of the running, it should prove interesting to see what strategies the other struggling companies companies utilise to ensure survival.
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