Sony and Samsung a study in contrasts

January 8, 2014 6:34 pm

Sony and Samsung a study in contrasts

By Richard Waters

Groups reveal diverging paths at CES show in Las Vegas

Watching Sony and Samsung strut their stuff at the Consumer Electronics Show in Las Vegas this week has been a stark study in contrasts. They amounted to two very different responses to a pressing set of problems: how to make money when older product categories are shrinking, profit margins are under more pressure than ever and the smartphone revolution is moving into a new, lower growth phase.Take Samsung first. For devotees of its often over-the-top tech demonstrations, this was one for the ages. To the accompaniment of booming music, it promised flatscreen TVs that curve at the touch of a button, lights that dim when you talk into your watch and fridges that channel telephone calls to you while you’re in the kitchen.

These and other fruits of Samsung’s fevered techno-imagination prompted an inevitable question: Why? The unspoken response from the company seemed to be: Because we can.

This was technology in search of a purpose. As a fast follower, Samsung is a fearsome competitor. But it needs someone to follow.

In its effort to define new markets like “wearable” gadgets, Samsung seemed more than ever to be throwing ideas at the wall to see if anything would stick. In a week when it issued an earnings forecast that was well short of estimates, this was not particularly encouraging, even if it was entirely in character.

The contrast with Sony could not have been greater. Yes, there was plenty of hardware fetishism on display. It almost seemed a throwback to better times, as Sony executives talked of packing ever more into smaller, sleeker devices. In truth, though, Sony’s ability to differentiate itself through miniaturisation went out with the analogue world.

More significant were the promises of new services to stitch together its disparate devices, putting digital media experiences above hardware fetishism. These included an online games network and plans for a streaming service that combines live TV and premium video and could be viewed from any device.

Hardware also took a back seat with Sony’s approach to wearables. It came in the form of a faceless widget, intended to be embedded in any number of future “smart” wristbands or brooches. More important than the device is the data it collects about the wearer, to power a service called Lifelog.

The hope for Sony fans now is that chief executive Kaz Hirai can succeed in two areas where predecessor Sir Howard Stringer failed. One is to make the hardware-plus-services model work. This is hard to do well – which increases the potential returns for getting it right.

Sony has already demonstrated how not to do it, from its first, clumsy venture into digital music to the 2011 hack of its PlayStation network. But Apple has also struggled in the cloud: Steve Jobs’ final hurrah, the iCloud, gets mixed reviews and has yet to make a user’s personal information and media seamlessly available on all Apple devices.

Having a foot in the entertainment camp should also help. The promise that buyers of its latest Xperia smartphone can watch the Sony Pictures movie Captain Phillips on the first day of digital release may not do much to lift sales on its own. But Sony’s ties in the entertainment world will be important as it tries to assemble the rights needed for its new digital services. The promise of a full live internet TV service is both a tantalising glimpse of where Sony could be headed and a big risk: no one else has pulled it off yet.

The other area where Mr Hirai needs to do better than his predecessor is in overhauling Sony’s hardware line-up. It’s no good using services as the glue for a hardware-focused business if the hardware products themselves fail to yield decent gross margins. A lot rests on making up lost ground in smartphones, but abandoning unprofitable products in shrinking areas of consumer technology must also be faced.

Looking further ahead, the disruption to Sony’s hardware business from the shift towards software and services could be even more profound. Cloud gaming doesn’t require a console – and nor does cloud TV, which can be streamed to any screen.

Sony this week even offered a vision of a future in which screens themselves become redundant, using projectors to beam video straight from the internet on to a home’s walls, ceiling and windows.

Mr Hirai is trying to pick up the pace as Sony searches for its digital destiny. But the familiar questions remain: can it execute on the plan, how fast can it move – and how much pain is it prepared to take along the way?

 

January 8, 2014 6:34 pm

Sony and Samsung a study in contrasts

By Richard Waters

Groups reveal diverging paths at CES show in Las Vegas

Watching Sony and Samsung strut their stuff at the Consumer Electronics Show in Las Vegas this week has been a stark study in contrasts. They amounted to two very different responses to a pressing set of problems: how to make money when older product categories are shrinking, profit margins are under more pressure than ever and the smartphone revolution is moving into a new, lower growth phase.

Take Samsung first. For devotees of its often over-the-top tech demonstrations, this was one for the ages. To the accompaniment of booming music, it promised flatscreen TVs that curve at the touch of a button, lights that dim when you talk into your watch and fridges that channel telephone calls to you while you’re in the kitchen.

These and other fruits of Samsung’s fevered techno-imagination prompted an inevitable question: Why? The unspoken response from the company seemed to be: Because we can.

This was technology in search of a purpose. As a fast follower, Samsung is a fearsome competitor. But it needs someone to follow.

In its effort to define new markets like “wearable” gadgets, Samsung seemed more than ever to be throwing ideas at the wall to see if anything would stick. In a week when it issued an earnings forecast that was well short of estimates, this was not particularly encouraging, even if it was entirely in character.

The contrast with Sony could not have been greater. Yes, there was plenty of hardware fetishism on display. It almost seemed a throwback to better times, as Sony executives talked of packing ever more into smaller, sleeker devices. In truth, though, Sony’s ability to differentiate itself through miniaturisation went out with the analogue world.

More significant were the promises of new services to stitch together its disparate devices, putting digital media experiences above hardware fetishism. These included an online games network and plans for a streaming service that combines live TV and premium video and could be viewed from any device.

Hardware also took a back seat with Sony’s approach to wearables. It came in the form of a faceless widget, intended to be embedded in any number of future “smart” wristbands or brooches. More important than the device is the data it collects about the wearer, to power a service called Lifelog.

The hope for Sony fans now is that chief executive Kaz Hirai can succeed in two areas where predecessor Sir Howard Stringer failed. One is to make the hardware-plus-services model work. This is hard to do well – which increases the potential returns for getting it right.

Sony has already demonstrated how not to do it, from its first, clumsy venture into digital music to the 2011 hack of its PlayStation network. But Apple has also struggled in the cloud: Steve Jobs’ final hurrah, the iCloud, gets mixed reviews and has yet to make a user’s personal information and media seamlessly available on all Apple devices.

Having a foot in the entertainment camp should also help. The promise that buyers of its latest Xperia smartphone can watch the Sony Pictures movie Captain Phillips on the first day of digital release may not do much to lift sales on its own. But Sony’s ties in the entertainment world will be important as it tries to assemble the rights needed for its new digital services. The promise of a full live internet TV service is both a tantalising glimpse of where Sony could be headed and a big risk: no one else has pulled it off yet.

The other area where Mr Hirai needs to do better than his predecessor is in overhauling Sony’s hardware line-up. It’s no good using services as the glue for a hardware-focused business if the hardware products themselves fail to yield decent gross margins. A lot rests on making up lost ground in smartphones, but abandoning unprofitable products in shrinking areas of consumer technology must also be faced.

Looking further ahead, the disruption to Sony’s hardware business from the shift towards software and services could be even more profound. Cloud gaming doesn’t require a console – and nor does cloud TV, which can be streamed to any screen.

Sony this week even offered a vision of a future in which screens themselves become redundant, using projectors to beam video straight from the internet on to a home’s walls, ceiling and windows.

Mr Hirai is trying to pick up the pace as Sony searches for its digital destiny. But the familiar questions remain: can it execute on the plan, how fast can it move – and how much pain is it prepared to take along the way?