Sony Sums Up Their Own Lost Decade Without Realizing It

Just the other day, we reported on the Sony Premium Sound memory card for the upcoming Walkman NW-ZX2. Part of their 2015 fleet of products, the latest Walkman, priced at $1,200, is designed to offer premium sound with support for lossless music, including Hi-Res audio and noise cancelation among other premium features. Having had a chance to use one at CES 2015, I can certainly attest to its premium finish and lavish features but that on its own means little as I, like most people, could never afford such a product.

Alongside the new Walkman, Sony will also release their Premium Sound micro SDXC memory card along side the new Walkman which fetches a price of $160 for a 64GB card. For comparison, you can purchase the Sony 64GB SDXC Class 10 UHS-1 R40 Memory Card for $28 on Amazon while more premium SDXC cards fetch a higher price tag of $60. Clearly targeting the premium market, surely Sony has specific consumers in mind and is anticipating some form of demand – right?

As it turns out, not really, as even they don’t know if anybody will want them. Sony’s comment and my take on the matter after the jump.

When asked about the demand for such a device, Sony had this to say:

We aren’t that sure about the product’s potential demand, but we thought some among people who are committed to great sound quality would want it

That’s right. Sony has decided to engineer a product (which costs money), and show it off at events (which costs money), and finally actually ship and sell the product (which costs money) without knowing if there will even be any type of demand for it. Making matters worse, even if there is a demand for such a memory card, the market is beyond miniscule as you must first own a $1,200 Walkman that’s designed specifically for music. You might at least be able to justify such a product if it was built into a smartphone but it’s not.

Once part of this elite club, Sony can begin to target consumers which means they will have built a product that can likely only be marketed to a few hundred people. Even if there were no costs associated with making the Premium Sound memory card and each unit was sold at 100% profit (all impossible), here are some best case scenarios for Sony:

Price * Units Sold = Profits
$160 * 1,000 = $160,000
$160 * 10,000 = $1,600,000
$160 * 100,000 = $16,000,000

As you can see from my simple and dumb math, that the product’s returns are inconsequential to a multi-billion dollar company like Sony. Even if $16 million sounds like a nice boost (which it’s not), that’s assuming that Sony again sells the card with a 100% profit margin and zero R&D costs, among other logistical costs. But maybe most ludicrous of it all is to assume Sony could sell 100k of them because that means that Sony will have sold 100k Walkmans that carry a $1,200 price tag and all of them purchased one of these cards as well.

I don’t even want to get into the debate of “do these cards even make a difference?” What I do question is Sony continually pumping out such niche products. For a company who is battered down so badly by its competitors, how can anybody at Sony justify spending on products like the new Walkman and memory cards where even in the most perfect and impossible situation, it makes little sense for them to release it? While Sony has improved its product range in recent years, I can’t help but think that they’re not doing it fast enough. Sony is in no position to chase after niche markets unless they think they can turn that niche into mainstream and audiophiles is not one such market. Again, resting aside, if there is any real difference with some of these new lossless audio formats and devices like Ponyo and Hi-Res audio, the category is solely based around consumers with large dispensable incomes and even then, many aren’t interested in the formats, partly because of how niche they are which by definition limits the number of devices and content providers which can’t match the scale of services like iTunes and in turn make it a pain to use.

For all that Sony has spent on this (and let it be known that I’m not under some false mindset that this has cost Sony $100 million between R&D and final shipped product) be it $10 million or $1 million, costs wouldn’t have been better spent on marketing. In fact, for every niche product and accessory that Sony releases, imagine if the company instead diverted that money to marketing.

For every new product from Apple or plasticy device from Samsung comes an aggressive marketing campaign. Excluding PlayStation (though there is plenty to improve from a marketing perspective even there), when was the last time you saw Sony products being showcased in a meaningful marketing campaign that wasn’t a one off piece around Christmas? I’ve said it before and I’ll say it again – I truly believe that Sony is one great marketing campaign away from success. Keep in mind, one successful product doesn’t guarantee a successful future but success brings with it success. If Sony is able to get consumers aware and interested again in their products (and I’ve argued in the past that Sony is simply no longer part of the discussion when consumers are purchasing products like smartphones and televisions), then they can take that momentum (assuming their product pipeline supports it) and grow and expand again. But in order to do this, they need to market their products. There is no point in them releasing the Xperia Z4 Tablet, which has been so well reviewed, if consumers don’t even know it exists or have no channel to easily purchase one.