The Water Cooler: Does size really matter?

Posted June 7, 2006 at 05:31 PM by Adam Berger

Section: Features, The Water Cooler

Every Monday, Bryan Glanzberg contributes The Water Cooler, a column that bridges the gap between technology and business.

Everyone knows that Sony has done an excellent job of developing their brand among the consumer electronics world, especially in the US.  What few people realize is the brand name that they have developed in Japan.  Like all retail giants, internet powerhouses, and marketing guru’s, Sony has gotten to big for their own good.  When a company grows to expand its product lines beyond its core competencies, there is often a disconnect among the synergies that they expect to generate among cross functional lines.

Great example of this, (except it is in the context of a merger) was Time Warner.  The AOL, Time Warner merger was the be the smartest move of the century since the competencies of each side were completely in line.  However, they were unable to effectively exploit these synergies and, as we all know, the merger failed miserably. 

“Sony has expanded into so many business areas in Japan and abroad that it has blurred its original identity as an engineering innovator.  Analysts say this murkier image threatens one of the company’s most profitable assets: the so-called Sony premium, the higher prices long commanded by its electronic products, which still account for 64% of revenue, excluding sales between Sony divisions.“

I must applaud Sir Howard though on the efforts he has made recently to spin off Sony’s financial lines and the life insurance line that they have.  This would have a great effect on Sony’s bottom line, allowing them to substantially re-design their cost structure and better utilize the capabilities they have available to them…..I do miss Aibo though….Aibo was my dog (not literally but he was pretty cool).

Read [NY Times]