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Sony Corporation (Japan)

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During the 1990s, Sony transformed itself from electronics manufacturer to global entertainment company, establishing a leading position in music, movies and computer gaming. But those new ventures distracted attention from the company's core business, which struggled to maintain its position in the rapidly changing marketplace. Sony invented the concept of portable personal music players and dominated that sector for almost 20 years before its lead was snatched away, virtually overnight, by Apple's iPod. At the same time Samsung and LG usurped Sony's position in televisions and home entertainment appliances, myriad mobile phone manufacturers eviscerated Sony's digital cameras and camcorders, and Microsoft's Xbox and Nintendo's Wii slashed the profitability of PlayStation. A series of restructurings have failed to restore Sony's lead, although at least the broad spread of operating businesses allows the company to offset poor performance in one division, usually a different business each year, with gains in another. For the past few years, the group's strongest division has not in fact been any of its electronics or content subsidiaries, but its financial services arm. But even that business has not been able to offset woes elsewhere and in 2015 the group reported its sixth net loss in seven years. It was finally back in profit for ye 2016.

Advertising

Click here for agency account assignments for Sony from Adbrands.net. Including unmeasured media, the group declared advertising expenses of Y363.8bn ($3.52bn) in year ending 2017. In the US, Kantar (in Advertising Age) reported measured expenditure of $518m for calendar 2016, out of an estimated total of $741m. Biggest spending brands were Sony Pictures/Pictures Classics (measured media $355m) and Playstation ($53m). See also:

Competitors

See Consumer Electronics and Information Technology Sector indexes for other companies

Brands & Activities

Sony's brand remains one of the most widely recognised in the global consumer electronics sector, but the company is no longer the innovator it once was. Diversification comes at a price, and over the years Sony has spent too much time and effort developing new technology which failed to find a big enough market and not enough time protecting its lead in core areas such as home entertainment devices. Above all, it entirely missed the boat on the sudden emergence of digital media, too busy defending its music content business to catch the MP3 wave. The group placed all its bets on convergence, but in reality its hardware and software/content divisions would have been better off as two separate companies.

Group performance has been further damaged by a perfect storm of additional problems, including the soaring value of the yen, which reduced the value of goods sold outside Japan, lasting problems from the Great East Japan Earthquake disaster of March 2011 and severe flooding later the same year in Thailand, both of which severely disrupted manufacturing. Added to this is the intense competition from Korea's Samsung and LG, who together decimated Sony's position in larger consumer electronics devices.

As Sony's entertainment business developed, so the company's spiritual home shifted steadily away from Japan and towards the US, where most of the entertainment businesses are based. With the group's Japan-based hardware operations under threat from Korean and US competitors, the group demonstrated the seriousness of its plight in 2005 by appointing a Westerner as its chairman and CEO. Sir Howard Stringer, a Welshman by birth, had previously headed the entertainment division. It was then (and still is) extremely unusual for any large Japanese-owned corporation to appoint a foreigner as its most senior executive. (The only other recent examples had been in the motor industry, where non-Japanese managers were appointed to turn around the fortunes of struggling companies such as Nissan, Mitsubishi Motors and Mazda. In all those cases, however, the Japanese company was already part-owned by a Western company.) However, Stringer struggled to get to grips with the full range of problems affecting the sprawling group, as a quick fix in one division was quickly succeeded by new problems in another. He eventually stepped down in 2012 and was succeeded by the Japanese-born former head of the group's PlayStation division.

Traditionally, there have been five main arms to Sony Corporation: electronics, computer entertainment, music, pictures and financial services. The key concept within the company has for some time been convergence, as Sony seeks to combine platforms between its various business units to provide a seamless entertainment experience. The group has tinkered repeatedly with the operating structure of its electronics businesses since 2008, trying various different strategies to hasten the development of synergies. The most recent realignment reunited professional audio and video devices with their consumer-oriented counterparts and also integrated the previously separate mobile handsets unit with Playstation and other computing products. Several other underperforming units have been closed or sold.

By the end of the 1990s, Sony had become an important player in computers, manufacturing Apple's old PowerBook laptop under contract as well as its own range of Vaio PCs, Clie personal organizers and numerous peripherals. In 2001, Information & Communications, housing PCs and peripherals, was the biggest segment within Sony Electronics. However, over the following few years, revenues from that division fell significantly as a result of consolidation within the computer market. In Feb 2014, Sony agreed to transfer ownership of Vaio computers to private equity firm Japanese Industrial Partners. However, the subsequent plunge in performance by the PC business and adjustments for the sale resulted in huge losses for ye 2014.

The group also spent much time and money developing a sideline in robots, such as the Aibo pet dog, and Qrio, a prototype humanoid robot who could walk, run, dance and sing. These extravagances were quietly sidelined in 2005 by Howard Stringer. So too was niche luxury electronics brand Qualia, launched in Japan in 2003, but shut down two years later. Aiwa was originally a separate electronics company part-owned by Sony, but struggled for many years to be profitable. Sony acquired full control in 2002, and gradually phased out the brand. By the end of the 2000s, televisions had become Sony's biggest electronics business by revenues, but sales of these began to plunge in the following decade, especially outside Japan, in the wake of lower-priced and arguably more advanced sets from Samsung and LG. As a result, even this business too was considered for disposal.

From year ending 2015 onwards, there are four main electronics divisions: Imaging Products & Solutions (IPS); Mobile Communications (MC); Home Entertainment & Sound (HES); Playstation unit Game & Network Services; a fifth unit of Devices was split in 2016 into Semiconductors and other general Components.

Imaging Products & Solutions

The IPS division houses professional video and audio products as well as consumer-oriented Handycam and Cybershot digital video and still cameras. Following the acquisition of Konica Minolta's photographic division, Sony launched its first digital SLR range in 2006 under the alpha brand. However, both product ranges have come under intense competition from high-end mobile phones which offer virtually the same basic functionality at a fraction of the cost. Sony remains one of the top three manufacturers, below Canon but ahead of Nikon. In the digital camcorder market, Sony has been replaced as the global #1 by US competitor GoPro, but sales of all companies have been cannibalised by the mobile phone market. Unit sales of digital cameras plunged by almost two-thirds in three years from 11.5m devices in ye 2014 to 4.2m units in ye 2017, before recovering slightly 4.4m units in ye 2018. For the latter year, combined external revenues from IPS were Y647bn ($5.8bn), up over 13%, while operating profit soared by 60% to Y75bn ($677m). Still & video cameras accounted for almost two-thirds of that figure, with the remainder from other products such as projectors and medical equipment.

Home Entertainment & Sound

The HES division comprises home audio and video products, as well as the once-struggling televisions business. The group was the global #1 in TVs in 2007, thanks to its Bravia range of LCD HD flat panel and projection TVs, but performance slumped alarmingly over the following decade, as fierce competition from Korean manufacturers drove down prices. As a result, within just three years, Sony had slipped to the #3 position in the global flat panel market and its share has steadily continued to decline. By the end of 2014, according to researcher IHS Display Search, Sony's share of the global market had slumped to 7.9%, less than half LG and under a third of Samsung's 29.2% share. From a high of Y1,357bn (then equivalent to $13.5bn) in 2008, Sony's revenues from televisions had more or less halved by ye 2017, before recovering slightly in ye 2018 to Y862bn ($7.8bn). As an illustration of the steep fall in retail prices, Sony achieved those 2008 revenues with sales of just 10.6m LCD TVs. Within four years, volumes had almost doubled to 19.6m units, while prices halved. As a result, the televisions unit is rumoured to have made losses for as many as eight consecutive years in the late 2000s and early 2010s. There had been some improvement since 2013, after the company set out to refocus its attention on profitability rather than revenues. As a result, revenues and unit volumes have fallen back significantly - to just 12.4m devices in ye 2017 - but profits have recovered.

Yoked to the televisions division is audio, once the group's flagship business, before it was eclipsed by the spectacular growth of Apple's iPod and other competitors. The range includes a wide variety of home and in-car systems (but not the latest generation of Walkman digital music players, which are included with the group's computers). As a result, audio is now bundled within the group with the video division, which makes DVD players and recorders. This business too has come under sustained attack from other companies, resulting in a steady decline in both volumes and revenues. Sony attempted to boost its position in 2006 with the launch of Blu-ray, its own next-generation high-definition DVD system. However, this prompted a brutal marketing battle against a rival and incompatible system developed by Toshiba. Sony was eventually victorious - Toshiba's HD DVD was discontinued in 2008 - but the whole saga proved ruinously expensive and after a brief moment in the sun, has been further dented by the global; shift towards streamed rather than disc-based entertainment. Revenues from audio/video were Y357bn ($3.2bn) in ye 2018

Combined revenues from HES for ye 2018 were Y1,221.7bn ($11.0bn), up an impressive 18% on the year before. Operating profit jumped by 47% to Y86bn ($774m).

Mobile Communications

Following the sale of the Vaio PC business with which it was once combined, Sony Mobile is the main component in the group's Mobile Communications segment. It also contains other portable devices including Walkman digital music players (still popular in Japan), the Sony electronic book reader and tablet devices, launched in 2011 against iPad. However, this entire division is withering. A huge impairment charge in ye 2015 resulted in operating losses of Y220bn ($2.0bn). Another very difficult year ending 2016 resulted in a further 20% decline in revenues to Y1,122bn ($9.35bn), and a Y61bn ($511m) loss. For ye 2017, revenues slumped by almost a third to Y753m ($7.0bn), but the division clawed back a modest Y10bn ($94m) profit. Another decline in ye 2018 saw revenues down to Y714bn ($6.4bn). Another large impairment charge resulted in an operating loss of Y28bn ($249m).

Game & Network Services

Sony's PlayStation business now operates once again as a standalone unit under the Game heading. Despite a often bumpy performance it is unquestionably now the star performer within the group, at least as far as electronc devices are concerned. Revenues and profits have risen and fallen according to the tide of hardware development but it is now the group's biggest business by some degree. Revenues for ye 2018 rose by 17% to a new record high of Y1,848bn ($16.7bn), while profits jumped by over 30% to Y178bn ($1.6bn). The most significant component for that year was not the Playstation console itself, but its online network through which players are able to buy games and other entertainment content.

Semiconductors & Components

The former Devices division was split in 2016 into two separate units of Semiconductors and other Components. The first of these is the bigger by far, and includes the image sensors used in the cameras built into Apple, Samsung and other snatphone manufacturers' devices. The company has more than 40% of the global market for image sensors, more than its next two competitors (OmniVision and Samsung) combined. Semiconductor revenues were Y727m ($6.6bn) in ye 2018.

Entertainment

Sony Music and Sony Pictures are the group's two entertainment divisions, headquartered in the US (see separate profiles for details). However, both businesses have been beset by a series of challenges. Sony Pictures in particular has suffered a series of problems, not least a massive cyber attack. Also in the US, the local arm of Sony Electronics in 2008 acquired technology company Gracenote for around $260m. Gracenote is best-known for its vast digital database of music track titles and artists, which it supplies to music download services such as iTunes and Napster. The business was sold on at the end of 2013 to media group Tribune for $170m. In Spring 2013, hedge fund Third Point Capital, already one of Sony's biggest shareholders, began pressuring the group to issue an IPO of its US-based entertainment businesses to increase profitability. Sony's board considered the proposal but eventually rejected it, although it agreed to take steps to boost profitability at its US-based entertainment operations.

Financial Services

Despite the group's primary focus on electronics and entertainment content, its most consistent performer has for several years had nothing to do with either of these market sectors. Sony Financial Holdings is centred around Japanese insurance business Sony Life. Formed in 1979, this was originally a joint venture with Prudential Insurance of America until Sony acquired full control in 1996. It sells life insurance products through its own sales team as well as third-party agencies, mainly under the Lifeplanner brand. Aegon Sony Life, a joint venture with Aegon, was established to begin marketing pension products in Japan from 2009. Sony Assurance, a separate division, is a leading direct-seller of motor and medical insurance policies. The group also owns 80% of internet bank Sony Bank, which trades under the MoneyKit brand. (JP Morgan holds 4% and Sakura 16%). Sony Bank doesn't have any branches, but uses the automated-teller machines of Sumitomo Mitsui Banking Corp, the state-run post-office savings system and convenience store network am/pm. Sony had been considering an IPO of this financial services division since 2003, but plans were repeatedly postponed until 40% of the division's equity was floated in 2007. The group retains a 60% shareholding in the business. For the year to 2018, Sony Financial reported revenues of Y1,221bn ($11.0bn), with operating income of Y179m ($1.6bn). It was by the group's single most profitable division for the eighth consecutive year.

Other interests

There are also numerous other businesses in which the group has an interest. Intervision, purchased by Sony in 1997, was for several years the group's in-house advertising agency. In early 2002, Denstu acquired a 40% stake in this business and it was repositioned as Frontage to develop communications for broadband media. A separate arm of the group has developed technology for contact-free FeliCa smartcards. These are now used in mass transit systems in Japan, Hong Kong and Singapore as electronic tickets, and can also be used to carry electronic cash for vending machines and other appliances. That business was transferred into a joint venture with mobile phone giant NTT DoCoMo in early 2004, and will be introduced by rival operator KDDI in 2005. Sony Communication Network (So-Net) is a separately quoted ISP in Japan, and the group also has a 20% holding in DeNA, an online auction company.

In 2006, Sony agreed an eight-year sponsorship agreement with world football association FIFA, running from 2007 to 2014, covering two World Cup championships. It declined to renew that arrangement in 2014, citing not only the expense but also the allegations of corruption within FIFA.

Financials

Sony's financial performance peaked in the year to March 2008 at record revenues of Y8,871bn (approx $88bn) and net profit of Y369bn ($3.7bn). Since then the group has endured a series of problems, including the soaring value of the Yen against international currencies, the impact and after-effects of the Great East Japan Earthquake of 2011, but above all fierce competition form rival manufacturers, especially Samsung and LG and Apple. These prompted a steady decline in revenues as well as four straight annual losses. Although these were partly generated by impairments and accounting adjustments, they also reflected steep falls in profitability in several key divisions, especially the televisions business, Sony Ericsson and even Playstation. Revenues gradually shrank year-by-year, reaching a low of Y6,493bn for the year to 2012. Almost incredibly, that was the single lowest annual total in Japanese Yen since 1997, because of plunging exchange rates against international currencies. The fall in US Dollar equivalent was rather less dramatic, with the 2012 figure equivalent to $82bn. Combined net losses over those four years totalled Y857bn, with more than half of that sum generated in the loss for ye 2012 of Y456.7bn ($5.77bn).

There was finally some sort of return to form in the year to March 2013, exacerbated by a dramatic weakening of the Yen in the final six months of the fiscal year. Revenues rebounded by 5% to Y6,801bn ($81.9bn at average exchange rates), although that improvement was generated only by currency fluctuation and the consolidation of all of Sony Mobile. Without the one-off gain from Sony Mobile, comparable revenues would have fallen. The group also reported a much-needed net profit, its first in five years, although this was generated primarily by the sale of shares in a healthcare research subsidiary and a revaluation of its remaining investment. Attributable net income was a modest Y43bn ($518m).

It was back into the red again in the year to 2014, with the group's fifth net loss in six years. Helped by positive exchange rates, Sony's revenues rose 14% to Y7,767bn ($77.5bn), but the previous year's profit reversed into a Y128bn ($1.3bn) loss. Even operating income plunged by almost 90%.

The following year, Sony delivered yet another loss, the sixth in seven years. For the year to Mar 2015, net losses dipped only slightly to Y126bn ($1.15bn), despite a 6% rise in revenues to Y8,216bn ($74.76bn). The sales figure was flattered by exchange rates, which offset the impact of the divested computers business. On a constant currency basis, group revenues were flat.

The group was finally back in the black again for the year to 2016. Full year revenues were down around 1% to Y8,106bn - around $68bn at annual exchange rates for the year - but the prior year's Y126bn loss turned into a Y148bn ($1.2bn) net profit.

Combined revenues for ye 2017 fell back by another 6% to Y7,603bn ($70.2bn), mainly as a result of exchange rates. At constant rates, sales were flat year-on-year. However, after the previous year's promising recovery, net income slumped by 50% to Y73.3bn ($677m) as a result of a huge impairment charge against expected future performance by Sony Pictures.

Finally, for the year to 2018, Sony appeared to have achieved a full recovery. Operating profit set a new 70-year company record, while net profit soared almost sevenfold to Y491bn ($4.4bn) on the back of revenues up 12% to Y8,544bn ($77.1bn). Currencies helped considerably, but underlying performance was also up strongly. All the group's operating divisions except smartphones reported double-digit percentage increases in revenues and high-single or double-digit growth in profits. Around 31% of group revenues were generated in Japan, 21% in the US, the same in Europe and 8% in China.

Management & Marketers

Sir Howard Stringer stepped down as CEO & president of Sony Corporation in April 2012, to be replaced by fast-rising Kazuo Hirai, previously executive deputy president, consumer products & services. Kenichiro Yoshida was appointed as EVP & CFO in 2014 to speed up restructuring of the ailing group. After five years of restructuring, Hirai announced plans to step down at the end of March 2018, when the group is expected to report record profits. He was succeeded as CEO by Yoshida.

See Adbrands Account Assignments for Sony marketers

Background

The Sony Corporation was founded in 1946 as Tokyo Tsushin Kogyo (or Tokyo Telecommunications Engineering Corporation). Founder Masaru Ibuka (who died in 1997) was an engineer who had worked in film processing plants before the war. With partner Akio Morita, he began to experiment with several chemical processes, one of which led to the development of magnetic recording tape in 1949 (made from paper coated with magnetic powder). The company launched its first tape recorder the following year. Ibuka oversaw research and development while Morita took care of sales.

Unlike its Japanese competitors, Sony set out to develop new technologies rather than simply adapt Western ideas. The company also irritated domestic rivals because it chose to work alone or in partnership with non-Japanese firms, rather than as part of the traditional local cartels. In 1953 Sony bought the rights to use Western Electric's miniaturised transistors for $25,000. The US company thought it had made a killing on the deal, believing the device was so limited in its power that it could only be used for hearing aids. But Ibuka set out to use the components as the basis for a portable radio, and he succeeded two years later. Billed as a "pocket" radio, it was actually too big for any normal pocket. Master salesman Morita redesigned the shirts worn by the sales force with extra-large breast pockets to accommodate the device.

To capitalize on its rapid growth the company changed its name to Sony Corporation in 1958. The name was chosen to suggest connections to sound, but also the derivative "sonny" or little son. (In fact, the company name was originally pronounced as "sunny" rather than the current "soany"). In 1960, a US office was established and Ibuka developed a portable transistorized television, followed by the first VCR in 1963 and the Trinitron colour system in 1967. The latter bypassed US patents on the colour television process by firing the three electronic beams needed to produce a colour picture through a single gun, focusing them with a single shared lens. Not only did this mechanism take up less space, allowing for smaller sets, but it gave a sharper, brighter picture. In 1969, the company acquired a large shareholding in rival developer Aiwa, which was experimenting with a form of cassette tape. (The standard format used today was actually introduced by Philips in 1972).

Sony quickly moved on to develop a system for recording video images, developing a special form of tape for this in 1971. This 3/4-inch format, named U-matic, was subsequently compressed to form the first home video recording system in 1975, under the name Betamax. However, this was to lead to Sony's first major error of judgment. The company was already in fierce competition with Matsushita, owner of the Panasonic brand. Matsushita had launched its own video recording technology, VTR, a year after Sony, based on a different form of tape. In 1976, Matsushita launched the VHS system and the two companies went head-to-head for domination of the home video market.

It was an expensive war. Sony quickly lost the battle in Europe but fought long and hard to maintain its foothold in the American market. One key factor gave VHS the lead. Matsushita had cleverly anticipated that consumers would use their tapes to record films and sport, so it concentrated on developing cassettes with a 90-minute running time. Sony's more compact Betamax tape had an optimal one-hour running time. Popular legend has it that Americans finally ditched the system in favour of VHS when they realised they couldn't record the Superbowl on a single Betamax tape.

Despite the bloody nose it received over Betamax, Sony had two further aces up its sleeve. The first was the launch of the Walkman portable cassette player in 1979, a massive worldwide success. In the years preceding its launch, Philips' cassette tapes had been used primarily for live recording and playback. Sony engineers spent some time in the 1970s trying to develop a compact cassette recorder, but found it hard to combine both recording and playback heads in a small unit. Instead they developed a unit that was capable of excellent playback and was also completely portable. Initial feedback from retailers was very poor - most felt that a tape recorder that couldn't record would never sell. However Akio Morita was convinced of the product's value, promising to resign as chairman if it was a flop. In fact quite the opposite was true. The company sold out its first Japanese production run of 30,000 units in under three months. On the back of this success the product launched in other countries under a variety of different names - the Sony Stowaway in the UK, Soundabout in the US and Freestyle in Australia. The Walkman brandname was adopted in all territories in 1980, by which time Sony had sold more than 1.5m units. Its success ushered in a new boom period for the music industry, which managed to persuade consumers to swap their existing vinyl records for this new ultra-portable format. With sales now approaching 300m units, the Walkman remains the single most successful consumer electronics product ever made.

Even more significant was another new concept Sony began designing in partnership with Dutch electronics company Philips: the Compact Disc. That system was launched in 1982, with Sony responsible for designing and manufacturing players for the storage medium developed by Philips. The success of the format was unprecedented. Even now, the two companies continue to divide a royalty of 5 US cents on every CD sold. Later, Sony took a huge leap into the unknown by negotiating the purchase of CBS Records in 1988 followed by Columbia Studios a year later. This marked a key turning point in the group's history as it set out to own the entertainment content for its hardware. [See Sony Music and Sony Pictures profiles for more]. The purchase of Columbia was one of the last deals under the management of Akio Morita, who more or less retired from the group in 1989. (He died in October 1999).

Subsequent technological innovations met with varied degrees of success. DAT (1987) entirely failed to take the industry by storm and MiniDiscs (launched 1992) struggled for several years to capture consumer interest before also fading away. Another major investment in the late 1990s was Super Audio CD (or SA-CD), a format designed to succeed CD, based on similar principles to the DVD video format which had been introduced by a consortium of manufacturers in 1995. The audio DVD concept had been conceived by the Sony-Philips partnership back in 1992 as a successor to the CD, but the two companies quickly found themselves in a race with another joint venture between Time Warner and Toshiba, who were developing their own SD format. During the mid-1990s, Sony attempted to join forces with Matsushita to avoid another embarrassing and costly VHS-Betamax war, but in the end the market was split between numerous different but largely compatible DVD formats from different manufacturers, each specialising in a different area - video, audio, data, recordable, rewritable and so on. After seven years of development, Sony and Philips launched Super Audio CD in 1999, but like MiniDiscs and DAT before it, the format failed to appeal to consumers. A foray into mobile phones also struggled to set the market alight, and was eventually merged with another struggling manufacturer, Ericsson, to form Sony Ericsson. Sony's move into computer entertainment, however, proved far more successful. Its PlayStation games machine single-handedly revived the console market after the decline of Nintendo and Sega.

Reflecting the restructuring of several of its underperforming subsidiaries, Sony's financial performance for fiscal 2003 disappointed investors, coming in below the group's own mid-year forecasts. Although net profits rose dramatically, the increase was still well below the level anticipated. Adding to concern were a further 6.5% fall in sales at the group's core electronics business, increased losses within the Sony Ericsson mobile phone business, and continuing over-dependence on its games business, which contributed a disproportionate percentage of group operating profits. Sony's results for the first quarter of fiscal 2004 were even more disappointing, briefly rocking the Japanese stock market in what became known as the "Sony shock". Second and third quarter figures were only marginally improved, and full year performance remained poor. There was no noticeable upturn from the electronics division during 2004, and if anything the company fell even further behind in areas such as MP3 audio. As a result, the group's board reached a historic decision at the beginning of 2005 to appoint a foreigner, albeit one well-schooled in Japanese business practices, as its new head. Nobuyuki Idei retired as chairman and CEO of Sony Corporation in June 2005, and was replaced by Sir Howard Stringer, formerly chairman of Sony Americas. Later that year, Stringer unveiled a major corporate restructuring designed to cut around 10,000 jobs worldwide by 2008. The group announced plans to close or sell 11 of its 65 manufacturing plants in a bid to save around $1.8bn of annual costs.

By refocusing on core strengths from 2004 onwards, Stringer was able to deliver a considerable improvement in the performance of the electronics division, despite the impact of a costly and embarrassing product recall in 2006 of laptop computer batteries supplied by Sony's components division to Dell, Apple and Lenovo. Those three companies issued recalls of around 7m battery packs following reports that they could spontaneously burst into flames. Sony eventually made a provision of Y51.2bn to cover the cost of the recall. Nevertheless, combined sales for the year to 2007 increased, and the division reported an operating profit after three straight years of losses. Performance continued to improve in the year ending March 2008, before plummeting once more in the following period as a result of currency fluctuation and economic uncertainty.

Among Howard Stringer's other important initiatives following his appointment was an attempt to negotiate a truce in another potentially damaging war over technology formats. Since 2002 Sony had been busy with the development of a high-definition successor to the existing DVD standard. Sony's system, known as Blu-ray, had won the endorsement of electronics manufacturers including Panasonic and Samsung, as well as the home entertainment units of Sony Pictures, Disney and Fox. Unfortunately Toshiba had developed a competing and incompatible format of its own, called HD-DVD, and had secured the backing of Paramount, Universal and Warner Bros home entertainment as well as NEC and Sanyo. Each side had spent the last three years trying to establish its own format as the industry standard, but without success. Another Betamax-VHS situation seemed inevitable. But in April 2005, common sense finally appeared to prevail, and the two sides agreed to negotiate some form of compromise. A month later, though, the two sides had still not agreed on which format was to be adopted, and negotiations stalled shortly afterwards, with both companies vowing to continue with their existing plans. Sony's position was weakened further later that year when Intel and Microsoft both added their support to the Toshiba technology.

Sony and Toshiba both launched their rival systems in 2006, creating confusion among consumers. Gradually however, Blu-Ray gained the edge, helped by its inclusion in the group's PS3 consoles. By the end of 2007, Sony's Blu-Ray system was seen as the more widely supported system, with Blu-Ray players outselling HD DVD players in the key US market by three-to-one. In early 2008, Warner Bros shifted allegiance to Blu-Ray, and was followed by several retailers, who announced plans to stop selling HD DVD disks and players. Toshiba responded by making steep cuts in the price HD DVD players, but sales remained slow. The crunch came in February when Wal-Mart also shifted its allegiance to Blu-Ray. Toshiba announced plans to suspend production of the system a few days later.

Last full revision 16th May 2017

* Archive page for historical reference only. This profile is no longer being actively updated. See active page here *


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