Sabyasachi Patra

Sony Electronics Corporation to be established

Sony Electronics Corporation to be established

Sony Corporation has announced that starting from 1st April, 2020, it is going to hive off its Electronics Products and Solutions (EPS) segments comprising the Imaging products and solutions business, Home Entertainment & Sound and Mobile communications into an intermediate holding company called Sony Electronics Corporation. Cameras, lenses etc i.e. photography and film cameras business come under the imaging products business. So in layman’s terms Cameras, TV, mobiles i.e. all electronic products and services will go into one business. Manufacturing, sales, marketing, procurement, logistics etc. i.e all related functions of these products will also go into the Sony Electronics Corporation. So the mobile, video/audio and imaging businesses will now be separate from the music and the film studio business.

This is an attempt to unlock value of the business. Historically many companies have created separate holding companies before selling off a portion/ getting specific investors or to seek collaboration etc.

Daniel Loeb, an American investor with a huge stake in Sony has been putting pressure on Sony to hive off the businesses. In 2019, June he had asked Sony to separate its image sensor business. There has been speculation that Daniel Loeb has increased his stake recently in Sony taking advantage of the drop in share price in the backdrop of Covid 19 led share market fall.



At times conglomerates become too big with too many different businesses and they don’t move fast. Hiving off into separate companies can lead to more nimble footedness. Sony imaging business, after taking over Konica-Minolta and innovating in the last few years, have become a top player. Earlier it was Canon and Nikon in the DSLR arena. Now Nikon has faded. There is tough competition between Canon and Sony in the DSLR and mirrorless space. Sony had bet big on mirrorless and is now infact leading in the mirrorless cameras. From recent announcements (like Canon R5 mirrorless camera with 8K video and Canon 1DXIII DSLR with higher specs than mirrorless cameras) it appears that Canon is hitting back with some high tech products to take back the leadership in mirrorless cameras from Sony.

It is to be seen which direction Sony Electronics Corporation takes from 1st April onwards.

 

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