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After a decade of struggle, the year 2011 was
supposed to be a comeback year for Sony.
The consumer electronics a n d entertainment
giant had one its best batches of new prod-
ucts ever heading for store shelves. Even
more important, Sony was heading back into
the digital big leagues with the l a u n c h of a n
iTunes-like global digital network that would
combine Sony's strengths in movies, music,
and video games for a l l its televisions, PCs,
phones, and tablets. Analysts forecasted a
$2 billion profit. "I really and truly believed that
I was going to have a year to remember," says
Sony's chairman Sir Howard Stringer. "And I
did, but in the wrong way."
Instead of a banner year, 2011 produced a
near-perfect storm of environmental calamities
for Sony. For starters, in March 2011, eastern
Japan was devastated by a mammoth earth-
quake and tsunami. The disaster forced Sony
to shutter 10 plants, disrupting operations and
the flow of Sony products worldwide. In April,
a hacking attack on the company's Internet
entertainment services— the second-largest
online data breach in U.S. history-forced the
company to shut down its PlayStation Net-
work. Only four months later, fires set by rioters
in London destroyed a Sony warehouse and
an estimated 25 million CDs and DVDs, gut-
ting an inventory of 150 independent labels.
To round out the year, floods in Thailand shut
down component plants there.
When the rubble was cleared, Sony's
projected $2 billion profit ended up as a
$3.1 billion loss — the largest in 16 years. That
loss marked a three-year streak of losses that
had begun with yet another environmental
upheaval -the Great Recession and global
financial meltdown of 2008. In mid-2012,
Sony's shell-shocked new CEO, Kazuo Hirai,
spoke out publicly about Sony's "sense of
crisis," projecting yet another annual loss in
excess of a billion dollars.
There's no doubt that environmental
unforeseeables have dealt Sony some heavy
blows. But not all the blame for Sony's woes
goes to uncontrollable environmental forces.
Sony's current difficulties began long before
the recent string of events. More to blame than
any natural disaster has been Sony's longer-
term inability to adapt to one of the most
powerful environmental forces of our time-
dramatic changes in technology.
Interestingly, it was Sony's magical touch
with technology that first built the company into
a global powerhouse. Only a dozen years ago,
Sony was a high-tech rock star, a veritable mer-
chant of cool. Not only was it the world's larg-
est consumer electronics company, its history
of innovative products- such as Trinitron TVs,
Walkman portable music players, Handycam
video recorders, and PlayStation video game
consoles-had revolutionized entire industries.
Sony's innovations drove pop culture, earned
the adoration of the masses, and made money
for the company. The Sony brand stood for in-
novation, style, and high quality.
Today, however, although stil an $8-
bilion company, Sony is more a relic than a
rock star, lost in the shadows of high-fliers such
as Apple, Samsung, and Microsoft. Samsung
overtook Sony as the world's largest consumer
electronics maker nearly a decade ago. Sam-
sung's sales last year bested Sony's by 50 per-
cent, and Samsung earned profits of $14 billion
while Sony lost $3.2 billion. Likewise, Apple
has pounded Sony with one new product