By Ingrid Lunden
So the reports have proven to be true: Sony (NYSE:SNE) has now officially said that it will be reducing its headcount by 10,000 people worldwide, some six percent of its workforce, as the struggling electronics giant reorganizes under new management and its new "One Sony" plan.
Sony says the employee reductions will be made over the course of this fiscal year, and will also include some employees leaving the company through sale and transfer. Meanwhile, the organizational restructuring will see Sony strengthen its focus on the core units of digital imaging, gaming and mobile; attempt to turn around its ailing TV business and expand in emerging markets. Altogether Sony estimates that the restructuring will cost it ¥75 billion ($926 million).
Sony has a huge task ahead of it: it is coming into this new financial year (which started on April 1) with a $6.4 billion loss for FY 2012. Once a gold standard for consumer electronics, the company will have to work hard to convince those who have strayed away from the brand that it is still current and still setting the pace in the field.
Although Sony is calling its plan "One," there are actually five different areas that it says it will tackle under its new management (that in itself could make this strategy problematic). They include strengthening core businesses (Digital Imaging, Games and its new Mobile division); turning around the ailing television business; expanding in emerging markets; the generic area of creating new businesses and accelerating innovation; and realigning and optimizing the business (the last is where the layoffs come into play).
At least one of these initiatives - innovation and new business - will see Sony moving into new areas altogether like medical technology; another - emerging markets - will be a challenge because of how it will impact margins for Sony's traditionally not-cheap products; and yet others, like mobile (and possibly TV if reports are to be believed) will see Sony face the formidable task of going up against the likes of Apple (NASDAQ:AAPL), which has effectively replaced Sony as the pace-setter for the rest of the pack, although as we have seen in mobile Sony is attacking the new business with gusto.
Through this, Sony says it is aiming by 2014 for sales of ¥6 trillion in electronics - with 70 percent of those sales coming from imaging, games and mobile - on overall sales of ¥8.5 trillion by 2014. Sony is positioning digital imaging, game and mobile as the three main focus areas of its electronics business and plans to concentrate investment and technology development resources in these areas.