[lbo-talk] As Sony wobbles, Samsung rises

uvj at vsnl.com uvj at vsnl.com
Sun Mar 13 16:32:46 PST 2005


THE TIMES OF INDIA

FRIDAY, MARCH 11, 2005

As Sony wobbles, Samsung rises

TOKYO: In 1997, the year Howard Stringer joined Sony, Japan's premium electronics company took little notice of Samsung Electronics, a South Korean TV maker fighting a life or death battle to survive the Asian currency crisis.

Less than a decade later, Samsung has twice the market-cap of Sony, which this week named Stringer as its new chairman. Samsung also is no longer Sony's only rival. Apple Computer now dominates the market for portable music players. Silicon Valley companies have led the way in digital gadgets like the PalmOne personal organisers and TiVo's digital video recorders.

Sony is even facing strong competition from Eastman Kodak and Canon for digital cameras, a product category it invented.

Samsung has become what Sony could once claim the competitor with both the breadth of products and the appeal of a premium brand. This rapid reversal of fortunes illustrates the highly competitive world of consumer electronics that Stringer, a media man, is entering.

Complacency and coasting on best-selling products have contributed to a nearly 75 per cent decline in Sony's stock value since its peak on March 1, 2000.

The invincible "factory of ideas" founded almost six decades ago by Akio Morita, the company that brought the world the transistor radio, the Walkman and the Trinitron TV tube, seems to have lost its way.

"Samsung is now the anti-Sony," said George Gilder, a US technology analyst. "Sony is layered with bureaucracy," he added. Samsung, by contrast, has kept a lean corporate structure, with authority increasingly delegated to frontline managers around the world, and almost a quarter of the far-flung staff of 88,000 dedicated to R&D.

In the past three years, Sony's electronics division has dragged down company profit. With the division forecasting a loss for 2004, Sony is expecting about $1 billion in profit for the year ending in March, about 1.5 per cent of revenue of about $69 billion. By contrast, Samsung, in the year that ended in December, had $10 billion in net income on sales of $52 billion.

A high profit allows Samsung to invest billions in R&D, maintaining 15 laboratory complexes around the world. "Last year we spent $7 billion in capital spending, the largest for any information technology company in the world," Chu Woo Sik, a spokesman for Samsung Electronics, said.

NYT News Service

Copyright © 2005 Times Internet Limited.



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