Sony vs. Samsung

Sony had ever been a role model for many Korean companies, including Samsung Electronics. However, since 2002, the fortunes of the two companies have changed dramatically. Sony’s performance deteriorated, and both the Chairman and the President had to resign in 2005. On the other hand, the CEO of Samsung turned Samsung into one of the most profitable companies in the electronic industry. This is the chart of the two companies’ market capitalization. Sony’s market capitalization started to fall below Samsung since 2002.

This chart shows the annual profit variation of the two companies. Samsung has shown continuous increase in profit while Sony is recording continuous loss. This is mainly due to the drop of sales of Sony and increased sales of Samsung. Samsung has shown a continuous increase in sales from 2002 while Sony has shown a decline. Both these brands lost sales in 2008 due to the financial crisis, but Samsung has recovered so fast and come to its highest-ever sales growth in 2011 and 2012. However Sony’s recovery was not a strong one. It lost sales again in 2010 and 2011.

Let’s have a look at what caused their changing fortunes from different perspectives.

-Product-

Sony:

With the advent of digital technology, Sony’s traditional core businesses walkman, Trinitron TV and audio lost competitiveness. Sony’s poor performance of sales and profitability is mostly result of these products. Another reason for the declining popularity of its product is compatibility. For example, the Trinitron TV Sony produced is not compatible with the ordinary external power source. Its Networkman is not compatible with MP3 format. What’s more, Sony prefers to label his own technology as the industry standard. As long as his technology fails to beat over other players’ technology or turns out to be unaccepted by customers, Sony loses huge market share and its previous investment in R&D gathers no returns. One example is when MP3 format became the worldwide accepted...