Japanese Electronics Industry Must Consolidate – Ex-Chief of Sony

Further Consolidation Needed Among Japanese Electronics Makers

by Anton Shilov
01/27/2009 | 08:29 PM

Nobuyuki Idei, the former chairman and chief executive officer of Sony Corp., said in an interview that in order to remain competitive, the Japanese electronics industry must further consolidate. There are many problems for the country’s electronics manufacturers at the moment, but during the times of the global economic crisis revolutionary decisions should be made.

 

“In the past, Japan was criticized for being an over-banked country; now it is over-electronics,” Mr. Idei said in an interview with the Financial Times.

In fact, the consolidation of the electronics industry in the country has been happening for several years now: Panasonic recently agreed to take over Sanyo Electric, Toshiba Corp. partly acquired semiconductor manufacturing fabs from Sony Corp. and is about to buyout Fujitsu Limited’s hard disk drive business. In addition, many companies do collaborate with each other by forming manufacturing joint-ventures to build commodity components enjoying the highest possible volume of scale benefits.

Perhaps, the former head of Sony envisions more dramatic consolidations in this industry, when large Japan-based electronics conglomerates, some of which are hundred of years old, will merge?

Mr. Idei also pointed out that the industry should not just focus on producing “stand­alone cars and televisions”, but must mix products with other services in order to stand out. Sony does this with its PlayStation business and will also benefit from the rising popularity of Blu-ray disc technology by getting licensing fees. However, Sony and other large Japanese companies failed to create globally accepted a service like iTunes, which sells music tracks as well as Apple iPod portable digital media players.

Consolidation between various companies would create a lot of new ideas or products, however, execution is crucial when several big market players join forces in a bid to make industry-changing products.