Analysis of Sony Corporations Blu-Ray Technology - Case Study Example

The entertainment industry is a very profitable industry that has grown tremendously during the last 15 years. The music and film segments of the entertainment industry are multibillion dollar industries. A company in the electronics industry that has always targeted the entertainment industry to obtain sales is Sony Incorporated which was founded in Japan in 1946 under the name Tokyo Tsushin Kogyo (Sony, 2007). The company has come a long way in 60 years and in 2006 it generated sales of over $70 billion (Yahoo, 2007). This innovative company help invent a technology called Blu-Ray that creates a new high definition DVD format. The purpose of this research paper is to analyze Sony’s Blu-Ray technology and determine its viability to become a profitable product in the marketplace. The proposed research study would utilize various methods to analyze Sony Corporation with emphasis in its Blu-Ray technology. The research is based on the use of secondary data as the primary source of information. Secondary data is a research technique which tests theories and hypothesis based on data that is readily available in the public realm (Disc, 2003). This proposal would utilize sources such as the Sony’ corporate website, other information available in world wide web, journal articles and information obtained from professional databases such as EBSCOhost, ProQuest and Plunckett Research databases. Different analytic techniques will be utilized to study the company and its Blu-Ray technology. Some the techniques include analyzing the marketplace, identifying the key competitors, describing the advantages and disadvantages of the technology, studying the internal and external environments, performing SWOT analysis and identifying the key issues Sony faces in its introductory phase of its Blu-Ray technology. This initial proposal for a research study of Sony’s Blu-Ray technology limits itself to identifying the problems the company is facing with its Blue-Ray technology and the different issues and complication that have surge with the introduction of the products. Other business aspects such as Sony’s strategy and its main competitors are also described in the research proposal. In order to understand the situation the first thing is to understand what Blu-Ray technology is. Blu-Ray technology (DB) is the next generation optical disc format to enable recording, rewriting and playback of high definition video, as well as storage of large amounts of data (Blu-ray, 2007). The technology uses blue-violet laser instead of the red laser technology which allows greater precision in the reading and information to be stored in a small space inside the disc. Sony has faced many obstacles in its introduction of its Blu-Ray technology into the market. At the same time Sony was in the process of launching Blu-Ray one of its main competitors, Toshiba, launched a product called HD-DVD to directly compete with Sony’s Blu-Ray DVD formats. Sony had various delay in its product launch, while the HD-DVD was a smooth launch for Toshiba which enable the company to reach the market first and obtain the first big contracts from movie producers to utilize the HD-DVD technology in its new releases of DVD movies (Gardner, 2004). This is the first of many issues and obstacles Sony has faced with its Blu-Ray product line. The manufacturing process for Blu-Ray caused some problems for the company since some of the key raw materials were not readily available. The supply of Blue-Ray laser diodes is limited; ironically one of two manufactures in the world of this prime material needed to manufacture Blue-Ray diodes is Sony (Digg, 2007). Sony controls a large portion of the supply chain, thus in the long-term despite early setbacks they can create a barrier of entry for other companies attempting to enter the Blu-Ray market since they along with Nichia are only manufacturers of the diodes. There are other problems associated with Blu-Ray technology. Major players in the computers industry such as Microsoft and its founder Bill Gates are claiming Blue-Ray technology has compatibility problems with Microsoft operating systems which are installed in over 80% of computers around the globe (Edwards & Burrows & Glover, 2005). There have been lots problems, but the biggest so far is beyond anything Sony and its shareholders could have imagined. A company called Target Technology filed a patent infringement lawsuit in 2007 against Sony claiming Blu-Ray technology violates a patent they hold for reflective layer materials in optical devices (Newratings, 2007). Such a claim would have been a thing hard to imagine for Sony considering the Blu-Ray was a jointly developed project by the Blu-Ray Disc Association (BDA) in which giants in the electronics industry participated including Apple, Dell, Hitashi, HP, JVC, LG, Mitsubishi, Panasonic, Pioneer, Phillip, Samsung, Sharp, TDK, Thompson and Sony participated (Blu-ray, 2007). When the Blu-Ray technology was finally ready to launch into the market Sony Corporation decided that to showcase the technology it would integrated into its gaming console Playstation 3. In order to do so the company absorbed major losses by selling the PS3 at around $600 which is significantly below its actual cost considering a Blu-Ray DVD player retails at a minimum of $1000. As great as an idea as it sounded the inclusion caused two strategic blunders for the company. The total production of PS3 was limited, a product that could have sold double or triple if more units were manufacture and most of its supply of laser diodes was used in the gaming unit leaving very few materials left to produce normal Blu-Ray players. DVD sales are a tremendous market that generated nearly $900 billion in sales in 2006 (Plunckett Research, 2007). Sony’s Blu-Ray technology is a great research topic of great interest since is one of the two main technologies that will dominate the high definition market which is a hot market trend. A complete research study would be beneficial since there are lots of areas to research. Some of the areas to study are Blu-Ray compatibility with computer software and hardware, the legal implication of the lawsuit with the possible exit strategies to solve the problem, ways for Sony to solve its availability of component issue among other analysis of the market. References Blu-ray.com (2007). Blu-Ray Disc. Retrieved October 3, 2007 from http://www.blu-ray.com/info/ Digg.com (2007). Sony has the blues: Blu-Ray delayed until 2007. Retrieved October 3, 2007 from http://digg.com/tech_news/Sony_has_the_blues_-_Blu-ray_delayed_til_2007 Disc.edu (2003). An Introduction to Using Data at DPLS. Retrieved October 3, 2007 from http://www.disc.wisc.edu/types/secondary.htm Edwards, C., Burrows, P., Grover, R. (2005). Daggers Drawn over DVD’s. BusinessWeek. Retrieved October 3, 2007 from http://www.businessweek.com/technology/content/oct2005/tc2005106_9074_tc024.htm Gardner, D. (2004). Blue Day for Blu-Ray: Movie Studies Back Toshiba’s HD-DVD. Techweb Network. Retrieved October 3, 2007 from http://www.techweb.com/wire/ebiz/54200929 Newratings.com (2007). Sony accused of infringing blue ray disc technology. Retrieved October 3, 2007 from http://www.newratings.com/analyst_news/article_1539736.html Plunckett Research (2007). Entertainment and Media Industry Trends. Retrieved October 4, 2007 from Plunckett Research database. Sony.com (2007). Rebuilding from the Ashes. Retrieved October 3, 2007 from http://www.sony.net/Fun/SH/1-1/h1.html Yahoo.com (2007). Sony Corp. (SNE). Yahoo Finance. Retrieved October 3, 2007 from http://finance.yahoo.com/q/is?s=SNE&annual Read More