SONY Has Lost Its Way

Sometimes it is useful to be reminded that a great strategy is only great in context.
From the early 1980s and into the ‘90s, Sony was great. The unrivalled master of the consumer electronics world, its name was synonymous with cutting-edge technology, sophistication and desirability.

People had a collective vision back then of a thrilling yet humane future and Sony’s hypercapable, slightly fussy gadgets were its clearest expression. But it was about much more than the Walkman and the Trinitron - everything the company made was of impeccable quality, satisfying to hold and intricately detailed in its functionality.

That last statement is still true today but everything else has changed. Sony still makes exquisite products, but fewer and fewer people get excited about them.

The strategy address recently delivered by the corporation’s new chief executive, Mr Kazuo Hirai, earned press coverage that verged on mocking.

The Wall Street Journal noted that the brand’s “once-sterling cachet has deteriorated”, while The New York Times went further, placing Sony in “a fight for its life” and accusing it of “an astonishing lack of ideas”.

Both observations are correct, but they only hint at the underlying question: Why is the strategy that once served Sony so well now failing so badly? It’s not as if its new cameras take fuzzy pictures or its home stereos fall apart after three months. And the market for consumer electronics is larger than it has ever been.

The New York Times article rightly observes that Sony’s current product line is crowded and confusing, but offering customers a wide array of choices was fundamental to its success in the past.

What changed?

Part of this shift is technological.

Apple’s iPhone — the product often described as getting everything right that Sony got wrong - only comes in one current model and two colours, yet it’s tremendously customisable.

Since the iPhone’s software, rather than its hardware, drives most of the user experience, consumers are not so much using a product designed for them as one designed by them.

This strategy is especially powerful because it replaces a single moment of instant gratification - buying the perfect camera, TV or mobile phone — with dozens of such moments. Every time users install an application or download a song, they experience an emotional impact on par with what they felt when they bought the product.

This suggests a more fundamental explanation for Sony’s troubles: Consumers today care more about experiences, while Sony is still focused on products. It’s been trapped by its past successes.

In the early ‘80s, simply delivering technology in a usable form was still the biggest challenge and Sony got it right before anyone else. The company had an astonishing ability to find the next technical hurdle - a brighter TV, a smaller tape player, an integrated camcorder — and leap over it with grace, before its competitors even thought to try.

In an industrial, product-oriented economy, this was enough. Every year saw new products with unprecedented capabilities.

And as long as each one could do something new, we did not seem to care what kind of experience we had using it.

Plowing through 70-page manuals and fussing with Dolby II and metal/non-metal switches was just part of the deal.

In the experience economy, these expectations are reversed.

Technology is a given and the question “What are the specs?” has been replaced by “What is it like to use?”

Sony’s expertise at making the next great thing has been matched by companies like Samsung and LG, and soon enough they will all be caught by increasingly sophisticated Chinese manufacturers. By not modifying its business model, Sony has been left behind by a world that has changed its relationship with technology.

What is tragic is that Sony still has all the resources to execute well on a new strategy. Its engineering capabilities are impeccable, its research and development resources are highly developed, and it has massive amounts of high-quality media.

The success of the PlayStation shows that it has the ability to deliver a powerful experience through an integrated ecosystem of products and content. But these days, the PlayStation is just another video game platform struggling to keep up with innovative alternatives like the Wii, Xbox and Kinect, and it’s been years since Sony’s other divisions unveiled a real game changer.

What is missing is the strategic vision to emphasise the delivery of powerful and resonant user experiences. Mr Hirai acknowledged several times the need for the company to change, but the goals he stated were still hardware-focused: Sell this many smartphones, that many camcorders.

The user is still missing in this strategy, as is a sense of what Sony stands for and what its vision is for an integrated experience. For Sony, it may be too late.

For other brands, there may still be time to change. Every industry has its Sony, still trying to get ahead by solving a problem that has already been solved. But every industry also has its Virgin Atlantic, its IKEA or its Procter & Gamble: The major player that continues to innovate. Even Microsoft has shown signs of sensitivity to user experience in its latest mobile operating system.

There is nothing magic about innovation, just as there is nothing magic about technology. Both are hard work, but as Sony has shown, all the hard work in the world will not matter if you’re working with a strategy that was framed for an earlier era

Evolving Distribution Channel

The Shanghai branch of China Life Insurance (Group) Company has signed cooperation agreement with Kedi and Alldays convenience stores for the sale of accident insurance in Shanghai. With the cooperation, the 1,420 Kedi and Alldays convenience stores in Shanghai will sell China Life Insurance's five insurance products, including travel accident insurance and traffic accident insurance, via activation cards.

According to a representative from Shanghai branch of China Life Insurance, the five products currently available in convenience stores have good features like clear insurance responsibilities, low prices, and large insured sums. These insurance products are sold in the form of activation cards, which can be activated via the Internet, short message, or phone calls, making the purchase process easy and convenient.

The representative also revealed that if the cooperation goes smoothly, the company will launch more products to provide more complete services to customers. In the future, customers will not only be able to buy insurance products from convenience stores, they can also pay the renewal fees in convenience stores.

Kedi and Alldays are both convenience store brands owned by Shanghai Nonggongshang Supermarket Group.

One Photo Tells All

Reaching Out For Peace

Ungratefull

A "KIND and generous" New York mum donated a kidney to help save the life of her boss - who then turned around after she got what she wanted and helped fire the woman, according to an explosive new legal complaint.

"I decided to become a kidney donor to my boss, and she took my heart," Debbie Stevens, a 47-year-old divorced mother of two, said. "I feel very betrayed. This has been a very hurtful and horrible experience for me. She just took this gift and put it on the ground and kicked it."

In papers filed on Friday with the state's Human Rights commission, Stevens charges that she was clearly set up by Jackie Brucia, 61, her once-ailing boss at the billion-dollar Atlantic Automotive Group (AAG), which operates several new-car dealerships.

Stevens said she first got to know Brucia, one of the West Islip company's controllers, while toiling as a clerical worker for the firm starting in January 2009. Stevens then left the company in June 2010 to move to Florida. But when she returned to Long Island for a visit that September, she stopped by the office and talked with Brucia, a discussion that included Brucia's health problems and "her need for a kidney transplant", the papers state.

Stevens said that Brucia told her she had located a possible donor, a family friend.
But "because she was naturally a kind and generous person, Stevens told Brucia that, if necessary, she would be willing to donate a kidney," the document says.

"Brucia ... told her, 'You never know, I may have to take you up on that offer one day,'" the papers say.

Soon after, Stevens decided to move back to Long Island for good and asked Brucia if she could return to work there. She had a job with the company again within weeks.

Then, two months later, in January 2011, Stevens said, Brucia "called me into her office and said, 'My donor was denied. Were you serious when you said that?' I said, 'Sure, yeah.' She was my boss, I respected her. It's just who I am. I didn't want her to die."

Brucia had been "apparently grooming her to be her 'backup plan,'" according to the papers.

But while Stevens was a close health match for Brucia, she was not a perfect one. So the doctors agreed to allow Stevens to donate her left kidney to someone else in the transplant group so that Brucia could move up the waiting list and get her organ from someone else.

Stevens said she did not realise that she was in for serious pain, discomfort in her legs and digestive problems after the surgery on August 10, 2011. She said she felt pressured to return to work on September 6, before she was ready - even while her boss was still recovering at home.

When Stevens went home sick three days after her return, she said, Brucia actually called her from home to berate her. Brucia did not return phone calls. She was spotted outside her home on Friday getting into a limo with plastic cups and what appeared to be a bottle of pink champagne.

Takaful Malaysia

Syarikat Takaful Malaysia Bhd (Takaful Malaysia), the only pure takaful operator listed on Bursa Malaysia, has been forecasted to see consistent earnings moving forward, thanks to the large regional Muslim population, currently low family takaful penetration rate and its niche expertise.

OSK Research Sdn Bhd (OSK Research) stated in a research note, “The takaful industry has been experiencing strong growth in Malaysia during the last decade on the back of various government initiatives to promote the country as a global Islamic financial centre.

“We see tremendous potential in the life takaful business as demand for healthcare strengthens due to demographic shifts, coupled with the fact that the family takaful penetration rate was merely 10 per cent of the population in 2010.

Takaful Malaysia with a market capitalisation of RM508 million was presently the only takaful operator which offered a 15 per cent no claim rebate for all its general insurance products and selected family takaful products.

In terms of gross takaful contributions, Takaful Malaysia was ranked second in 2011 with a 21 per cent market share. Zooming specifically into general and family takaful, Takaful Malaysia was ranked second for both categories with a market share of 19 per cent in 2011.

OSK Research expected more competition moving forward especially from bank-backed takaful operators, considering that they can distribute their products aggressively via their branches.

Malaysia’s penetration rate for overall life insurance in 2010 stood at 41 per cent of the population, or 2.8 per cent of gross domestic product (GDP), which is low compared with that in developed nations such as Singapore (6.1 per cent) and Japan (7.5 per cent),

Meanwhile, the penetration rate for takaful in Malaysia was about 10 per cent of the population of which the Muslim segment comprised more than 60 per cent; this indicated a large untapped market.

“We believe that the life insurance industry will grow at more than eight per cent annually as its growth rate is usually two to three per cent above the country’s GDP, while the takaful industry should continue to enjoy a double-digit growth of 20 to 30 per cent as the population becomes more familiar with the concept of takaful insurance moving forward.

OSK Research also believed the group’s Indonesian operations offered immense potential as the family takaful penetration rate stood at only one per cent of the population in a country with more than 213 million Muslims.

Takaful Insurance Deceleration

Growth of the takaful or Islamic insurance business is slowing, industry statistics show, increasing pressure on the sector to boost efficiency, roll out new products and explore new markets.

Takaful, which has its core markets in the Gulf and southeast Asia, is one bellwether of consumer appetite for Islamic finance. But profitability has been hit by fierce competition and rapid growth of workforces at takaful providers in past years. The industry's big challenges include building product awareness and making consumers realise the importance of saving over the long term.

The market opportunity is significant, according to a report last year by Swiss RE; conventional insurance accounts for 83.1 percent of all premiums written in Muslim countries, it estimated.

Meanwhile growth in Bahrain and Malaysia, regarded as the most well-developed takaful markets, is also showing signs of flagging, though it still outpaces conventional insurance.

Malaysia has proved more resilient but has followed a similar trend, according to data from that country's central bank. Takaful assets grew 18 percent in 2010 against 28 percent in 2007.

The deceleration could be hard to reverse because of shrinking sales force in the industry. The number of employees involved in general takaful sales in Malaysia peaked at 32,997 in 2009, when it soared 107 percent from the previous year; but it contracted 5 percent in 2010, while staffing for the conventional insurance industry fell just 2 percent.