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T

Terrell

Member
http://business.timesonline.co.uk/tol/business/industry_sectors/technology/article5446963.ece

Sony, the embattled Japanese electronics group, is on the brink of a corporate upheaval that could see job cuts and sweeping changes to management and manufacturing processes.

Company sources have told The Times that operations across the group are braced for a series of “sacred cow-slaying” measures that they believe will abolish or fundamentally alter many of Sony's long-established business practices.

The expected restructuring - considered by many analysts to be occurring far too late - is likely to be announced early next month, with the lion's share of the changes imposed on Sony's domestic Japanese operations in the form of factory closures and the abolition of several major divisions.

The restructuring is expected to be unveiled after this month's Consumer Electronics Show in Las Vegas and comes as analysts are warning that Sony faces long years of multibillion-dollar losses unless its president, Sir Howard Stringer, is given free rein to take on the company's old guard and erase many of its legacies.

Analysts are issuing blunt warnings of an impending flood of red ink in Sony. Their calls for deep changes in the company - supported by large investors - predict an imminent “all or nothing” moment for Sir Howard and the company of which he took charge in 2005.

Koya Tabata, a Credit Suisse analyst, recently warned investors that the restructuring of Sony is perilously overdue and must be radical. Sony management needs to make a rapid shift in its business model to one driven by earnings in the content business, he said.

The focus of research and development must be on software, he said, adding: “The most important thing is that, to improve organisational strength in the areas of development, purchasing and marketing, it will be necessary to further concentrate power in the hands of [Sir Howard] and unless this is achieved we believe [Sony] will be unable to close the gap with competitors such as Apple and Nintendo.”

Sony has already flagged the possibility of changes to its business model. A thinly detailed statement last month focused chiefly on short-term cost cutting, job losses of about 16,000 permanent and temporary staff, and a vow to re-examine the role of non-core or non-profitable businesses. The announcement did not say what these were. Deutsche Bank analysts described the restructuring plans as

“insufficient in scope and scale” and, along with other observers, noted that Sir Howard's longer-term plans would have to be fairly spectacular in order to restore investors' faith in the stock.

Despite the promise of reform inherent in the appointment of Sony's first non-Japanese head, sources close to Sir Howard describe three years of frustration as the company's British-born chief has tried to impose changes on an unwilling entrenched management. Those frustrations - and a clear internal cultural clash between Japanese Sony and its US and European operations - have finally begun to be noticed by Japanese analysts. Several have started to call for Sir Howard to be free to take a “gloves-off” approach to running Sony, even if that means that the axe falls most heavily on the group's Japanese operations.
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We've had a little bit of a head-start in the OT on this one, and after review of Sony's earnings reports showing they are approaching $4 billion in losses in the Gaming division as a whole for just over 2 years (edited for accuracy, thank you for catching our error), when coupled with the bolded and underlined parts of the quote above... we're wandering outside the realm of hyperbole and into a very serious risk of the endangerment of Sony's position in the gaming industry. The axe is going to have to slash somewhere, and to think they wouldn't start with their largest red-ink albatross begins to seem more like wishful thinking than a reality.

To be clear: I'm not saying that Sony is going to exit the gaming industry entirely. But there's serious worries that continuing as they exist now is simply not possible if it runs the risk of totally destroying the company's solvency and future. Be it an exit from hardware and establishing itself as a software publisher, selling some of the division's assets (read: developers or IPs), or whatever else that could be done to help... it seems likely SOMETHING will happen, and there's just no easy way for this to end pretty. It all seems a matter of how hard the axe falls and where they start chopping.
 
oh god oh god oh god oh gdo hogod this should never have left the OT! gah
 
Sony said it has no plans to announce additional restructuring actions, denying a report that says the company plans a big corporate upheaval that could see job cuts and sweeping changes to management and manufacturing processes.

"We announced the restructuring of the electronics business last month," said Sony spokesman Atsuo Omagari, Bloomberg reports. "We are not planning to announce further restructuring at this time."
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http://www.thestreet.com/story/1045...of-further-restructuring.html?cm_ven=GOOGLEFI
 
I guess people on the gaming side of the forum just can't take bad news. I don't see why this shouldn't be talked about at all. It's important news.
 
Gaming division is what kept sony afloat for a few years, so dont expect it to go anywhere. The article said, to close the gap to Apple and Nintendo. How are they going to close the gap without a gaming division? :lol

Oh GAF.
 
<closes laptop and hides under the duvet>

10eleah.gif
 
Terrell said:
http://business.timesonline.co.uk/tol/business/industry_sectors/technology/article5446963.ece



We've had a little bit of a head-start in the OT on this one, and after review of Sony's earnings reports showing an over $5 billion in losses in the Gaming division as a whole for just over 2 years (which makes it the largest loss in all divisions that I have seen from the reports so far), when coupled with the bolded and underlined parts of the quote above... we're wandering outside the realm of hyperbole and into a very serious risk of the endangerment of Sony's position in the gaming industry. The axe is going to have to slash somewhere, and to think they wouldn't start with their largest red-ink albatross begins to seem more like wishful thinking than a reality.

To be clear: I'm not saying that Sony is going to exit the gaming industry entirely. But there's serious worries that continuing as they exist now is simply not possible if it runs the risk of totally destroying the company's solvency and future. Be it an exit from hardware and establishing itself as a software publisher, selling some of the division's assets (read: developers or IPs), or whatever else that could be done to help... it seems likely SOMETHING will happen, and there's just no easy way for this to end pretty. It all seems a matter of how hard the axe falls and where they start chopping.
Click to expand...

thread opening...

Puck said:
http://www.thestreet.com/story/1045...of-further-restructuring.html?cm_ven=GOOGLEFI
Click to expand...


thread closing.
 
Vorador said:
I wonder how much posts before someone claims "Sony is the new Sega!!"

>_>
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Been there done that.
 
If Sony shakes up a lot it will be massive, massive news not just in gaming but in terms of movies, music, home entertainment, gaming, and a few other areas that escape me.

I hope it doesnt spell any doom for their gaming arm, because the competition between MS/Sony/Nintendo is what seems to push gaming forward, or at least adding impetus to it.
 
Sony's first party games division is far too large and puts out far too few system selling games. They need to cut the fat, sell studios and merge others. A good streamlining of their division would save them significant cashflow, and in a business where 3rd party titles are becoming ever more important I do not think it makes sense to have so many 1st party studios anymore.

Another issue is the cost of the PS3. Obviously Sony needs to bring the costs down, and I think they should aim for a release of a cheaper slimline PS3 ready for worldwide release at Christmas 2010. The PSP has been a strong and consistent seller, but I feel that a relaunch of the platform should also be aimed for in 2010, one which abandons the UMD format altogether and one which will have titles and features which will attract people to the platform creating an ecosystem where they purchase more games.

The PS3 disaster will mean significant changes for their games division, but I think these will be good changes, and will make Sony a better company for it. You never know, the PS3 might end up being the best thing that ever happened to them.
 
Terrell said:
Yeah, because a PR statement in denial has really said much in ANY part of the consumer electronics sector.
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Yeah, because The Times is always right and has never published bullshit as fact.
 
I'm sure hoping that Sony won't pull the plug on the PS3 (as that's the current-gen console I own), but I also didn't think that SEGA would've pulled the plug on the Dreamcast in early 2002, either... and I dropped a good chunk of change into that platform for two years before it became market-worthless.

Hmmm... isn't the PS2 only just over two years old, too? Uh-oh.

EDIT: I just proved Vorador's point. Oops.
 
im calling it now.....PS4 will use PS-Eye as the standard control scheme for its games (to gain the casual market) and will utilize an advanced cell processor since sony already poured billions into the tech.


either that, or there will be a PS3 "reboot" (PS3 slim?)in a few years where the PS-Eye will be the main focus
 
Petrae said:
I'm sure hoping that Sony won't pull the plug on the PS3 (as that's the current-gen console I own), but I also didn't think that SEGA would've pulled the plug on the Dreamcast in early 2002, either... and I dropped a good chunk of change into that platform for two years before it became market-worthless.

Hmmm... isn't the PS2 only just over two years old, too? Uh-oh.
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The PS3 is too successful for Sony to pull the plug on it. The problem is that it is still a financial disaster for the company. I think some analysts are predicting the PS3 might not ever turn a profit; which is a cataclysmic failure for the company that dominated the previous two generations.

I expect Sony to do some massive changes to the gaming division over the next two years. It wouldn't surprise me to see nonsense like Home to be some of the first stuff to get axed. Beyond that, who knows... With the economic downturn, they are completely fucked. I guarantee the December PS3 hardware sales were a total disaster, and without a price drop, their market share ain't improving any time soon.
 
Zhuk said:
Sony's first party games division is far too large and puts out far too few system selling games. They need to cut the fat, sell studios and merge others. A good streamlining of their division would save them significant cashflow, and in a business where 3rd party titles are becoming ever more important I do not think it makes sense to have so many 1st party studios anymore.
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I see it as just the opposite. 3rd party is becoming less important the more they go multiplatform with every property. 1st party is the prime source for platform-defining exclusive titles, the titles that will draw customers to your platform---even when it has a higher price than the competition.

Cut their first party efforts now and they might as well just throw the rest of their ps3 efforts into a landfill next to the ET cartridges.

1st party development is Sony's life preserver at this point, not an albatross to be ditched at the earliest opportunity.
 
Terrell said:
Yeah, because $5 billion in debt in 2 years is just cat-scratch.
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Yes because the previous 2 years are indicative of the next 7-10 years.

There has always been a massive investment during the start of each console cycle from Sony. No one is going to argue that Sony probably spent way too much on the PS3, however what's done is largely done; Sony had to keep the PS3 afloat during its first few years taking on massive losses on the hardware.

Now that the PS3's manufacturing costs have come down considerably, and Sony hasn't dropped the price further for this quarter, they are looking to get back in the black for their gaming division. They shouldn't be too far removed from that reality.

In other words, just because the previous 2 years saw massive losses doesn't mean that, going forward, the gaming division will continue to bleed like that. In fact, if anything, if Sony manages to continue cutting costs further, then their gaming division may actually be one of the better divisions of Sony. The problem is that they may not be able to drop the price as much as they want to in order stop the bleeding from Sony as a whole, but certainly I wouldn't expect the gaming division to be anywhere near the axe compared to some of their other divisions.
 
Private Hoffman said:
Yes because the previous 2 years are indicative of the next 7-10 years.
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No way in hell the PS3 is going to have a lifespan of 9-12 years. What are you smoking?

MS and Nintendo are going to be exerting pressure for the next cycle in the next 2-3.
 
Yes Boss! said:
No way in hell the PS3 is going to have a lifespan of 9-12 years. What are you smoking?
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When did I suggest that it would be solely the PS3? I just said that the previous 2 years were not necessarily going to be indicative of their gaming division for the next 7-10 years. I didn't reference the PS3 specifically.

I certainly don't expect Sony to repeat the PS3 strategy with the PS4.
 
Sony Gaming division actually turned profit during Q1 2008 I think it was. And lets not forget that during all this time Sony as a whole has been making profits.
 
Private Hoffman said:
Yes because the previous 2 years are indicative of the next 7-10 years.

There has always been a massive investment during the start of each console cycle from Sony. No one is going to argue that Sony probably spent way too much on the PS3, however what's done is largely done; Sony had to keep the PS3 afloat during its first few years taking on massive losses on the hardware.

Now that the PS3's manufacturing costs have come down considerably, and Sony hasn't dropped the price further for this quarter, they are looking to get back in the black for their gaming division. They shouldn't be too far removed from that reality.

In other words, just because the previous 2 years saw massive losses doesn't mean that, going forward, the gaming division will continue to bleed like that. In fact, if anything, if Sony manages to continue cutting costs further, then their gaming division may actually be one of the better divisions of Sony. The problem is that they may not be able to drop the price as much as they want to in order stop the bleeding from Sony as a whole, but certainly I wouldn't expect the gaming division to be anywhere near the axe compared to some of their other divisions.
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We're in a worldwide recession, the rules of the game have changed. Were it not for that, I would show much less concern.
Second, even with a decrease in parts, PS3 is STILL sold at a loss.
Lastly, they have a $5 BILLION debt to recover. That doesn't wash away overnight. Not even the PS2 had debts like that to recover, and it took 2 years for that platform to recover its losses, being magnitudes more successful.

So I don't honestly see how you can think everything's all roses.
 
I'm sure the gaming division will be affected to some degree but I doubt it will be catastrophic for the PS3. I think they'll focus on trying to reduce spending, first party titles will probably face smaller budgets. They've lost a lot of money recently but they can get a lot out of their investment in the technology in PS3. The console has a fairly long future ahead of it and I expect the PS4 to amount to an expanded PS3. By the launch of that system it should be relatively cheap to produce.
 
I don't think Sony will drop the gaming department. Yeah it's losing money now, but things will change over time.

I would say that maybe their robotics department might get the axe, that is extremely high R&D cost with not a proven market yet.

But yeah, I think that the gaming division would be the 2nd to last thing Sony would have to cut, and the last thing would be their Bravia TVs.
 
Terrell said:
Second, even with a decrease in parts, PS3 is STILL sold at a loss.
Lastly, they have a $5 BILLION debt to recover. That doesn't wash away overnight. Not even the PS2 had debts like that to recover, and it took 2 years for that platform to recover its losses, being magnitudes more successful.
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Quoted from the earnings releases thread: http://www.neogaf.com/forum/showpost.php?p=13448142&postcount=415

Code: 
	  Sony		    Nintendo	     Microsoft	       Industry
Y/E 1998     $902,811,090   $1,023,333,867                      $1,926,144,957
Y/E 1999   $1,102,563,557   $1,301,350,000                      $2,403,913,557
Y/E 2000     $722,738,949   $1,368,207,547                      $2,090,946,497
Y/E 2001    -$449,776,290     $677,576,000                        $227,799,710
Y/E 2002     $629,101,056     $895,872,180   -$1,135,000,000      $389,973,237
Y/E 2003     $935,569,253     $834,333,333   -$1,191,000,000      $578,902,586
Y/E 2004     $627,195,212     $993,161,303   -$1,337,000,000      $283,356,515
Y/E 2005     $419,888,799   $1,056,056,202     -$539,000,000      $936,945,001
Y/E 2006      $69,129,058     $774,478,055   -$1,339,000,000     -$495,392,887
Y/E 2007  -$1,970,923,859   $1,914,666,388   -$1,969,000,000   -$2,025,257,471
Y/E 2008  -$1,079,994,103   $4,322,637,887      $426,000,000    $3,668,643,783

Y/E 09Q1      $51,113,208   $1,124,452,830      $178,000,000    $1,353,566,038
Y/E 09Q2    -$379,471,154   $1,278,759,615		
			
Total				
	   $1,579,944,775  $17,564,885,209   -$6,906,000,000   $11,339,541,523
				
Full Year Average
	     $173,482,066   $1,378,333,888   -$1,012,000,000      $907,815,953
				
Profitable Years				
			8		11		   1		     9
				
Non Profitable Years				
			3		 0		   6		     2
				
Average in Loss Year				
	  -$1,166,898,084	       N/A   -$1,251,666,667   -$1,260,325,179
				
Average in Profit Year				
	     $676,124,622   $1,378,333,888      $426,000,000    $1,389,625,094

I'm not sure where the $5bn figure is coming from.
 
Forsete said:
Sony Gaming division actually turned profit during Q1 2008 I think it was. And lets not forget that during all this time Sony as a whole has been making profits.
Click to expand...

Since the second quarter of '06, the games division has produced only two profitable quarters: the third quarter of 2007 (+113 million) and the first quarter of 2008 (+51 million). All of the other quarters posted losses.

(Credit: http://www.neogaf.com/forum/showpost.php?p=14245470&postcount=111)
 
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