Sony Corporation: Car Navigation Systems

Sony could to keep up with this development and the market share dropped to 15% in 1996. In Europe and the US, Sony was also the first one that introduced the navigation system, but local manufacturers in Europe started to launch competing products aggressively. Other Japanese competitors were expected to enter the Europe and the US market by 1997. The problem definition Is the following: How can Sony boost sales and recapture lost market share in the highly competitive Japanese market and at the same time expand to Europe and the US in order to stay ahead of the growing competition and the technological development?

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The concept of the car navigation system had been around In Japan since the early sass’s, Honda claimed to be the first company to put a navigations system on the road. The Japanese market for car navigation systems was the world largest in 1995 with sales of 580,000 units and $840 million. Sony competitors in Japan were Pioneer, Mediumistic, Matthias and Alpine. The European market stood behind the Japanese market for five years. The market began to develop when major companies Like Busch and Phelps Introduced products In Germany and France, which became Sonny’s competitors In Europe.

In the US, car navigation systems were not known by everybody. The US market was behind both Europe and Japan. The value of car navigation systems was not that obvious for US drivers due to the well- organized system with traffic signs, street names and highly developed highway. The strategic options for Sony can be divided into three parts: the geographical focus issue, the product options and the option whether to continue with Navies or not. We have chosen the option to develop a low-priced model for the three markets. For Europe and the US, it will be an effective way to Introduce the car navigation system f Sony.

In Japan It will be a way to gain the mass market. Although the market Is In sensitive for the price or they do not know how to use it properly. For them we will introduce an easy to understand, low-priced model. We also recommend Sony to innovate consistently and faster in Japan, because the competition is far ahead. This needs managerial persistence and financial commitment for the development of the product and for the marketing as well. The distribution of this car accessory will be the after market retail channels. We suggest that Sony should stay with Navies.

S. Market. You will find the analysis in chapter 5, which shows Samara’s 3 Was and the value curve. In chapter 6 you will find an overview of the strategic options. And finally, chapter 7 will give our recommendations and at the end you will find our conclusion. Chapter 1 Sony Corporation The Sony (Sony stands for sons, sound) Corporation was founded in 1946 by Kaki Moratoria and Maseru Baku. With only 500 dollars the founders realized they would have to differentiate themselves from their larger competitors by developing more innovative products.

They were especially focused on consumer needs. Sony was often the first mover to markets with technological innovations. Examples are the color television market, of course the famous Walkway and the compact size camcorder with video camera. Through experience, Sony learned that technological innovation alone did not insure market dominance, the match between hardware and software was critical. As a result, Sony was cooperating more with competitors to develop industry standards. The company was very market driven.

To develop future top managers, Sony appointed promising young executives as president of each company with substantial autonomy. Moratoria was president of the Personal & Mobile Communication Company. Car Navigation Systems A car navigation system plotted a driver’s current location on a dashboard mounted LCD monitor by calculating signals received by satellites and/or utilizing a dead reckoning system fed by speed and gyro sensors. The system also told the driver the best way to his or her destination by employing a digital map database stored on either a CD-ROOM, a computer hard disk, or an ICC-card.

A typical model consisted of hardware such as a satellite signal receiver, a CD-ROOM player, an LCD monitor mounted online a car dashboard, a digital map software in the form of a CD-ROOM. Later on, recent models could inform a driver of his/her current location at all times and deduce the best route to a destination automatically by taking into account current traffic conditions. Some systems could even communicate verbally with the driver and provide turn-by-turn instructions on the LCD map or through voice. Hardware system. The central concept behind this was triangulation.

It used four signals from four different satellites to locate the position of the antenna. There was also a back- p dead-reckoning system of speed and gyro sensors that could take over seamlessly and relay the car’s speed and direction to the navigation system. In car navigation systems, there were many variations. Software The software database technology used in a car navigation system was the offspring of GIS, Geographic Information System, a digital database. As many data layers as desired could be added to the digital map, like postal zip codes and phone numbers.

But collecting and digitizing all the road related information and the point of interest data were labor intensive, because it had to be updated all the time. The cost of digitizing the cartography of the US was estimated at 1 billion dollars with an additional 100 million a year for updating. The payback time was therefore 10 years. The data storage media varied. Some devices used the digital map stored on a CD- ROOM, while others on computer hard disk or ICC card. CD-ROOM based navigation systems were popular in Japan and Europe, hard disk and ICC card were acceptable in the US.

Distribution Channels Car navigation systems could be sold on an MOM basis or through after market retail channels. In the MOM channel, car navigation system producers contracted with car assemblers to supply car navigation systems to the automaker’s specifications. The systems were pre installed by the car manufacturers or installed later by dealers. After market models were usually distributed through wholesalers to auto parts retailers and electronics outlets. Chapter 2 Japan 2. 1 The Japanese market The concept of the car navigation system had been around in Japan since the early with sales of 580,000 units and $840 million.

Car navigation systems were installed in 10% of new Japanese cars in 1995. The penetration rate for all cars registered in Japan was 2%. With competition among 30 companies, the average retail price per unit decreased dramatically from $4,000 in 1990 to $2,500 in 1995. As competitors vied to introduce new models with the latest technological features, market shares fluctuated dramatically. The Japanese road system was very complicated in, therefore landmarks for finding their destinations because not all the streets had names and road signs were few and far between.

The car drivers were usually young people, who would like to invest over $2,000 on electronic accessories. The most important factors for Japanese consumers for buying a car navigation system were accuracy of dado map, automatic route calculation, easy-to-set-up destination and speed of route calculation. The most important information the consumers wanted were real time traffic Jam information, one ways and real time parking space. The government also invested in improving the efficiency of the Japanese road system, by developing a real time traffic information system called VIC’S (Vehicle Information and Communication System).