SIGNALS

"I think we should just be friends."
"You're going to make someone really happy someday."
"We should start seeing other people."
"It's not you, it's me."

I don't need to remind readers here what Sony once was. Today, Sony is a troubled company. Losses continue to mount and the remedy always seems just out of grasp. Still, a company with this much heritage, a deep corporate pride, and an immense pool of talent, does not go quietly. Rather, it makes bold moves to turn things around and get back in the game it once dominated.

The feeling, it seems, is that the company is too vast and too diversified. Each of its individual markets is so competitive and fast-moving that it's hard for a big company to respond. Instead, a collection of smaller, more nimble companies is being proposed. Last year, Sony sold its laptop business, and spun off its television business as a wholly-owned subsidiary. Now, Chief Executive Kazuo Hirai announced that Sony will spin off its audio/video holdings, creating a self-sustaining, wholly-owned subsidiary.

At its roots, Sony is an audio company. Sony's name is partly based on the Latin word "sonus" ("sound") and the first Sony products were tape recorders and radios. Now, products such as Sony Blu-ray players, headphones, and portable players will no longer descend from the mothership. Instead, the new division will go its own way. According to Hirai, "The head of each division will be encouraged to take the initiative for future options, such as business tie-ups with other companies, changes in the business portfolio, buyouts and sell-offs."

According to Hirai, the core company will focus on "engines of growth." That means games, music, movies, streaming, and image sensors (used in Apple iPhones). In other words, Sony is keeping the profitable parts of the company and letting the other stuff try a sink-or-swim approach. Since AV is being spun off, apparently it is not considered an engine of growth. Not coincidentally, Hirai formerly headed Sony's PlayStation division. And phones? The latest news is not good for that vital business. Sony has announced another round of layoffs in that division and Hirai said that Sony will not "pursue sales growth in areas such as smartphones." Bottom line: Hirai wants to take Sony from its current projected loss of $1.4B to a $4.2B operating profit in three years.

Sony once ruled the consumer electronics market. Even with a dramatic recovery, it is not likely that it will ever enjoy that kind of supremacy again. Times have changed as has the business of developing and manufacturing innovative consumer products. Still, one hopes that Sony, and in particular its audio/video subsidiary, will survive and prosper. Sony's continued strong presence is vital for the audio/video industry and its absence would be unthinkable.