Sony, a representative home appliance company in Japan, was once the "king" that dominated the global electronics market. With innovative products such as the Walkman, PlayStation, and Trinitron TV, it was loved by consumers and established itself as a symbol of technology and design. However, in the 2000s, Sony went down the path of decline due to the failure of the digital transition and the advancement of competitors. However, in recent years, Sony has made a surprising revival and is once again attracting attention from the industry, recording higher profitability than Samsung Electronics. This article briefly and clearly examines the causes of Sony's slump, its recent revival, and the secret to its successful monetization.
The fall of Sony: Why the king of electronics collapsed
Sony's decline was the result of a combination of factors. Until the end of the 20th century, Sony dominated the market with hardware-centered innovation, but it gradually fell behind as it failed to adapt to the digital era of the 21st century. Below are the main reasons for Sony's slump.
1. Failure of digital transition
Sony was a powerhouse in the analog era. Products such as the Walkman caused a worldwide sensation by allowing people to enjoy music on the go. However, as the digital music market grew with the advent of MP3 players and smartphones, Sony failed to respond quickly. While its rival Apple dominated the market with the iPod and iTunes, Sony insisted on its own format (ATRAC) and ignored consumer convenience. This is considered a case symbolizing Sony's failure of digital transition.
2. Advancement of competitors
While Sony was faltering, Korean companies such as Samsung Electronics and LG Electronics grew rapidly. In particular, Samsung dominated the TV and smartphone markets with its semiconductor and display technologies. Sony's Trinitron, once synonymous with premium TVs, lost its competitiveness to Samsung's QLED and OLED. In addition, the Xperia brand also lost its presence in the smartphone market, failing to increase its market share compared to Apple and Samsung.
3. Worst Deficit in History
In 2008, Sony fell into serious financial difficulties due to the global financial crisis. In 2012, it recorded a deficit of 5.7 billion dollars, leading to the emergence of the term "Sony Shock." With the sluggishness of the TV business, struggles in the smartphone market, and inefficiencies in its internal organization, Sony was in a situation where its survival was threatened. The fall of Sony, the pride of the Japanese home appliance industry, shocked both the industry and consumers.
Sony's Resurrection: A 10-Year Reversal Drama
The process by which Sony escaped from the swamp of decline and came back to life was amazing. After about 10 years of restructuring and strategic changes, Sony returned to its heyday in the 2020s. What were the key factors in this revival?
1. Business Restructuring and Selection and Focus
Sony abandoned the typical "do everything well" strategy of the past and focused on areas where it could leverage its strengths. Loss-making businesses such as TVs and smartphones were scaled down or streamlined, and instead, efforts were focused on **image sensors**, **games**, and **entertainment**. In particular, image sensors have become Sony's main source of revenue along with the growth of the smartphone camera market. Sony currently accounts for about 50% of the global smartphone image sensor market, which is also supplied to competitors such as Samsung and Apple.
2. Success of PlayStation
Sony's game business, especially PlayStation (PS), is the main contributor to its revival. The PS4 and PS5 are greatly loved by gamers around the world, overwhelming Microsoft's Xbox. As of 2023, PS5
has sold more than 40 million units, and is generating stable revenue with game software and subscription services (PlayStation Plus). This is an example of Sony diversifying its revenue not only with hardware but also with content and services.
3. Strengthening the entertainment business
Sony has also stood out in the music and movie businesses. Sony Music has global artists such as BTS and Adele, and is generating profits in line with the streaming era. Sony Pictures has also solidified its position in the entertainment market by continuing to enjoy box office success with blockbuster movies such as the Spiderman series. These content businesses have greatly contributed to Sony's financial stability.
4. Premium Brand Strategy
Sony has also targeted the premium market instead of competing on low prices in hardware. Sony's Bravia TV has regained its market share in the premium TV market by competing with Samsung and LG with high resolution and high sound quality. In addition, high-end headphones (WH-1000XM series) and cameras (Alpha series) have been successful targeting professionals and enthusiasts, increasing brand value.
Sony's Monetization: The Secret to Surpassing Samsung
Sony's recent financial performance has improved remarkably. As of fiscal year 2023, Sony's operating profit margin is approximately 10%, exceeding Samsung Electronics (approximately 6%). This is because Sony did not simply increase sales, but focused on high-margin businesses and maximized efficiency. Below are the key secrets to Sony’s monetization.
1. Focus on high value-added businesses
High value-added products such as image sensors guarantee high margins. With increasing demand in various industries such as smartphones, self-driving cars, and drones, Sony is demonstrating unrivaled technological prowess in this field. This is comparable to Samsung’s semiconductor business, but Sony has maximized its strength in niche markets.
2. Synergy between content and hardware
Sony has built a unique ecosystem that combines hardware and content. For example, PlayStation does not stop at selling game consoles, but generates additional revenue through game content and online services. This is similar to Apple’s hardware-software integration strategy, but Sony has leveraged its strong content base of games and entertainment.
3. Cost reduction and efficiency
In the past, Sony was criticized for its inefficient organizational structure. However, under the recent leadership of CEO Kenichiro Yoshida, the company has focused on reorganizing unnecessary businesses and increasing productivity and profitability. This is the background for achieving higher profitability despite lower sales than Samsung.
Lessons from Sony's Resurrection
Sony's fall and revival provide an important lesson for corporate management. Even the strongest companies can collapse if they fail to adapt to the digital age, and a leap forward is possible if they maximize their strengths through selection and focus. Sony did not rest on its past glory, but embraced change and pioneered a new path.
What is the future of Sony?
As of 2025, Sony is growing around three axes: image sensors, games, and entertainment. Having regained its pride as a Japanese home appliance company, Sony is now on par with global companies such as Samsung and Apple. If it continues to pursue technological innovation and content enhancement, Sony's revival will likely lead to a long-term heyday rather than a simple flash in the pan.
Sony's story of decline, revival, and success in monetization reminds us of the importance of change and adaptation not only for companies but also for individuals. This story is inspiring to many, as the keyword "Sony's revival" is at the top of the search results.
