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When it comes to innovation, alas, Sony just does not get it. And this, despite its brilliant CEO Sir Howard Stringer, a UK citizen knighted by the Queen*.
Many years ago, Sony and JVC (Japanese Victor Corp.) raced head-to-head to develop a home video recorder. Sony should have won hands-down. And in fact, technologically, they did. They developed Beta-Max technology which gave a superior crisp picture. But business-wise, Sony lost. JVC’s VHC technology was designed-for-manufacture, and as JVC raced down the learning curve, costs fell, and with them, the prices of its VHS recorders. JVC triumphed. Sony’s superior technology lost to a far better business design. And Sony ultimately was humiliated, having to lease JVC’s VHS technology. When master recordings of videos were made, they used Betamax technology; but our home machines were VHS. 

Today, Sony is locked in a similar duel, this time over e-book’s, with Amazon. Sony’s entry in the race is the Reader, a neat portable device for reading electronic devices, launched by Sony two years ago. It has a great screen, and is restful and easier to read than a compute screen.

Against it, Amazon has launched Kindle. Kindle, with inferior technology, will win – in fact, it already has.


A superior innovation model. Kindle follows Jeff Bezos (Amazon founder and CEO) and his philosophy of avoiding “cognitive overload”, meaning “help people avoid thinking too hard when they buy something.”  Amazon pioneered ‘one click’ shopping. Now, with Kindle, you can easily link to Amazon’s on-line store and download 145,000 titles. Moreover, Kindle connects to a 3G mobile network, so you can download books and newspapers within a minute. Sony’s Reader does not have this feature. 

And Sir Howard? After being trounced by Steve Jobs’ iPod, he has now ordered that 90 per cent of Sony’s devices should be networked, connected wirelessly, within two years.

Two years? Amazon already did it. Too late, Sir Howard.
*Based in part on: John Gapper, Why Sony Lost the e-book battle,  Financial Times,  Thursday August 7, 2008, page 7.

Blog entries written by Prof. Shlomo Maital

Shlomo Maital
August 2008
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