Sony 2015 Annual Report Download - page 8

To remain competitive and stimulate customer demand, Sony must successfully manage frequent
introductions of, and transitions to, new products, semiconductors, components, and services, while managing
the impact on the sales of Sony’s existing products, semiconductors, components, and services.
Due to the highly volatile and competitive nature of the consumer electronics, network services and mobile
communication industries, Sony must continually introduce, enhance and stimulate customer demand for
products, semiconductors (including image sensors), components, services and technologies in both mature and
developing markets. The successful introductions of, and transitions to, new products, semiconductors,
components, and services depend on a number of factors, such as the timely and successful completion of
development efforts, market acceptance, Sony’s ability to plan and execute an effective marketing strategy,
Sony’s ability to manage the risks associated with new products and production ramp-up issues, the availability
of application software for new products, the effective management of purchase commitments and inventory
levels in line with anticipated product demand, the availability of products in appropriate quantities to meet
anticipated demand, and the risk that new products, semiconductors, components, and services may have quality
or other issues in the early stages of introduction.
Additionally, markets for existing products and services such as smartphones, and the image sensors within,
or game consoles might contract as consumer preferences shift, or new, competing technologies are introduced.
Under these circumstances, Sony must respond to changing consumer demands with appealing new products and
services as well as continue to improve the value of its existing products and services.
Accordingly, if Sony cannot adequately manage frequent introductions of, and transitions to, new products,
semiconductors, components and services, Sony’s operating results and financial condition may be adversely
impacted.
Sony is subject to competition from firms that may be more specialized or have greater resources.
Sony has several business segments in different industries with many product and service categories, which
cause it to compete with many existing and new competitors ranging from large multinational companies to
highly specialized entities that focus on only a few businesses. In addition, outsourced manufacturing services
partners may enter and compete with Sony in markets in which they currently supply products to Sony.
Furthermore, current and future competitors may have greater financial, technical, labor and marketing resources
available to them than those available to the businesses of Sony, and Sony may not be able to fund or invest in
certain areas of its businesses to the same degree as its competitors or match competitor pricing. A failure to
efficiently anticipate and respond to these established and new competitors may adversely impact Sony’s
operating results.
Sony’s investments in research and development may not yield the expected results.
Sony’s businesses operate in intensely competitive markets characterized by changing consumer preferences
and rapid technological innovation. Due to advanced technological innovation and the relative ease of technology
imitation, new products and services tend to become standardized more rapidly, leading to more intense competition
and ongoing price erosion. In order to strengthen the competitiveness of its products in this environment, Sony
continues to invest heavily in research and development (“R&D”), particularly in growth areas such as image
sensors and the Game & Network Services (“G&NS”) segment, and intends to limit its expenses in markets it
deems mature or as having limited growth potential. However, Sony may not be successful in identifying growth
potential and evaluating major market trends, its investments may not yield the innovation or the expected results
quickly enough, or competitors may lead Sony in technological innovation. This may hinder Sony’s ability to
commercialize, in a timely manner, new and competitive products and services that meet the needs of the market,
which consequently may adversely impact Sony’s operating results as well as its reputation.
Sony’s business restructuring and transformation efforts are costly and may not attain their objectives.
Sony is implementing restructuring initiatives that focus on profitability, business autonomy, shareholder
value and the clear positioning of each business within the overall business portfolio. Restructuring charges in
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