The cut-back can be regarded at three levels. At one level it can be regarded as a firm that has over-reached itself, diversified too widely (its acquisition of film studios in Hollywoods has been a disaster) and can no longer manage itself efficiently. This is the fate of many large firms (and even Microsoft cannot be far off this stage now). At a deeper level, Sony's restructuring may be symbolic of the wider malaise that has afflicted the Japanese economy for the past 14 years.
At a deeper level still -- the one I am principally concerned about -- there are no more status goods to come in the electronics field. This is not to say that Sony is incapable of thinking up new products. For a firm that was the first to produce the tape recorder, the transistor radio, the trinitron TV tube, the walkman and the robotic dog, and is still deeply involved in widely-selling personal computers, the playstation and DVD recorders, it is surely not short of new ideas. After all, in association with Samsung, it is setting up what will be the world's largest factory making flat-screen TV in South Korea.
Very briefly let's analyse the significance of these products in terms of economic significance. The first tape recorder, transistor radio and trinitron colour TV were certainly products which, when first produced were quite expensive, were items of some rarity for a while and were certainly regarded as status symbols by the first owners as they talked about them to neighbours and work colleagues. Understandably they had huge sales -- which became even larger as they became cheaper and more widely available to less well-off sections of the population.
The above were true Status Goods.and enabled Sony to pull way ahead of its competitors To some extent, even the walkman was a status good among teenagers -- not because it was so much of a rarity or high-priced but because it was 'cool' to be seen with one, so visible. It was a very useful arrow in Sony's quiver but was hardly of the same potency as the others in promoting economic growth. All the others in the list have had less and less impact as status goods as they came on the scene. Today, several of my friends have massive flat screen TVs but they've never talked about them in order to gain status. They were simply replacements for their old TVs.
Then again, with one exception, all of Sony's subsequent since the tape recorder were, to some extent, cannabilizing the sales of previous products because they are all competing for the same limited free time of the consumer. The one exception is the walkman for the obvious reason that it gives extra time to the invidivual in which to listen to music. I suppose that the next obvious innovative electronic good will be a 3-D TV and Sony and others are researching this new technology intensively. But, once again, this will only cannabilize the sales of ordinary TVs and flat-screen TVs.
Sony will no doubt imporve the quality of its existing products, but all new products from now onwards will be embellishments of previous ones. What Sony needs now is a product that is so fascinating that it will displace the time that is spent with all the others -- and also very expensive to start with as it starts off a powerful cascade of sales starting with the well-off middle-class and working downwards. However, I would suggest that it has probably mined-out a once rich seam of household electronic goods and is now part of a much larger economic problem in modern society. This is: How to produce something which is amazing enough to absorb the time already spent in watching and listening in the home -- and among all classes of customer, too -- and is also expensive enough (and hopefully visible enough also) to be talked about as a status good that causes all one's friends to rush to the nearest store -- as they used to in the 1960s and 70s.
Keith Hudson
Keith Hudson, Bath, England, <www.evolutionary-economics.org>, <www.handlo.com>, <www.property-portraits.co.uk>
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