Kazuo Hirai: Sony is looking beyond the smartphone for the future

Making smartphones must be profitable, he stresses, but he claims the aim of the exercise is to future-proof Sony as much as it is to put it into permanent profit.

Sony doesn’t know whether smartwatches, tablets or some other, as-yet-unimagined device, will lead the charge, he says. “To me right now, it looks like a combination of a wearable device together with some kind of a smartphone-ish form factor. I’m not exactly sure what that is.

“Wearable is probably going to have some sort of impact. But being in smartphones is less about being number three than it is about being a viable player. I don’t care if we’re four, five or six, so long as we’re a viable player.”

Indeed, Hirai adds that the original Z1 smartphone was as much a catalyst for internal change as it was a product: “We said we’re going to use ‘One Sony’ as a concept, bringing the whole, diverse company together. We came up with the Z1 and these guys have been inundated with ideas from other divisions – that’s how ‘One Sony’ manifests itself.”

He says Sony’s approach contrasts with that of its rivals. Many have criticised Samsung for adding a slew of features to its devices, so losing focus. Hirai doesn’t name the South Korean behemoth, but says: “The steps that we’ve taken in terms of the Z series has been much more evolutionary than ‘let’s put in everything and the kitchen sink’.”

None the less, Sony’s road has been a hard one. “A lot of the major pieces have been moved around and now it’s putting the finishing touches on,” says Hirai of his streamlining programme.

“Now that we have the television business as a wholly owned subsidiary and they’re running very lean and mean, the issue we have with it is in the large sales companies that we have outside Japan, and to a degree inside Japan as well. We need to go through those transformations this fiscal year so we can take the hit this fiscal year as well.”

He highlights the US operation, where a workforce of 3,300 lost almost a third of its staff.

“Not all territories will get that kind of drastic reduction. But people understand there needs to be a sense of urgency. And people really need to understand there is no safe haven.”

If that wasn’t obvious before, when Sony sold off the Vaio division for £300m to a Japanese private-equity group in February, it became clear nothing was sacred.

“A lot of people say it was too late or too slow,” says Hirai. “I feel that I gave them the proper opportunity to make the case that it can be a sustainable business. I gave them opportunities to prove that. We had a lot of different meetings and ultimately I said, ‘you know what – we’ve been doing this for three four years. And I just can’t see how this is going to be a sustainable business going forward so I’m sorry but this is the time to pull the plug’.

“Obviously if you talk about the employees, their families, the municipalities, the tax revenues, all the stakeholders, the component manufacturers – it impacts them in a huge way. To the extent it’s a managed business I’d like to see if we can sustain the business. But ultimately the decision was we can’t. That’s not done with a cold heart that says, ‘if it’s not making money, we’re out of here’. I’ve visited the facilities many times, I know the employees personally. Obviously they got impacted and that is a very important part of the decision-making process. Not that it impacts the decision at the end of the day, but it’s done with a heavy heart.”

Sharpening Sony’s focus must, however, sit with the company’s diverse interests in insurance, property among others, as well as the Sony Pictures film studio. Hirai denies the films are a sideshow: “The entertainment properties are an integral part of the core Sony business. It’s like asking if you think PlayStation is a core business.”

It makes Sony, along with Panasonic, one of the last truly conglomerate Japanese businesses.

“When Toshiba gets into nuclear reactors, it’s like, ‘good business to be in’. When Panasonic gets into business-to-business? ‘Great business to be in’. When we do it, we’re held to a different standard,” Hirai says. “I’m not exactly sure why that is, but I’m not going to spend the rest of my career worrying about that.”

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