Like Japan itself, Sony struggles to adapt

TOKYO — Sony once was a company famous for firsts. The world’s first short-wave transistor radio. The first portable television. The first stereo cassette player.

But those firsts are museum pieces now, sealed into glass display boxes and stored in a Tokyo archives room, available to visitors by appointment only.

Sony is still a manufacturing giant, but a troubled one, and its recent struggles to cut costs and match more nimble international competitors typify a lumbering Japanese electronics industry that is famous far more for its past products than its current ones.

Experts say that Sony now needs a transformation. That’s the chief challenge facing incoming CEO Kazuo Hirai, who takes over from Howard Stringer on April 1 and is charged with reviving a company that has lost money four years in a row.

Such a turnaround will require many steps — paring of product lines; outsourcing; jobs cuts — that Japan’s major manufacturers often say they cannot take, due to cultural expectations for lifetime employment. It also requires recapturing the gift for innovation, something that came easier for Sony when it was young and streamlined, not sprawling. Sony, whose Walkman became a cultural icon in the 1980s, hasn’t developed a touchstone product in years.

“Sony is like a metaphor for Japan” because it has been slow to adapt since the collapse of the economic bubble here two decades ago, said Osamu Katayama, who has written three books about the company. “Sony started out as a very entrepreneurial company. But they were not willing to make major changes because change is always accompanies by pain. As a result, they are no longer a special company.”

Temporary pain

Hirai takes over during a dismal period for Sony. Some of that pain is temporary: Last year hackers sabotaged the PlayStation gaming network, disrupting service and stealing personal information from account holders. An earthquake in Japan and flooding in Thailand damaged factories and interrupted supply lines. The company was also hamstrung by a record-strong yen, which raised the prices of Sony’s products abroad.

But even with supply lines restored and the yen weakening, Sony faces fundamental problems, analysts say, as it tries to regain the ground it has lost to Apple and Samsung.

Sony no longer makes a profit on some of its most iconic products, including televisions, where it has taken losses for eight years in a row because global competitors use similar technology and far cheaper labor. Sony was also years too late to develop flat-panel models, losing a market share it hasn’t been able to recover. (Sony now makes the bulk of its money by selling life insurance through its financial business arm, Sony Life.)

Sony is also slowed by its own size, analysts say — typical of corporations here that emerged in this country’s post-World War II manufacturing boom. That bulk can be seen in Sony’s awkward attempt to marry its products and content. Though the company, for instance, made digital music players and laptops, and though it operated a recording business and a motion picture studio, its engineers were slow to weave it all together, as Apple did seamlessly with its iPod and iTunes.