Sony to slash 10,000 jobs, close 11 manufacturing plants
Company seeks to ‘eliminate corporate silos’
In surprising news breaking this morning in Japan, Sony has announced it will shed 10,000 jobs in the coming months and close 11 production plants.
Silicon.com reports that “The company known for its Walkman music player, the Spider-Man movie franchise and the PlayStation game console will "eliminate the corporate silos" of its Sony Corporation Network starting on 1 October, and replace it with a new structure it hopes will allow for better co-ordination on product planning. Centralised decision-making authority over key areas will go to president and electronics CEO Ryoji Chubachi.”
Sony has stated that the restructuring of its business will set it back $1.8 billion as it tried to regain its once-solid grip on mainstream consumer electronics and associated businesses.
Apple’s iPod took massive sales from Sony’s usually strong portable music player offering in the past two years. This has been compounded by strong showings from competing TV manufacturers, with Samsung taking the majority of sales away from what was once another cash cow Sony product range.
Sony will report a financial loss of about $90m on sales of about $65.1bn for the year, following the news. The firm had stated that it would generate a profit of $90m.
And then something funny happened. Howard Stringer, recently promoted to chief executive and shipped out to Japan said, “We have made promises before but we failed to execute them. We must fight like the Sony warriors that we are!” It is unknown if he made his exclamation holding aloft an ancient katana blade, but the comedic possibilities are expanded if one imagines such a scenario.
Something less funny is the loss of 10,000 skilled jobs, amounting to a 7% of Sony’s total workforce. Stringer said that the warriors unlucky enough to be denied the chance to fight would comprise 4,000 from Japan and 6,000 from elsewhere, likely focussing on Chinese operations.
The restructure seemingly misses out Sony Computer Entertainment altogether, instead focussing on Sony Consumer Electronics. Five new divisions will be established, concentrating on TV, video, digital imaging, audio, broadcast and professional products. The Cell Processor that will power the PlayStation 3 and as-yet undisclosed future Sony products will be manufactured by the Semiconductor Business Unit.
Silicon.com reports that “The company known for its Walkman music player, the Spider-Man movie franchise and the PlayStation game console will "eliminate the corporate silos" of its Sony Corporation Network starting on 1 October, and replace it with a new structure it hopes will allow for better co-ordination on product planning. Centralised decision-making authority over key areas will go to president and electronics CEO Ryoji Chubachi.”
Sony has stated that the restructuring of its business will set it back $1.8 billion as it tried to regain its once-solid grip on mainstream consumer electronics and associated businesses.
Apple’s iPod took massive sales from Sony’s usually strong portable music player offering in the past two years. This has been compounded by strong showings from competing TV manufacturers, with Samsung taking the majority of sales away from what was once another cash cow Sony product range.
Sony will report a financial loss of about $90m on sales of about $65.1bn for the year, following the news. The firm had stated that it would generate a profit of $90m.
And then something funny happened. Howard Stringer, recently promoted to chief executive and shipped out to Japan said, “We have made promises before but we failed to execute them. We must fight like the Sony warriors that we are!” It is unknown if he made his exclamation holding aloft an ancient katana blade, but the comedic possibilities are expanded if one imagines such a scenario.
Something less funny is the loss of 10,000 skilled jobs, amounting to a 7% of Sony’s total workforce. Stringer said that the warriors unlucky enough to be denied the chance to fight would comprise 4,000 from Japan and 6,000 from elsewhere, likely focussing on Chinese operations.
The restructure seemingly misses out Sony Computer Entertainment altogether, instead focussing on Sony Consumer Electronics. Five new divisions will be established, concentrating on TV, video, digital imaging, audio, broadcast and professional products. The Cell Processor that will power the PlayStation 3 and as-yet undisclosed future Sony products will be manufactured by the Semiconductor Business Unit.
Companies:
Sony
Read More Like This
Comments
fluffstardx 23 Sep 2005 11:41
1/19
I thought they already had massive problems making enough PSPs and PS3s as it was? This will seriously hinder the production of the new machine, and just be their downfall. After all, Toys R Us have declared PSP and Xbox 360 this christmas' big sellers, and the X360 and Revolution can only get more popular if there isn't enough of the main rival machine to meet demand...
tyrion 23 Sep 2005 12:43
2/19
fluffstardx wrote:
I thought they already had massive problems making enough PSPs and PS3s as it was?
PSP is a product of SCE, specifically mention in the story to be exempt from the restructuring.
PS3 hasn't even begun production yet, so how can Sony have production problems?
This re-structuring is probably in preparation for the PS3 production.
more comments below our sponsor's message
fluffstardx 23 Sep 2005 18:24
3/19
The restructuring's in the company; the production teams are, IIRC, totally separate, and make whatever they're told.
And I'm saying less production lines = less places to make a PS3, and if it does happen that way...
And I'm saying less production lines = less places to make a PS3, and if it does happen that way...
saurian 23 Sep 2005 18:45
4/19
fluffstardx wrote:
And I'm saying less production lines = less places to make a PS3, and if it does happen that way...
What is more worrying is that they are losing money. Thats why they are taking these steps. What restrictions will this place on them??
LordVader717 23 Sep 2005 21:01
5/19
fluffstardx wrote:
I thought they already had massive problems making enough PSPs and PS3s as it was? This will seriously hinder the production of the new machine, and just be their downfall. After all, Toys R Us have declared PSP and Xbox 360 this christmas' big sellers, and the X360 and Revolution can only get more popular if there isn't enough of the main rival machine to meet demand...
With the production capacity Sony has, they have no exuse for not being able to meet demand.
Although they might have genuine problems when they use the cell chip, SCE has a history of undersupplying retailers, despite there being no actual reason for it.
If the PSP, for example, had been out 9 months in America with relatively small sales figures, how could they justify a such a "shortage" in europe, which was clearly artificial.
I have no doubt Sony will try and pull the same trick next year. It's clearly very interesting for the pr if the system is so hot that you can't get hold of it. If it actually has a positive impact on sales is debatable.
I remember when Nintendo had supply problems with the GBA SP in the first week after launch in japan, they pulled back all advertising, and within reasonable time, stores were well stocked, and there was no sign of any shortage when the system was released in the more modest european market hardly one and a half months later.
LUPOS 24 Sep 2005 01:16
6/19
saurian wrote:
What is more worrying is that they are losing money. Thats why they are taking these steps. What restrictions will this place on them??
lets see... M$ looses a ton of cash makign xbox's all these years... whiel sony manages to loos only a little and buy now actually turn a profit... and it was a drastically inferior system (technologically speaking, im not bashing there game paly, take ill take that gripe else where). and now the 360 is comming, and we all can safley assuem M$ will take a loss on it atleast to start... but then, they can afford to... sony has already stated that peopel will eb willign to pay whatever sony charges for the ps3... cause they know its goign to have a massive price tag on it. so the 360 comes out at 4... and the ps3 will be 4x as powerfull (hehehe)... i woudl expect atleast another 100 bucks on top of that... will you pay 500 for a ps3? will the moms and dad os the world be abel to tell 100 bucks worth of difference betwen the two systems when it finaly comes out? plus the revo will probabyl be 200-300 at launch if nintendo holds true to form... if the ps3 doesnt hit big... this coudl mean a world of hurt.
and yes i know that sce is not part of the resturcturing but the company as a whoel posted a loss... the ps department may have made a profit, but it wasnt enough to make up for the pathetic showing in other areas.
but then i could be completley off the mark... im sure youll let me know if i am :)
_____________
SPInGSPOnG 24 Sep 2005 08:09
7/19
fluffstardx wrote:
And I'm saying less production lines = less places to make a PS3, and if it does happen that way...
Thing is, if they have excess capapcity in areas that they are underperforming in, this will cost them money. If they aren't selling enough TVs and Walkmans, what's the point in keeping people sat around not making them to not sell?
Cost cutting in consumer electronics will free up budget to concentrate on profitable areas.
Sony Computer Entertainment is a separate (wholy owned) company. Any amount of losses in the parent company will not affect it. The Sony group as a whole could collapse (this is not likely, and I am not predicting it), and SCE would walk out of it intact.
OptimusP 24 Sep 2005 09:33
8/19
The holding Sony is a huge HUGE beast bleeding to death but because it's so bloody HUGE it takes a good while before it actually dies.
Restructering is needed in that regard and probably is the only option the company has. Sony has divisions that make huge loses and selling them has been speculated a lot,problem is, those divisions are responsible for most of the production of the PSP and upcoming PS3, they can' t sell them so the only think they can do is restructure. I believe Sony will slowly restructure its electronics division in service of the more profitable divisions: movies and games (if they aren't doing that allready).
Key of Sony's survival is the Cell-chip and the reason why the PS3 is rumored to be so expensive: they're not in a position to produce and sell this against a loss. Sony has to stop bleeding as a company (the PSP is not helping in that regard, don't expect price-cuts anytime soon) and a way to do is is to slimdown a lot and concentrate resources on the profitmaking divisions and pushing media convergence to push the whole company into profit.
The PS3 can be succesfull but not in the way Sony wanted it and can kill the company (would take a very long to explain this thoroughly so i'm not ging to) however 'killing' Sony is to hard... before the end comes the company will probably sell certain parts of itself and live on.
Restructering is needed in that regard and probably is the only option the company has. Sony has divisions that make huge loses and selling them has been speculated a lot,problem is, those divisions are responsible for most of the production of the PSP and upcoming PS3, they can' t sell them so the only think they can do is restructure. I believe Sony will slowly restructure its electronics division in service of the more profitable divisions: movies and games (if they aren't doing that allready).
Key of Sony's survival is the Cell-chip and the reason why the PS3 is rumored to be so expensive: they're not in a position to produce and sell this against a loss. Sony has to stop bleeding as a company (the PSP is not helping in that regard, don't expect price-cuts anytime soon) and a way to do is is to slimdown a lot and concentrate resources on the profitmaking divisions and pushing media convergence to push the whole company into profit.
The PS3 can be succesfull but not in the way Sony wanted it and can kill the company (would take a very long to explain this thoroughly so i'm not ging to) however 'killing' Sony is to hard... before the end comes the company will probably sell certain parts of itself and live on.
Joji 24 Sep 2005 21:43
9/19
Sony are resorting to these means for true reasons we might never know but can only guess.
PSP is a good piece of kit but Sony haven't a clue on how to sell properly to the people as far as PSP is concerned. They assumed it would be a walk in the park like PS2 and are playing the price for their arrogant greed to deceive us.
A nine month wait for a PSP, delays are one thing (which we've had plenty of for various consoles) but this is a handheld not a home console.
PSP is a good piece of kit but Sony haven't a clue on how to sell properly to the people as far as PSP is concerned. They assumed it would be a walk in the park like PS2 and are playing the price for their arrogant greed to deceive us.
A nine month wait for a PSP, delays are one thing (which we've had plenty of for various consoles) but this is a handheld not a home console.
fluffstardx 25 Sep 2005 07:56
10/19
I think the real problems begin if HD-DVD wins over Blu-Ray. That's a ton of consoles with an unusable format, straight away. There's a lot of eggs in that PS3 basket; Bluetooth linking, Blu Ray drives, CELL... If any one of these turns out to be a bad thing the whole thing could go up. And if SCE start to die, Sony are in real deep trouble.
I've been reading articles in the paper about this one; seems most of the restructuring is over the double whammy of business loss to Samsung over televisions and Apple over music players. The loss of factories is simply to cut costs; it will slow production of a lot of things, especially as a lot of the production lines left are reserved for PS3, PSP and their new network walkmans.
They really need to keep people's interest in PSP and in particular the UMD format going to ride this one out. And they're looking at the impossible task of beating the iPod too...
I've been reading articles in the paper about this one; seems most of the restructuring is over the double whammy of business loss to Samsung over televisions and Apple over music players. The loss of factories is simply to cut costs; it will slow production of a lot of things, especially as a lot of the production lines left are reserved for PS3, PSP and their new network walkmans.
They really need to keep people's interest in PSP and in particular the UMD format going to ride this one out. And they're looking at the impossible task of beating the iPod too...
saurian 28 Sep 2005 20:30
11/19
LUPOS wrote:
lets see... M$ looses a ton of cash makign xbox's all these years... whiel sony manages to loos only a little and buy now actually turn a profit... and it was a drastically inferior system
but then i could be completley off the mark... im sure youll let me know if i am :)
_____________
I think you are way off the mark because you start defending Sony before you actually try to understand what I put. I was making the point that Sony as a company are making large losses. This loss making has led to drastic cuts. This announcement is the 2nd wave of cuts. The first wave failed.Losses are still rising.PSP is being sold at a loss. PS2 is at the end of its life. PS3 development is costing a fortune. No-one can go on making losses for ever. If these cuts do not send the company back into profit, more measures will be needed. Then, someone at Sony may need to take the decision to drop Blu-Ray, or cut certain features from PS3. That is what I was worried about. The reason why Microsoft made the Xbox such an awesome console is that it had to be way superior (as you acknowledge it is) to stand a chance against such a well known brand name as playstation. The reason why Microsoft will go on innovating and pushing the limits is that they have great competition in Sony. ( which is why Sony have had to try harder this time ).
LUPOS 28 Sep 2005 21:55
12/19
saurian wrote:
I think you are way off the mark because you start defending Sony before you actually try to understand what I put.
defend sony?! HA
i think its amusing that the ever cocky current market leader (by a mile and a half) is currentley flounderign finacially. i dont wish ill to sony... i just wish eveness between them and MS so we get consistent quality and inovation for the forseable future... and i hoep no matter which one peopel buy that they all also pick up a revo... because thats my video game utopia.
check the avatar amigo... i dont do alot of sony deffending... i hope these drastics cuts serve as a wake up call... as far as im concerned they just rested on their laurals for the ps2 and now they have an uphill struggle (to soem extent, mostley cost to produce vs sell) because of it.
____
tyrion 29 Sep 2005 08:03
13/19
fluffstardx wrote:
I think the real problems begin if HD-DVD wins over Blu-Ray. That's a ton of consoles with an unusable format, straight away.
Sorry, just had to comment, this is stupid reasoning. There have been many more consoles that have had proprietary media than haven't.
Say Blu-Ray fails as a general media format. How is Blu-Ray being PS3 only going to affect the PS3 more than NES, SNES, N64, GameCube, Megadrive, Master System, Dreamcast, GameBoy, GBA or DS?
Remember, a Blu-Ray drive will still play DVDs and CDs. With minor tweaking they will also be able to play HD-DVDs. So Sony won't lose out on the general media playing application market.
The bigger question is how are proponents of the HD-DVD standard going to be able to fight against several million Blu-Ray players being in people's homes across the world by this time next year? Doesn't matter if they are only being used for games by that time, the capability is there to play Blu-Ray movie discs.
LUPOS 29 Sep 2005 10:53
14/19
i actually saw a few articles yesterday, in regards to MS and intels deciding to support hd-dvd officially, where in they listed some of their reasons. two of which where that blu-ray had yet to offical state that it would be capabale of playing regular dvd's (let alone hd-dvds), and the fact that the final hd-dvd spec actually claims a max capacity of 30gigs, which out does blu-rays current theoretical limit of 25.
this coudl be all bs, i didnt look into it... but i saw it on the interent so it must be true!
_________________
this coudl be all bs, i didnt look into it... but i saw it on the interent so it must be true!
_________________
LUPOS 29 Sep 2005 11:42
15/19
fluffstardx wrote:
I think the real problems begin if HD-DVD wins over Blu-Ray. That's a ton of consoles with an unusable format, straight away.
i think the problem in question is that sony is a main driving force behidn the blu-ray format, they are not going to just make ps3's they are going to blu-ray players as well. if the blu-ray format lags behind hd-dvd and fails to take the market share necesary for succes it wont stop the hard core from buying ps3's but in the long the younger kids who have to rely on the parents woudl in theory have a rougher time convincing them to get the more expensive system if it doesnt use the cool new hd-dvd format.
which is a real big speculatory if, but a possibility none the less.
_________
tyrion 29 Sep 2005 12:13
16/19
LUPOS wrote:
it would be capabale of playing regular dvd's (let alone hd-dvds),
Well this page on the official Blu-Ray Disc website says.
Blu-ray Disc has the same physical characteristics as DVD and CD, and like its predecessors it also does not require a cartridge. This makes it possible to create Blu-ray Disc products that are backwards compatible with CD and DVD, allowing for a seamless transition to the new technology.
And this FAQ on a Blu-Ray info website says
...several leading consumer electronics companies (including Panasonic, Philips, Pioneer, Samsung, Sharp, Sony and LG) have already demonstrated products that can read/write CDs, DVDs and Blu-ray discs using a BD/DVD/CD compatible optical head, so you don't have to worry about your existing DVD collection becoming obsolete.
So it's possible, and has been demonstrated as such. It's true that the DVD compatibility is not a requirement of a Blu-Ray player according to the spec, but then neither was CD-ROM compatibility for DVD players.
LUPOS wrote:
and the fact that the final hd-dvd spec actually claims a max capacity of 30gigs, which out does blu-rays current theoretical limit of 25.
And as you can see from this page on the Blu-Ray site, Blu-Ray has a 25 GB limit for single layer discs and 50 GB limit for dual layer compared to HD-DVD's 15 and 30 GB limits.
So either Microsoft and Intel were talking out of their arses, or they were mis-quoted in the coverage you saw.
LUPOS 29 Sep 2005 12:42
17/19
i believe i saw it on ign ans somethign on slashdot, which of course links to somethign else... ign being the pinbacle of quality journalism it must have been that intell where talking out of there back sides.
either way i didnt say i believed it... just felt it shoudl be mentioned.
either way i didnt say i believed it... just felt it shoudl be mentioned.
fluffstardx 29 Sep 2005 17:11
18/19
LUPOS hit it; the backwards compatability with DVD will keep it alive, but if Blu Ray fails overall and HD-DVD takes over from DVD as the media everyone uses, without HD-DVD compatability Blu Ray would have been screwed.
But Blu-Ray may be HD-DVD compliant? Wow, they're really taking no chances now... you learn something new every day, they say.
But Blu-Ray may be HD-DVD compliant? Wow, they're really taking no chances now... you learn something new every day, they say.
saurian 29 Sep 2005 20:39
19/19
LUPOS
defend sony?! HA
i think its amusing that the ever cocky current market leader (by a mile and a half) is currentley flounderign finacially. i dont wish ill to sony... i just wish eveness between them and MS so we get consistent quality and inovation for the forseable future...
check the avatar amigo... i dont do alot of sony deffending... i hope these drastics cuts serve as a wake up call...
____[/quote wrote:
defend sony?! HA
i think its amusing that the ever cocky current market leader (by a mile and a half) is currentley flounderign finacially. i dont wish ill to sony... i just wish eveness between them and MS so we get consistent quality and inovation for the forseable future...
check the avatar amigo... i dont do alot of sony deffending... i hope these drastics cuts serve as a wake up call...
____[/quote wrote:
Sorry mate - I owe you an apology - it seems I jumped in before digesting what you said!!
And I agree with you.