Wednesday, 18 April 2012

Sony. The 6.4billion loss and the death of brands.

Most of us will remember Sony as the great, quality premium brand of growing up. Clever advertising instilling a real sense of long-lasting, up-to-the-minute products that were a little more expensive but hey, worth every penny. Innovation through The Walkman, Playstation, Bravia, Vaio, Cameras.....

I remember walking into The Sony Store in New York and being mesmerised by the high technology future on display. It wasn't a shop, it was a glimpse into an enthralling future and it became almost a tourist attraction.

And then most of us recently will have seen Sony spend the last 5 years tearing that image down and re-positioned as the general, competitively priced brand. Just the same as everyone else.

Except having developed the persona of "premium", make the mistake of trying to create it more around "value". People knew the brand and it's hard to move from a long-term embedded positioning to something else without losing customers.

Last week Sony flagged a 6.4billion usd annual loss and an axing of 10,000 jobs. It has of course been hammered by Apple and Samsung. It's stock has almost halved in a year.

It also emerged that The Playstation 3 was being sold at a hardware loss in the hope of recouping revenue on the games themselves.

What has happened here is typical of old-world brands. 

They firstly ignore the web, then they actively rubbish it and then the web, takes them apart. 

Look at what itunes has done to HMV which at one time, had that music business in its hands. Look at what Netflix is doing to retailers such as Xtravision and Blockbusters. Look at the way online gaming has hurt the 'Game' chain of stores. Look at what Amazon/E-Books have done to high street book retailing with 'Chapters' and 'Waterstones' a perfect example of that. Look at the former dominance of 'Golden Pages' compared to Google. Look at Smartphone development and what that has done to Nokia (with a company valuation falling from 100 billion to 11 billion, and quickly). What online publishing (Huffington Post a classic example) has done to Press. It goes on and on.

All of these older businesses had the brand values, the trust, had the customer loyalty, had the business knowledge and yet they got stuffed. In a lot of cases too, because they were run by middle-aged men who had/have no comprehension of what is going on. And still don't. Because they believed they were too big to fail.

The internet is the greatest brand-leveller. Its beauty is that it allows young turks with heads full of great ideas to go and eat established brands lunch. Because they've nothing to fear.

And it's not over. Not even nearly.

Recent news last week from Tesco (a brand I worked on) where they're re-shaping by reducing larger stores to focus more online, is yet another sign. Less and less people will be prepared to park in a car park on their free Saturday to do grocery shopping - they'll do it online. Which in turn means the "anchor" tenant of old in a Mall, such as the likes of Tesco, will lose impact and other retailers, whom depend on the high traffic they bring in, will suffer.

What too,is voip going to do to telephony? And are O2 (another brand I worked on) and Vodafone in a place where they're ready with a serious online strategy? Well? Didn't notice it just yet.

They should note that bigger brands have fallen and Sony's losses, typifies it. This is a big lesson.

Brands don't need banner ads. They don't need a Social Media strategy. They need an online plan. 

It starts with that and re-designing your website to make it "e commerce enabled" isn't one. It needs a total radical overhaul of thinking provided by people who know and not by existing management in the main. 

The excellent Sarah Gordon in the Financial Times says it as "Investors in today's technology titans such as Apple, would do well to remember just how easy it is to lose such a reputation".

Otherwise when the hit comes, it will be hard.
Ask Sony.