What Microsoft can learn from Sony

What Microsoft can learn from Sony

By Hayley Tsukayama, E-mail the writer

Sony chief executive Kazuo Hirai has made a painful decision, announcing Thursday that Sony is parting ways with its Vaio line of computers, one of the most iconic brands in the company’s modern portfolio.

Investors certainly seemed to agree with the move. The Japanese firm has been criticized heavily for sticking too closely to the formulas that have made it successful in the past, and for splitting its focus among too many products. Cutting Vaio — it has entered into a “memorandum of understanding” with Japan Industrial Partners for the business — and announcing it will spin off its lagging television business into a subsidiary will help narrow the company’s focus. Sony’s stock rose Thursday, closing up 3.9 percent, and was still slightly up on Friday morning, at $16.58 per share.

It could not have been easy to let go of a line that epitomized Sony’s reputation for sleek, futuristic hardware design. Hirai, on the earnings call, called the decision “agonizing.”

That, in fact, is exactly the kind of decision that Microsoft’s newest chief executive, Satya Nadella, is already being called on to make for the software giant. As The Washington Post’s Brian Fung reported, investors are calling on the company to spin off all of its consumer products — Surface, Bing and Xbox.

Splitting any of those off would be a tough thing, culturally, for Microsoft. Sure, the Surface is a new initiative, but it was introduced with a lot of fanfare as the banner of a new, more unified era of Microsoft as a devices and services company. The Bing search engine hasn’t taken down Google, but it has been gaining (at Yahoo’s expense) and has an estimated 18 percent of market share, according tocomScore. And the Xbox is one of the few consumer markets where Microsoft leads — making it a good candidate for a spin-off, but also a difficult brand to let go of, particularly when the firm has added more Microsoft branding to Xbox with Skype and SkyDrive (soon to be OneDrive) integrations.

To be sure, Sony and Microsoft are very different companies. But they’re looking at similar challenges. Like Sony, Microsoft has been faced with new competitors and sinking core markets — televisions for Sony, PCs for both companies. Both have also undertaken bold plans to get their company divisions to work together more closely. (In fact, Sony’s strategy is called “One Sony,” while Microsoft’s is “One Microsoft.” )

And both have now put rising internal stars into the drivers’ seats. Hirai was the head of Sony’s PlayStation and digital entertainment division before he assumed the top spot. Nadella comes to the CEO position from Microsoft’s cloud and enterprises division. Both face questions about whether they’re willing to shake up their companies enough to counteract the tarnish that’s creeping over their brands — something Nadella has already nodded to by saying that he knows this industry only respects innovation, not tradition.

With the Vaio announcement, and an upbeat speech of his own about innovation at this year’s International CES, Hirai has shown he’s willing to make bold moves. Yes, it’s too early to tell whether jettisoning Vaio will help Sony. But, on this particular front, Hirai’s example can at least stand as a model for Nadella on how not to let sentiment cloud decisions about when to split with the past.