Bloomberg has put together an interesting piece, outlining the five years that Kaz Hirai has been at the helm of Sony with five different charts. Prior to Kaz Hirai, Sony was led by Sir Howard Stringer during a time that I like to refer to as ‘the lost decade’ during which competitors like Apple and Samsung were able to overtake the once-dominant brand. To help turn things around, Sony would promote Kaz Hirai to CEO in April 2012 and since then, he’s been able to double the company’s valuation.

 Hirai’s biggest accomplishment has arguably been the return to profitability in consumer electronics. The 56-year old has slashed costs in everything from televisions to smartphones while retreating from unprofitable businesses. But he’s also doubled-down on more research and development, a move that’s resulted in “fewer and better products,” according to Macquarie Capital analyst Damian Thong. 

If that sounds all too rosy, it’s because it is. Yes, Sony has been able to double its stock price, and yes, they are now profitable, but as the below chart shows, it’s not because they’re winning over consumers.

I’ve said it many times before that I’m quite bullish on Sony’s future, not because of anything they’re doing in the electronic space but because of their stellar image sensor division. As far as consumers are concerned, PlayStation aside, Sony is no longer a player in any key electronic category that consumers interact with on a daily basis.

 Macquarie’s Thong says there are three things to look for at Sony going forward: whether it can boost online subscriptions beyond games to movies and music, what partnerships it strikes to develop new films and intellectual property and how it progresses with connected computing devices or the so-called Internet of Things. 

I think Thong is correct in part – Sony does need to greatly and far more aggressively expand its services business which includes PS Vue and PS Now, but I’m not sure movies and music has much of a future. That’s a long departed train that’s dominated by Apple, Netflix, Amazon, and Spotify and I’m not sure there is room for yet another player (look no further than Ultra). Nor do I think Sony has the right infrastructure and talent to be able to pull off such a service unless it’s coming from PlayStation, which brings me back to the original point – Sony needs to think more long term on how it can leverage PlayStation and tie that to their other products because that’s the one division that understands consumers and is delivering something compelling to them.

Perhaps not so coincidentally, PlayStation, which saw itself revitalized with the launch of PS4, was designed mostly in the US with all software and services handled out of the Bay area and not Japan.

As for their film division, that’s likely to figure itself out one way or another, which leaves us with IoT products, something Sony doesn’t really make yet. Make no mistake that we’re headed towards a future where connected homes via IoT products that talk with Siri, Alexa, and others are only going to exponentially grow and be adopted. As Nest, a company born from former Apple employees which has since been purchased by Google, has shown, designing good looking and functional hardware is extremely challenging, seeing how they haven’t had any new products in years. But with services like HomeKit doing a lot of the backend grunt work, this creates an interesting opportunity for Sony – create compelling home products while offsetting a majority of the complicated software stack to others who do it better like Apple and Google.

It’s doubtful that Sony will win consumers over by making the next amazing TV or smartphone and the VR market is still in its infancy with no indication as to when it might take off. But IoT products is a category that’s here today, and consumers are ready to spend as long as they can find compelling hardware, a key strength of Sony.

Market caps as of May 22nd, 2017:

• Sony – $45 Billion
• Apple – $798 Billion
• Samsung – $251 Billion