Question

Sony's Headphones to Challenge Bose and Beats

In the previous discussion, we learned how brands need to rejuvenate in order to stay relevant, or others , i.e., micro-brands, would do it for them. In this discussion, we see how Sony reposition its product by bring the quality (and prices) of its headphones to a higher standard to align with its brand. When Ichiro Takagi took over Sony's audio business seven years ago, the unit took pride in being the global No. 1 headphones in terms of units sold. But most were $10 headphones sold for minimal profit at grocery stores. Now Takagi is showing off the latest version of his flagship product, a $350 pair of noise-canceling wireless headphones. The $350 headphones can detect the owner's facial shape, hairstyle and presence of glasses, as well as pressure changes in an airplane, all to optimize the noise-canceling feature. Sony’s audio business is a prime example of how the company got back to profitability in recent years. By 2011, Sony had nearly given up on its old hardware products. That changed under new top management in 2012, which pushed the audio team to drop cheap products and focus on a few high-end models. Mr. Takagi scrapped an organizational chart that had separate groups of engineers focusing on subcategories like car audio. With the changes in Sony's audio strategy, more young engineers are raising their hands to join the department.

DISCUSSION QUESTIONS:

1. Discuss the opportunities that have emerged for companies like Sony due to the growth in music streaming services.

2. Why did the management at Sony decide to alter its strategy and re-position the headphones business? Do you think Sony’s headphones can compete with Bose and Apple's Beats? Why or why not?

Answer 1

1. In today’s digital era, there are plethora of opportunities for growth for companies in the music streaming services. Today, customers expect high quality products as value for the money. For customers, quality is in terms of good quality music such as Sony’s sound cancelling headphones. Music streaming services has become the most popular method to enable customers to access and listen to music. Music streaming services offers unlimited access to music. Streaming services is the method in which the service provider store the large catalogues of music in servers and the users can access this humungous quantity of music data by connecting the servers to their laptops and mobile devices. Since the streaming services are easily accessible and provides large catalogues of music for the customers to choose from, the companies are gaining popularity in this industry. The company that has gained popularity and dominance in the music streaming services is Spotify. Spotify is now the market leader dominating the music streaming services industry.
2. Since the management of Sony saw that the music streaming services industry is untapped by other companies, they felt that there is potential for huge growth opportunities in the industry. Sony’s innovation in the music streaming services is the noise-cancelling feature headphones which was priced at $350. This made the company gain back its profitability. Since the management realized that the high-end profit making models are a great success in the market, they decided to drop cheap products. This shift is a classic example of how the management can take strategic decisions to dominate the industry.

There is a great deal of subjectivity involved in identify which is the best headphones among Beats, Bose and Sony. At the end, the preference of the consumers matter more than anything else. Each brand has unique selling propositions (USP) such as Sony overall, Beats for comfort, Bose for workout for certain criteria for customers who prefer gym and fitness.

Though, Sony faces intense competition in innovation and technology with Beats and Bose, it is pertinent to say that Sony can compete with other brands' headphones.