As Apple and Samsung Prosper, Japan Electronics Company Struggle
As Apple and Samsung continue to fight each other as the dominant smartphone company, Japanese electronics companies are struggling to preserve their business models. Sony, Sharp, and Panasonic were once the top selling electronics companies and outpaced the U.S. rivals. Sharp recently had to announce that they are cutting one-fifth of their employees. The companies still have famous brand names and they still produce some of the best hardware devices, but they do not produce devices that people NEED to have.
The Japanese companies continuously focused on stand-alone products like TVs, phones, and computers, but they did not spend much investment on the software and the way that devices synced with each other. Their products do not work in harmony with each other like the way that an iPhone connects with music and a laptop. The Apple iPhone also interacts beautifully with an Apple TV.
There were several instances where the Japanese was ahead of the curve, but their devices lacked in content. For example, Sony was one of the first companies to create an e-book reader, but they struggled to complement it with useful software and easy-to-download books.
Even though Sharp, Sony, and Panasonic create world-class TVs, their Korean rivals LG and Samsung found ways to create similar products for a far less cost. Sony has not profited in four years and Panasonic lost money in three out of the last four years.
Out of the three struggling Japanese companies, Sharp has it the worst. Managing has had to take a 10% pay cut and employees tok a 7% pay cut. Their stock fell 70% in the last year. Foxconn parent company Hon Hai Precision gave them a life-line by buying 10% of Sharp for $864 million. Since Sharp’s stock dropped even further since the deal was made Hon Hai is in the process of renegotiating.
“We have no intention of giving away a larger controlling share,” stated Sharp President Takashi Okuda said in an interview earlier this month with Nikkei Business Magazine.
Sony and Panasonic started rapidly dropping their TV production. Sony’s life insurance arm was their most profitable division last year. Panasonic and Sharp are selling solar panels as well.This article was written by Amit Chowdhry. You can follow me at @amitchowdhry or on Google+ at +AmitChowdhry