Sony: “We’re Not After Marketshare” – But Is It the Right Strategy?

Sony CES 2016 - Mike Fasulo - Life Space UX

One of the major takeaways from the Sony keynote at CES 2016 was when Sony Electronics COO and President, Mike Fasulo, took to the stage. Beyond a handful of jokes that never landed properly with the crowd and some dazzling product announcements like the X930D series of 4K HDR TVs Sony would be releasing this year, Fasulo was keen to point out the direction of the company in 2016.

 We’re not after marketshare. We’re after delivering to the customer the best experience through audio and visual quality, and by doing so we’re making money. 

Nearly 3 weeks later and I’m still not sure what I make of this.

It’s no secret that Sony hasn’t been doing well for some time now. PlayStation aside (and even that was turbulent for the company during the PS3 era), Sony hasn’t had a hit consumer electronics product for over a decade. I mean really, think about it. During that time, its competitors have been able to bring to market a plethora of hit products from established companies like Apple and Samsung to much smaller ones like GoPro and Sonos. What these companies have in common is that they’ve been able to knock Sony out of a field they were once dominant in – or at least known for, or should have been known for.

When you think of phones and tablets, Apple comes to mind. If your friend or family member is getting a new TV, it’s likely a Samsung, and everybody who wants to do some extreme and record is likely purchasing a GoPro. Though this is not always true, perhaps worse for Sony is that in many of these product categories, they make the superior product and yet they’ve completely fallen out of the consumer psyche when it comes to electronic purchases.

Sony knows this and has referenced it during their last two CES keynotes, but only this year did the company make a statement that took the problem head on. In short, Sony is no longer interested in chasing the entry level consumer market where price is the only sales driver. This is a market that was once flooded by Samsung and now by Vizio where the only way to a make a profit (and that’s oftentimes not guaranteed) is by selling units in large volumes.

Sony instead now wants to target the more premium market where they know unit sales will be lower, but hope that in turn, margins can be higher. After all, wealthy clientele are usually more willing to pay the extra premium on the devices that have been stuffed with new and innovative features. But hasn’t Sony always been doing this?

Starting in the early 2000’s Sony began to follow the marketshare path by creating lower-end products in all of their product ranges. From VAIO laptops to Cyber-shot cameras, Sony began to have more and more entry models. This is even true today where you can purchase a 40-inch Sony HDTV (R510C) for just $449 – but during this time, Sony has never once stopped offering premium products. The XBR line has never gone away, the Alpha series has never diminished and yet Sony has seen their mindshare among consumers diminish further and further.

With their CES announcement, Sony is signaling to us that they want to focus on the premium market – a move which I fully support. Chasing the low-end market is a fool’s errand as there will always be new players in the market that can produce something cheaper or are willing to take a financial hit for that mystical mindshare. Ultimately, even they will see their business disrupted; just ask Samsung who chased Apple for years with wannabe products and now has seen their profits collapse as they’ve been squeezed out of the premium market by Apple and pushed out of the entry segment by Chinese firms. So if chasing marketshare for the sake of marketshare isn’t the answer, surely selling premium devices is, right? Sort of.

Sony_Retail_Store_Beverly_HillsThe problem that Sony faces is that consumers hold little regard for brand and Sony has little power to shape consumer interest. After all, Sony marketing is nearly nonexistent and the company has closed all of their retail stores, a key part of helping educate consumers about your products and allowing them to experience them the right way. While visiting an Apple kiosk at a Best Buy is better than the traditional rows of products on display, nothing beats going to an actual Apple Store, especially their flagship stores. While Sony stores of the past were built around the old retail mindset, it wasn’t until their Century City store opening that the company truly figured out a proper retail strategy. Unfortunately for them, by then, the company’s finances were at their worst and the retail location wasn’t in the best of spots.

On top of that, Sony no longer offers a sales portal and instead relies on websites like Amazon, Best Buy, and B&H Photo to sell their products. The problem this creates for Sony is that they have no direct relationship with consumers who are then free to enter any store and be persuaded to purchase any brand they see presented to them.

To make matters worse for Sony, during this last decade, as their mindshare has dropped with consumers, so has their premium stature. Again it’s been Samsung who controls the premium TV market with all sorts of sizes and crazy contraptions – keep in mind, I’m not arguing that their products are better – and it’s Sonos who controls the wireless speaker market. As Sony’s presence continues to diminish from consumer minds (after all, this is what a lack of hit products and advertising does to a brand), so does the probability that they’ll be recommended.

You see, when you’re at Best Buy or Costco, who do you think are the people recommending products? Kids who’ve been raised during the last 10-15 years and guess what brands they’re used to seeing and using? Likely not Sony. In a weird way, Sony is like Microsoft. It’s the thing your parents used to use and swear by but it’s not what you or your friends own and use.


This is then when Mike Fasulo’s comments matter the most, right? That Sony isn’t looking to chase the Best Buy and Costco consumers – that they want the more premium-minded consumers. But the same problems that I listed above still plague Sony, even in a more premium market. I live in LA, a city that’s littered with high-end home theater stores and Magnolia divisions from Best Buy – but guess which brand isn’t likely to be recommended to consumers? Sony. Trust me, I’ve been into plenty of them and 10/10 times, I know more about the Sony products than they do. In fact, just a few months ago, I had to talk the Magnolia stores sales staff in Woodland Hills into opening a Sony ST9 so my parents could actually demo it compared to the typical JBL or MartinLogan they want to push. Needless to say, we walked out with the ST9 and everybody in the store was blown away by its sound. Maybe they’ll introduce it to the next set of people who walk into their store.

The general public, which powers the sales force across retail, has had little interaction with Sony for over a decade. After all, we tend to recommend products that we ourselves use, right? The fact that Sony doesn’t understand marketing and has no direct sales channel with which to cultivate a consumer relationship is a direct contributor to the position they find themselves in now.

It’s not that I have a problem with Sony looking to realign their brand with the premium market. What I’m having a problem with is that their current vision only consists of that goal with no meaningful way of getting there. After all, you need not look any further than Apple – a company that sells premium products and is able to do so in large volumes; but they certainly didn’t get there by creating their products in a vacuum. Between their own retail vision and partners, robust online store, and top notch marketing, Apple is able to command its products onto the consumer with each new launch. Even if Apple is the outlier, we can look at a smaller company like Sonos who has been able to achieve relative success in their own product categories.


I would not, however, argue that Sony needs to copy Apple’s every move and product – again, just look at Samsung. It worked for the company for a few years but eventually, the entire scheme collapsed on itself with profits down nearly 60%. Instead what Sony needs to take away from Apple is that their success isn’t an accident; it’s part of a very calculated and cultivated plan that’s been in the works for a long time.

Heck, if Apple wasn’t able to sell in such massive volumes, their profit margins would be far lower than what they currently enjoy (around 35-40%) and the only way for them to offset the difference would be by raising their product prices. While it’s fine that Sony wants to focus on more premium products, with it also comes lower volumes produced which means higher component costs which mean higher unit prices which usually means lower sales.

That is, unless Sony is able to solve their true problem – consumer awareness and recognition of the brand – which in turn can help drive sale volumes, which means better component costs for Sony which means better profits. After all, who says you can’t sell premium devices at high volumes?


Do you think Sony will find their true footing by concentrating on premium products?

  • Victor Ling

    I totally agree with this article…it has been the breakheart of many sony fans that they simply do not have the marketing power they used to. You can say this of the general Japanese consumer electronics industry over recent years. Japanese products, along with sony, used to mean the best of the best, impeccable design along with high performance, top notch hardware and class leading quality second to none. Now, the world general consumers have thought, hey, its not Japanese but this Chinese 4K TV that is half the price of a Sony will do me fine. Which then leads to Sony along with many other japenese brands, having to downsize and sacrifice r&d and innovation just to squeeze out a little extra profit. I think that Sony is pretty much japans last hope for a technology company that has a global footprint. Without Sony, Japanese consumer technology is almost doomed. Everyone will/has switched to Apple. This isnt to say Sony isnt innovative, they are inching every bit closer to their former selves, intorducing great tech like hi res audio, LDAC hi res streaming to Bluetooth, first to have waterproof phones, ps4, remote play. They introduced the worlds first 4K phone and all people could say is the 4K isnt on all the time so oled is better. Such a shame. Im all for people choosing whatever technology suits their lifestyle, its just a shame to see such a great company be let down by poor consumer marketing.

  • Victor Ling

    Oh, and just to add one more thing, the Sony short throw projector is the stuff dreams are made of…now if Sony can actually get this into the general population not just Sony fans it would be a phoenix revival…

  • ricardo perez

    If Sony concentrates on premium hardware products than no. Software is the future, Sony needs to fire all their 90’s mindset of management and realized that people don’t care how the product looks as long as it works. Samsung is starting to invest in tizen. Sony needs to unify all their products through software and networking. They need to exit the tv business and make a set top box like apple. They can make more money through online sales than expensive tv’s. Sony should sell of Sony mobile and Merge Sony electronics with PlayStation. They can brand all heir headphones and speakers PlayStation and they would sell more.

  • ricardo perez

    Sony electronics is dead. Their video products are dead because steaming services are replacing them. Their cameras are dead because smartphones cameras are getting better and professional cameras are a niche. Sony is better of quitting the camera business and invest in better sensors. Sony should make the ps4 as the all in one device to buy than have Sony dvd’s and blue ray players. Also, quit the tv business. they need to make PlayStation as the set up box or app tow own to buy entertainment. Lastly, Sony has good audio products, they can be renamed PlayStation audio products.

  • Martin

    I agree with your article as well and with Victor. I think you hit the nail on the head with store closings and lack of consumer knowledge. When the stores starting closing all over the country, I knew Sony was not helping themselves and when they got rid of their online store, I knew it was really bad. I mean I had a sony finance card and a sony visa. Both worthless. I replaced them with my Amazon card. I don’t think they realize the reverberations caused by store closures and no marketing in the states. I just think Sony gave up on America and tossing scraps our way in the hopes something sticks. And there is no excuse on their part… they own a movie studio… they can easily blast sony products before every movie and that would cost them nothing. And yes it’s a shame…. their products are usually far superior than other companies including apple but the consumer market is often about the name brand. Like I said, I pretty much think Sony has given up on the US market and to a certain degree I can’t blame them. It’s got to be frustrating to see a rival with a toy phone clearly inferior to Sony phones selling like hotcakes.

  • The problem is that the PlayStation branding is too ‘childish’ for Sony to be able to sell expensive items under it. For that reason alone, the two divisions will always be separate. The same isn’t true for digital content however

  • Yea, I wish I could get my hands on the numbers but these half attempts at the US market like the Xperia Z5 to me feels like it’s costing Sony more money than bringing in.

  • What the Japanese industry missed was software. Hardware has gotten to a point where many things are good enough and what differentiates things is software. The Chinese are able to come in and say “we don’t get software either but we can make that ‘good-enough version’ for cheaper than everybody else. So they win consumers that way and other firms, say Apple can come in via software and pull in the top-end of the market that way. Leaves Japanese firms in a pickle

  • The Short Throw is an absolute dream. I’ve seen it the past few years and it’s absolutely a fantastic piece of hardware. Now how much market there is for something like that? Not too sure.

  • ricardo perez

    I never understood why Japan hates software?

  • It’s not that they do, it’s just a very very different culture. Almost like how in Japan, anime is for kids and adults but in the West, we consider anime as just ‘cartoon’ with material that can never be for adults

  • Michaux-O

    Really spot on article, Sohrab. They have stopped chasing the masses, and that is both slightly sad and just the reality of the company and their marketshare these days. I admit I fall into the category of being seduced by high-end Sony products and being rather obsessed with the company and their fortunes. My love of Sony is combination of factors. Part nostalgia as I grew up with a father who only bought Sony electronics, and I was weaned on Walkman, Watchman, Triniton, PS One, etc. I also just love their industrial design. They make such beautiful hardware. Looking around my living space, I have fully bought into the Sony ecosystem. I have a KDL-47W802A Bravia TV hanging in my living room with a PS4, PS3 and MDR-MA900 headphones attached to it. I also own two PS Vitas, and if I was pressed, I would say the Vita is my favorite product Sony has ever released. On the audio side I have my Walkman A-17 hooked up to my SRS-X9 and MBR-1ABT headset. I recently bought a lovely green Xperia Z5 to replace my lovely green Xperia Z3 compact. I also own the Xperia Z2 tablet. I have a Smartband talk on my wrist. Just last week I purchased the MPL-CL1 laser projector, and man, is that a cool device! I am super excited about their forays with the Lifespace UX line, and of course, have anticipation building for PS VR. Now, before you guys think I’m totally loco and/or wealthy, I should point out that I received a number of these items for “free” from points accrued through the Sony Rewards program. I’m a little worried about the future of that program in the U.S.A. It’s only a matter of time before the Rewards program goes the way of their retail/online stores. Looking back on this post, it seems more like boasting than contributing salient points to the discussion. Nevertheless, I am an example of someone that buys their premium products and has deep brand loyalty. My friends all make fun of me for my Sony obsession, but for me, Sony is the one and only. Thanks for keeping us informed, Sohrab and the Sony Rumors team.

  • Koreans don’t get software either. Read some Samsung employee revelations about senior management not getting software at all. Hardware is brilliant, but software is horrible. Same applies to almost all of the Japanese and Korean companies, even automotive. Look at Lexus for instance – very reliable cars, but horrid, awful, disgusting 10-year-old software and infotainment units even in MY2016/17 top of the line models. Infiniti – same, Acura… well, it’s a me-too brand so… Almost like a galapagos syndrome for the software side of the things.

  • Martin

    Your not loco.. I have five sony tv’s one of which is 4k in each room in our house/ a the smartwatch X10, Xperia Arc, Xperia S ZL z3, PS 1, 2, 3 and 4, vita, Tablet S, Tablet Z, Tablet 4, Sony alarm clocks in every room, Vaio Desktop, three Vaio Laptops, Sony headphone, two sony sound bars, sound base, receiver on and on and on. Wait maybe you are and maybe I am 😉

    Like you, my mom planted the Sony seed in my head with her affinity for Sony products. MY MOM! Then growing up with the walkman set me on my path. It only grew stronger when I got disenchanted with Apple’s DRM. Abondoned apple and embraced Sony. Sadly… Like Sohrab said, Sony is a mom and dad company despite it’s clear superiority. Apple is the “in” thing with the kids despite it’s inferiority.

  • Yea, I kind of lump Samsung under Japan in the sense that they aren’t Western like Apple but certainly not Chinese centric where they are simply trying to produce cheap products for the sake of marketshare.

  • Thanks so much for your kind words and that’s why this site exists, for readers like you. Because damnit Sony makes some wonderful pieces of hardware.

  • Chinese brands don’t expand to the west for a reason – they know most people here are still not ready for a Chinese TV or phone. Their QC and blatant disrespect for design patents will land them in very hot waters in NA or most of western Europe right off the bat. We’re used to Korean electronics and cars. Chinese… not until they shake off the stigma of communist-slave-labour-polluters-and-thieves that we fought and killed not long time ago. Not that korean companies are any different, Samsung itself has stolen a lot of tech from Japanese companies and even their neighbors. They get away with it because Samsung is a state within a state, also troubled with corruption and “family business”, which are acting more like criminal clans than legitimate enterprises. But hey, they are capitalist and christian, they must be good! /s

  • Michaux-O

    Ha! I think you have me beat there, mate. I’ve always joked that I am single handedly keeping the company afloat, and so it’s good to know there are others out there. It certainly makes me feel better about my spending habits. Obviously, we are the exception rather than the rule.

    I think it’s only a matter of time before Apple loses its status. Personally I find iPhones so boring with their cookie cutter sameness. I don’t get the appeal, although I suppose their software is pretty slick in their walled garden there. Don’t even get me started on Beats headphones.

    I imagine Playstation is Sony’s only real hope to regain some of its edge moving forward. They certainly aren’t going to sell the kids on hi-res audio…

  • Yea, the thing with Hi-Res Audio is, the debate aside of whether it’s actually any good or not is that consumers just don’t care which defeats all other arguments. Nobody is saying “I need to have this” and the ecosystem around it is simply terrible.