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""Transformation 60"is a road map for transforming Sony into a global company of the 21st century for the year 2006, Sony's 60thanniversary while continuing to be a company that evokes fascination and excitement, the management team is working together to build a foundation for future growth."

- Sony¹

Introduction

Arguably the world's most-admired consumer electronics firm, Sony faced various concerns in the early 2000s. The company, which made a host of products, including PCs, digital cameras, Walkman stereos, and semiconductors, had seen its market cap erode from $138 billion in 2000 to about $35 billion in 2004. Since 2000, Sony's annual sales had increased by only two percent while average profit margins had remained at one percent. In the video gaming market, where its PlayStation was the leader, Sony faced tough competition from Microsoft and a resurgent Nintendo. Though PlayStation dominated the video game market, sales of other electronics (DVD recorders, TVs, and computers) and music had dropped sharply.

Apple seemed to be well ahead of Sony in online music. Competition from low-cost players such as Samsung and LG was increasing. Weak consumer demand and price wars, along with restructuring charges had adversely affected the company's financial performance.

In April 2003, matters came to a head when the company suffered what was popularly called "Sony Shock." Earnings were adjusted downward as Sony declared a loss of $970 million and thousands were laid off. Sony launched a restructuring effort termed "Transformation 60" that began in October 2003 and would extend through 2006...

Excerpts >>

1] Sony Annual Report 2004.

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