sony case study

GROUP 9PRESENTS

SONYC O R PO R AT I O NCar Navigation SystemsBy Manu Ram Thankaji Naga Avinash Rumsha Hussain Shashank Kumar Vyshnavi P Nair

COMPANYS BACKGROUNDSony, is a Japanese multinational conglomerate corporation headquartered in Minato, Tokyo, Japan. Sony is one of the leading manufacturers of electronics products for the consumer and professional markets. Sony Corporation is the electronics business unit and the parent company of the Sony Group. Sony was named after the latin word sonus, which means sound.

Founder : Akio Morita

Founder: Akio Morita Strong entrepreneurial spirit: Tokyo Telecom Engineering

Revolutionary thinking: Brand is lifeblood of company success Listed Sony on NYSE in 1970. 1966 Never Mind School emphasize the capabilities of individuals, rather than their prior academic background and history a revolutionary concept for Japan. Strong belief R&D leads to new ways to meet customer needs.

Co-chair of various conferences, including the Japan-U.S Business Council, The Trilateral Commission, and the World Economic Forum in Davos.

How it started?May 7 1946, after the end of World War II, Masaru Ibuka started a radio repair shop in a bomb-damaged department store Shirokiya building in Nihonbashi of Tokyo.

The next year, he was joined by his colleague, Akio Morita, and they founded a company called Tokyo Tsushin Kogyo K.K. Ibuka traveled in the United States and heard about Bell Labs' invention of the transistor. Ibuka convinced Bell to license the transistor technology to his Japanese company.

Continued . .Sony was the first company that made transistor video commercially successful for the first time. As a young company, Sony did not have a keiretsu of affiliated companies and lacked the strong domestic sales base and the distribution networks

Sony Business Units Sony Pictures Entertainment motion picture - production, acquisition and distribution

television programming, production, acquisition and distributionhome video - acquisition and distribution television broadcasting

operation of studio facilitiesBlue Streak Wheel of Fortune Big Daddy

Sony Life Insurance Other:

Sony Finance International, Inc.Sony Trading International Corporation Sony Broadcast Media Co. Ltd.

Other local entertainment businesses in Japan, U.S., and Germany.

Company History 1946 - Tokyo Telecom Engineering 1950 - First Japanese tape recorder 1955 - First transistor radios 1957 - First pocket-sized radio 1958 - Name change to Sony(from "sonus," Latin for "sound," and "sonny," meaning little man)

1968 - Intro of Trinitron color TV explosive growth 1979 - Walkman personal stereo

Company History 1980s - Major Producer of computer disks/ floppies 1988 - Bought CBS Records for $2 billion. 1989 - Bought Columbia Pictures for $4.5 billion. 1994 - Sony Playstation released to great success.

1997 - JV with Philips (inventors of the CD) to make Super Audio CD 1998 - Launched Wega flat-screen TV

1999 - JV with Philips, Sun Microsystems to develop networked entertainment products 1999 - Walkman with MP3 capabilities

Company History 2000 - Formed PlayStation.com games/software online 2000 - Restructured all entertainment units under Sony Broadband Entertainment 2001 - JV Sakura Bank and JP Morgan Chase for online bank.

Sony Business Units Electronics:Audio,Video, Televisions Information and Communications.

Sony Computer Entertainment:Hardware and related software

Sony Music Entertainment:Sony Music Entertainment Inc.: Columbia Records, Sony Classical, Sony Discos,Sony Disc Manufacturing, and Sony Music Nashville Sony Music Entertainment Japan: Sony Records and Epic Records

Sony Business Units

RegionJapanUS Europe Other Regions Total

$ (Millions)20,01219,124 13.872 10,074 63,082

% of Total3230 22 16 100

CAR NAVIGATION SYSTEMA car navigation system plotted a driver s current location on a dashboard-mounted LCD monitor by calculating signals received from satellites. The system also told the driver the best way to his or her destination by employing a digital map database stored on either a CDROM, a computer hard disk, or an IC-card.

Digital Map companiesEtak --- U.K EGT --- Germany Teleatlas --- Italy Naviken --- Japan(sony and mistibushi)

Where it went wrong? Since the late 1980s, Sony led a group of 40 companies in establishing an industry standard (called NaviKen) which enabled consumers to benefit from mutually compatible digital map software Ironically, competitors not in the NaviKen group were able to introduce new and improved productsmore often and more rapidly by developing or acquiring proprietary digital map technologies. In contrast, NaviKen member companies, including Sony, lost time while trying to agree on standard software upgrades.

RESULT OF WHICH. .Sonys unit sales increased, but at a slower growth rate than the market; Sonys market share fell from 60 percent in 1993 to 23 percent in 1994 and 17 percent in 1995, and was estimated to drop to 15 percent in 1996.

Distribution Channel of car navigation systemWas sold on OEM basis or after market retail channels.OEM products were one or two years behind and more expensive than after market. So 80% were sold through after market channels and 20% were sold through OEM channels.

Multinational marketsAdvanced Japanese market Worlds largest car navigation system in 1995 Penetration rate for all cars registered in Japan was 2% Due to increase in traffic and well developed train systems most Japanese preferred car for weekend driving. So, many welcomed car navigation systems as a means of finding their way around in unfamiliar cities and towns. Even Japanese Government invested in improving the efficiency of Japanese road system by introducing VICS (vehicle information and communication system). This avoided grid lock accidents or washed out roads

Emerging European market European market lagged behind Japan by some five years. Only after the introduction of products in Germany by Bosch and Phillips, the market began to develop. The governments collaborated on efforts to improve highway system. Bosch and Phillips developed their products using ROUTE CALCULATION and GUIDANCE

Untapped US market

The US market lagged behind both Europe and Japan.As the road system in US was well organized, there was very less demand for car navigation system.

To make the consumers aware of this navigation system, JD Power conducted 2 day test drive followed by 3 questionnaire.

Sony in International CompetitionIn Japan: Nov 1990, 1st GPS based after marketing car navigation system by pioneer. It was named as satellite cruising system emphasizing on entertainment aspects of the product. Its distribution was through the same channel as they used to distribute conventional car stereos principally auto parts shops. Despite of its high price it sold 20000 units in 1990.

Continued.. Sony entered in1993 with after market segment with NVX-F10. six months later it introduced NVX-15 Sony named its product as Digital map car navigation system. Sony set out to establish industry standard for digital map software. It was the most active member of navigation research association to set the Naviken format for CD-Rom based digital map. This standard setting effort lowered entry barriers

In April 1994 Matsushitha who didnt join Naviken was first to develop a hybrid system with both GPS and Dead Reckoning sensor.

In Oct 1994 alpine originally a member of Naviken, later became an independent developer, introduced first hybrid model that could provide turn-by-turn route guidance .In 1995 Pioneer introduced new hybrid model with a flash memory chip in its CPU. Though Sony introduced new products almost every 6 months it was modified version of original GPS product. In 1994 Sony introduced NVX-B50 which employed a CDROM changer in which a driver could place 6 different CDROM .

European CompetitionIn late 1994 Navigation systems were first installed on OEM basis. Philips was the first one to introduce navigation system which had (hybrid system) GPS and Dead-Reckoning sensors. In Sept 1995 it started to sell the same product through After Market Channel in Germany and France. In Oct 1994 Bosch began supplying navigation systems. Sony started test marketing its GPS based model in France in 1995 but sold only 300 units. By 1997-98 Alpine, Matsushita and Pioneer were planning to enter European market.

US CompetitionIn US car navigation system was not widely known.Industry observers believe price reductions would be critical before demand for car navigation system would takeoff to US. Zexel was first to bring car navigation to US with GPS and Dead-Reckoning system. Due to lack of marketing expertise it couldn't sell well. Sony began marketing in NVX-F160 in 1994

Reconstruct the Global StrategyGeographical focus issue1.It was time to focus much more effort on markets outside Japan .

2.Focus on re-establishing its competitive position in Japan .3.Allocation of R & D resources depending on geographical priorities.

Product

choice

1. Launch handy navigation system GPX-5 as a global product2. Introduce modified hybrid NVX-S1 in Europe and US market

3. Develop a low price model for overseas market

Standard setting issue

Debate over continuation of Naviken consortium