Now that HP is Dead, Which PC Manufacturer Will Be the Next to Fall?
This laptop, netbook and desktop PC manufacturer is on the verge of death.
Hewlett-Packard (NYSE: HPQ) is no more. While the company has insisted (with a Celine Dion-like impression) that its heart will go on, the firm's core market – PCs and laptops – is being spun off. Just like IBM (NYSE: IBM), HP is slated to lose its identity as a consumer company.
This is just the beginning. Apple (NASDAQ: AAPL) is charging more, selling more, and making more than all of its competitors. The company is single-handedly wiping out the competition by producing items that are cooler, more stylish, and more reliable. That latter element convinced yours truly to switch from Windows (NASDAQ: MSFT) to Mac, and I'm not the only one. We know Apple's margins are ridiculous and we don't care. (Apple makes seven times more money selling one Mac than HP makes on the sale of seven computers. Seven!)
It took Apple several decades (and an iPod revolution) to earn such a high level of consumer devotion. Meanwhile, Dell (NASDAQ: DELL) – one of Apple's leading competitors – has severely hurt its image with a large number of recalls.
Dell, however, is safe. The company is too big and sells too many laptops and desktop PCs to succumb to the power of Apple.
The same, however, cannot be said for Sony (NYSE: SNE).
Sony will forever remind the world that it was responsible for inventing the Walkman. It's an old song and dance, to be certain. But if you were in charge of a company whose greatest accomplishments (Walkman, PlayStation, etc.) occurred many years ago, what would you do? Brag about the bleak future?
In the PC market, Sony has created a slate of laptops and desktops that are better than most. But with higher-than-average pricing, fewer desktop options (Vaio recently switched to an all-in-one design, just like the iMac), lackluster market penetration, and a weak presence at retail, Vaio machines have yet to take off.
At this point, it is unlikely that they ever will. Sony is trying to emulate the work of Apple at every turn, and it isn't working. While hundreds of thousands of customers flock to Apple stores every year, ready to pay a premium for what they believe to be a premium product, Sony has yet to obtain that level of customer loyalty.
Sooner or later, Sony is going to have to make some changes. In previous years, Sony Pictures brought in buckets of cash with the Spider-Man franchise. Sony Computer Entertainment made billions with the first two PlayStation consoles. New TV sales also proved to be a cash generator.
Unfortunately for Sony, times are changing. TV sales have slowed across all manufacturers, so this is not a problem that can be easily fixed. Video games sales are suffering as well, though Sony is entirely to blame for that one. And while the hype for the new Spider-Man film has been huge, there is almost no chance that this reboot (which looks like a rehash of the first Spider-Man film) will be as profitable as the Sam Raimi-directed trilogy.
When all is said and done, Sony is going to have to make some cuts. Considering the cost of manufacturing new PCs (and the difficulty of selling them in an Apple world), Vaio is a very likely candidate for destruction. Only a groundbreaking innovation could change that, but considering the lack of innovations over the past 10 years, consumers shouldn't expect one anytime soon.
Assuming that Sony continues to use the same botched strategy to produce and market Vaio machines, expect the company to back away from the brand over the next two to three years, and cease manufacturing of most (if not all) Vaio computers by 2016.
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