Analysis: Sony banks on a digital Christmas

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The good news

Many millions of people across the world have not stopped buying Sony’s Bravia LCD TVs, Cybershot digital cameras, Vaio laptops and Walkman MP3 players.

But the company now says it is going to sell not quite as many as predicted. Sony cut its full-year forecast for television sales to 16 million units from 17 million, and trimmed the projection for digital-cameras to 24 million from 26 million. That’s still an awful lot of gadgets and more than twice the number of TVs it was selling two years ago.

The bad news

Here is the scenario that epitomises the problem Sony and all the other consumer electronics giants like Panasonic and Samsung are facing.

Recently, when people have been buying new homes, it has been an easy step to buy a new flat-screen TV. House purchasers thought: “What’s a couple of thousand pounds for a new 50-inch TV on the wall to go with my minimalist decor and fancy lighting?” With the market turmoil and house purchases in free-fall, those days are gone. And with the Beijing Olympics behind us as well, the likes of Sony are now looking to the World Cup in 2010 to provide the next big boost for TV sales.

However, Sony may be better placed than most to deal with the downturn because of its unique ability to leverage its entertainment business into hardware sales with precisely the sort of “bundling” deals that appeal to cash-strapped customers in tougher times.

More bad news

Sony has been fighting hard in the gaming business. The company says it is on track to meet its target of selling ten million PlayStation 3 game machines this year. In Japan the new PS3 console is doing a roaring trade.

But the console is not yet available worldwide and in the UK, the Christmas predictions for console sales make unhappy reading for Sony executives. Figures from data specialist GfK Chart Track and retailer The Game Group show that as of September the PlayStation 3 has reached 1.4 million units, Microsoft’s Xbox 360 2.3 million and Nintendo’s Wii 3.6 million units.

While PS3 and the Xbox has shot up by more than a million units in a year, the Wii has put on 2.5 million sales. In the battle of the handhelds, the Nintendo DS has doubled its units sold to 7.1 million units in a year, leaving its rivals far behind.

Gaming sales are about more than just consoles and Sony is still hoping that sales of highly profitable games for its platforms will reap rich rewards this Christmas. So far this year, gaming has shown remarkable resilience to the economic downturn as consumers have bought cheap home entertainment rather than go out.

by
Leo Lewis and Mike Harvey (Timesonline)

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Through out my years, Sony has been a passion of mine.

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