Sony Car Navigation Systems
... Key issues facing the organisation 19 Alternative Strategy Analysis 20 Strategic recommendation, 21 Strategy and Objectives 22 Objectives 22 Substrategies 23 Economic Summary 25 Control 27 Summary of major support activities needed 27 Bibliography 28 Supportive material in appendices 29 Executive Summary Sony has lost its market lead in the Japanese Car Navigation System market, and is poorly situated in the emerging markets of Europe and the USA. This position has occurred because Sony has been out-innovated in the Japanese market and has not focused on the requirements of the new markets, where its products are too expensive and do not offer required features. The key issues faced are: · What is the role of the NaviKen software standardisation effort in the lack of innovation speed of Sony? Should Sony abandon its commitment to industry standardisation? ... · How can Sony grow the market in the U. ... Introduction The Sony Corporation was founded in 1946 by Akio Morita and Masaru Ibuka in Tokyo. ... Internationally, as well as in Japan, Sony was often first to market with technological innovations that set industry standards. In the past, Sony only significant failure came in the early 1980s (Jain, 2000:704), when its Betamax format VCR lost out to VHS. This gave Sony’s competitors such Matsushita and JVC time to develop a different VCR format, VHS. Although Betamax was generally considered technically superior, VHS soon became the industry standard, and Sony lost its early lead in the profitable VCR market. The bad experience with Betamax convinced Sony that technological innovation alone could not insure market dominance, and that the match between hardware and software was critical. Sony organizes its business into 10 divisions, including Display, Home Audio Visual, Information Technology, Personal AV, Personal & Mobile Communications, Broadcast Products, Image & Sound Communication, Semiconductors, Components & Computer Peripherals, and Recording Media & Energy. ... The Japanese market for car navigation systems was the world’s largest in 1995 with sales of 580,000 units and $840 million. Car navigation systems were installed in 10 percent of new Japanese cars in 1995. ... Channel structure Car navigation systems are sold through two main channels in all three market regions; after-market retail channels and OEM (Original Equipment Manufacturer) channel. ... It is a well established channel for car sound systems, for example. ... At the time of this market study, Car Navigation Systems (CNSss) are an innovative and expensive product. Even in the most developed market, Japan, in 1995 only 2% of cars were equipped with car navigation systems. ... customer as being: · Household income > $50,000 (1995) · Cellphone owner · Two hours per day in their vehicle · 25 to 59 years old The Japanese customer of CNSs is profiled as: · 70% of CNSs customers are between 25 to 39 years old · 95% male · 75% new car owner Of those consumers regarded as potential purchases, market research in Japan and the U. ... Drivers would pay $5 a day more to rent a car with a CNSs. ... Market forecasts indicate that the unit price of these systems will stay over $1,000 until after 2000. ... Growth of market niches Sony has identified non-car market niches, such as cyclists and hikers interested in portable systems. ... Japanese dealers say they greatly prefer (94%) selling systems supporting the NaviKen system. The OEM Channel In the channel, manufacturers sell CNSs to car manufacturers, who offer the CNSs as a pre-installed option. ... Government regulations regarding in-car visual devices are relevant in some cases. ... In the Japanese market, direct competitors are the car navigation systems producers such as Pioneer, Clarion, Nippon Denso, Sumitomo Danko and Nakamichi. These companies fall into two groups: members of the NaviKen software consortium, which makes standard software for navigation, and companies following a proprietary system. Indirect competitors would include other providers of navigation aids, such as maps and road atlases, and are not considered a significant force in the market. ... Another potential new form of competition is in-car internet connectivity, where the map calculation and real-time data would be handled by a server, communicating to the car over a generic internet link. ... Professional navigation aid suppliers (such as Garmin of the United States which makes consumer marine sonar, radar and radio systems and specialised navigation systems) will have to enter the market for their own survival. Current competitors are pursuing somewhat similar strategies to Sony; this is, the value-added proposition comes from bundling hardware, software and digital maps in one package, and competitors are active in both after-market and OEM channels. ... Sony and its fellow NaviKen consortia members have decided that generic software, or at least a high degree of commonality in software, is essential, meaning more emphasis on hardware for differentiation from each other, while the consortium tries to make the NaviKen software superior to proprietary systems. Sony’s commitment to this approach comes from their Betamax experience, when Sony’s attempt to bring a technology to the market was defeated by rivals pursuing a consortium approach. In terms of hardware capabilities, competitors have largely standardised on a GPS-approach, although some dead-reckoning systems survive. Competitors seem capable of matching Sony’s capabilities in hardware, with the key exception of portable systems. ... The NaviKen consortium approach is being challenged as leading members (Alpine, Matushita) either abandon it or offer systems with proprietary add-ons. ... Sony 15% 3. ... In after-market channel, the three top players are Bosch, Philips, and Sony. Bosch, has 72 percent (Bosch unit sales in 06/95 of 1,800 units divided total unit sales in 06/95 of 2,500 units), Philips has 16 percent (Philips unit sales in 09/95 of 400 units divided total unit sales in 09/95 of 2,500 units), and Sony has 12 percent (Sony unit sales in 10/95 of 300 units divided total unit sales in 10/95 of 2,500 units) of European market.