Sony - Taking its Eye off the Market?

Image: PlayStation 2. The market for games consoles is reaching saturation point and sales are slowing down. Copyright: Andy Culpin, stock.xchng

Sony are well known for high quality consumer electronics - hi-fis, the Walkman, Discmans, personal digital assistants (PDAs), televisions, DVDs, laptops and of course the PlayStation. Sony have been at the leading edge of these technologies for many years, winning plaudits and awards for its innovative technology. Imagine the horror of the financial world when the company announced a loss of nearly £600 million in the first three months of 2003! It has now re-assessed its markets and strategy and is looking to restructure, cutting up to 13% (20,000) of its workforce worldwide.

There have been a number of problems Sony have faced - in some cases highlighting how easy it is to misread market signals:

• Firstly, PlayStation 2 (PS2). PS2 is far and away the biggest selling games console - with unit sales in excess of 51 million, it is way ahead of its rivals Game Cube and X-Box, who each have sold around 9 million units. But the market is reaching saturation point and sales are slowing down. It has introduced the new 'EyeToy' - a web cam that sits on top of the television and enables gamesters to become physically involved in the games they play through the use of motion sensing technology. The EyeToy shipped over one million units in the first three months of its launch in Europe and has now been launched in the United States and Japan.
• Secondly, flat screen televisions. In 2002, 1.4 million flat screen televisions were sold. Sony did not see the need to get into the market and continued to focus on traditional cathode ray tube (CRT) televisions. Sony's rivals, especially Samsung and Matsushita, both had a different approach and invested in this new technology. The market for flat screen TVs is estimated to grow to over 19 million in the next three years. Sony got left behind and attributed much of its problems to this 'oversight'! In addition, Matsushita has stolen the market for DVD technology making large profits when Sony have been looking forward to only moderate yearly profits!

Banks go Phishing!

Halifax and Barclays have both been victims of a scam known as 'phishing' whereby customers are persuaded to give up personal details about their accounts, credit cards and bank details over the Internet. The details are requested by fraudsters who then use the information to raid bank accounts, costing individuals and banks millions of pounds.

Such tactics are not new, but they have been growing and are affecting a wider range of companies - NatWest and e-Bay are another two companies whose customers have been contacted. The e-mails may direct customers to the company 'home page' - a mock up of the real thing - where they are asked to enter personal details. The fraudsters may then use the accounts to draw money directly, purchase goods illegally or launder illegal money through them.

Image: A Halifax credit card. Banks highlight the need to keep bank account details private and secure. Copyright: Marcus Corner, stock.xchng

The Atkins Diet

Image: Demand for eggs (high in protein) has risen whilst demand for potatoes (high in carbohydrates) is down; all attributed to the Atkins Diet.

Many top celebrities are undoubted role models and most are the personification of what we all want to look like - if you are male, tall, bronzed, dark and handsome, or blonde and rugged; if you are female, slim, attractive and curvaceous. It is hardly surprising, therefore, that the remainder of the population seek out remedies that will get us closer to that ideal. There are thousands of diets but one in particular has seemed to reach the national consciousness - the Atkins Diet.

Devised by the late Dr Robert C. Atkins in the US, it advocates reducing carbohydrate intake and increasing consumption of protein with the result that the body burns off fat rather than carbohydrate. The likes of Geri Halliwell and Jennifer Anniston, amongst others, are said to be advocates of the regime.

The results on businesses, however, have been quite startling - demand for wheat and flour has gone down, sales of pasta products have fallen and demand for high protein foods like eggs and red meat have risen. Marks and Spencer has reported sales of its convenience foods have fallen - many of which are pasta based! Unilever has reported that sales of its 'SlimFast' dietary product has fallen and many major companies are getting wise to the Atkins way of thinking and are introducing new lines to cater for Atkins adherents, including Tesco, KFC, McDonalds and Michelob beer.