In some ways, the spectacle of Sony’s (NYSE:SNE) recent spate of bad news was sad to watch. First came its acknowledgement last Tuesday that its fiscal fourth-quarter loss was set to double to $6.4 billion. Then came CEO Kazuo Hirai’s press conference on Thursday about Sony’ restructuring, including a layoff of 10,000 employees.
How did such a one-time consumer technology powerhouse lose its way so badly? The company that not long ago created a whole new industry of portable music players (using cassette tapes, not bits and bytes) and the most-after TV sets is now taking nothing off the table as it fights to remain relevant in a wholly transformed competitive landscape.
It can be tough to watch. But it also can be instructive – especially for another company that today is sitting at a similar – ok, even higher – pinnacle of consumer success and rivals’ envy. That’s Apple (NASDAQ:AAPL), of course. And for all its prowess and seeming unstoppability, just a few wrong moves could turn that juggernaut, too, into a sad spectacle.
Yes, several injuries Sony has suffered were largely out of its control. Ten years ago, $1 was worth 130 yen; today it’s worth 81 yen. That exchange rate has severely eroded Japanese profits in the U.S. market. The 2011 earthquake and tsunami that struck Japan also had a serious impact on Sony, shutting down 10 of its factories and seriously damaging at least one.
But these don’t compare to Sony’s self-inflicted wounds. Here are four mistakes it has made and the lessons they provide for Apple if it’s to avoid the once-mighty Japanese company’s fate.
Security: Sony’s Mistakes
Sony suffered a PR black eye, financial losses and gave gamers more reason to turn to Microsoft‘s (NASDAQ:MSFT) Xbox game console when its PlayStation Network was hacked in 2011. PCWorld reports the hack compromised 77 million user accounts and cost the company $170 million. What made the incident even worse was the revelation that Sony had cut network security staff in the weeks before the attack.
Security: Lessons for Apple
Imagine what would happen if Apple’s iTunes Store is hacked and funds get drained from user accounts? There have been increasing reports of fraudulent activity on Apple’s app, music, movie and e-book hub (most likely attributable to users having their Apple ID and password lifted from another site or through a rogue app). But the scenario of a full-on security breach has more than a few people worried — and Apple must make sure it never happens. The iTunes Store is critical to Apple’s success. If it ever had to be closed for weeks as Sony did its PS Network, millions and millions of Apple devices would be unable to purchase content, developers and publishers would lose revenue and Apple would suffer a PR and logistical nightmare much larger than Sony faced.
On the computer front, Apple also must confront increasing threats of virus attacks against its Macs. Witness most recently the Flashback trojan that has infected some 650,000 Macs.