Sony's chief Howard Stringer had almost everything in place going into this year's Consumer Electronics Show in January: big new televisions to show off, high-definition DVDs and the PlayStation 3 on the way, and even a scheduled appearance by Tom Hanks.
The only thing he was missing was good news on Sony's Walkman, which has been eclipsed in popularity by Apple's iPod. A promising new version of the Walkman had just been released in Europe and Asia, but it was being torn apart on Web message boards — largely because critics said the software it came with was slow and crash-prone.
The result? At the year's biggest gadget show, Stringer said little about portable audio, once the company's sweet spot. Sony showed off the shiny new Walkman in its booth but gave no date for when the new device might reach the global market.
"We're between launches in Europe and America, and that just didn't fit the cycle," Stringer told reporters in a press conference before launching quickly into a description of how Sony was changing the way it oversees software development.
He had good reason to change the subject to software, because fixing software development could be every bit as important to Sony's future as perfecting an iPod rival.
Yet Sony's software problem stretches beyond the Walkman. Apple is stepping further into Sony's turf, the living room. Earlier this week, Apple re-released the Mac Mini as a TV-connected audio and video player. Other high-tech rivals from Microsoft down have their own home entertainment ambitions. Apple even has its own iPod stereo system now.
Indeed, consumer electronics devices increasingly depend on software for their core features. Some argue that Sony's ability to fend off Apple and other digital-age rivals depends on its ability to get software for its Walkman and other new products right.
By many accounts, that remains an uphill struggle. Interviews with past and present executives paint a picture of a company that remains split between business divisions and continents. Perhaps even more divisive is a philosophical question regarding how Sony should be run: Should it continue to rely on Sony-produced ideas and features, or adopt ideas from rivals such as Apple that are moulding the buying habits of a new generation of consumers?
Politburo problems
Stringer has publicly acknowledged the difficulty of coordinating software development between different divisions (often referred to as "silos"), and hired Apple's QuickTime chief Tim Schaaff in December as a new companywide "software tsar".
"Software has been designed inside those independent silos, with a tendency for repetition," Stringer told reporters in January, touting Schaaff's role. "Now we have the ability to coordinate software development... We have time with the PSP, and the video revolution, so that nobody else will slip by us."
Encouraging words from the chief exec aside, some inside the company remain pessimistic about Schaaff's ability to change a deeply ingrained culture.
"We need coordination, we need the best and brightest people involved and empowered," said one high-ranking Sony executive, who asked not to be named. "But the old guard in Tokyo is refusing to give up any central control. It's like a Politburo with a five-year plan."
Sony declined requests for interviews with Schaaff or other top executives on the topic of software development.
Exactly what Schaaff can or will do to change existing practices remains unclear. Sceptics note that he still reports to the Tokyo-based Keiji Kimura, Sony's executive vice-president in charge of technology strategy, who has presided over the portable device business that's been wounded by the explosive popularity of the iPod.
Top executives' rhetoric also may take time to filter down to the project level, other sources say.
"There is a lot of intellectual understanding of the issue," said one consumer electronics executive familiar with Sony's business practices. "But it's a question of whether on a project-by-project basis, whether the person in charge understands."
Current and former Sony employees say...
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