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Need a Walkman? Need a TV? A decade ago these were simple predicaments to solve: buy a Sony.

But the company synonymous with products such as the Walkman and Trinitron TVs during the 80s and 90s has fallen on hard times.

Sony announced a fortnight ago that it was cutting 20,000 jobs globally as part of a long-awaited restructure, aimed at putting it firmly back on the offensive in the emerging world of networked consumer electronics.

The three-year plan aims to drive performance in key sectors and reduce costs.

Fierce competition from companies such as Samsung and LG has put intense pressure on Sony, forcing it to cut back and change the way it operates.

But how could the former darling of the consumer electronics world fail to have seen the advent of the flat-screen TV and mobile phone?

Sony allowed itself to rest on its laurels. It failed to move with the times and to keep production costs down. It allowed itself to become bloated and unwieldy, diversifying into movies, music and financial services.

Sony is still the world's most powerful consumer electronics brand, yet in most areas in which it operates, it has lost its way. It has no equivalent for the iPod, for example, the MP3 player that is taking the personal stereo market by storm, which seems all the more remiss for a firm that created the Walkman.

As part of its restructure, Sony will be putting greater focus on 'growth products', including flat-panel TVs and DVD recorders, and looking at products that integrate consumer electronics and games technologies. It has recently announced a joint venture with Samsung to manufacture liquid crystal displays.

But is this enough? What can Sony do to become leaner and meaner? We asked Mel Taylor, vice-president, director of European marketing at Viewsonic, the manufacturer of pocket PCs and LCD TVs, and Richard Seymour, founding partner of product design specialist Seymour Powell.

VITAL SIGNS
Sony financial results
          Sales                         Income before tax
2003       Y7474bn (£40.9bn)       Y248bn (£1.4bn)
2002       Y7578bn (£41.5bn)       Y93bn (£508m)
2001       Y7315bn (£40.1bn)       Y266bn (£1.5bn)
2000       Y6687bn (£36.6bn)       Y264bn (£1.4bn)
1999       Y6804bn (£37.2bn)       Y378bn (£2.1bn)
Source: Sony annual report; figures for years ended March 31

DIAGNOSIS

Mel Taylor

Sony has a history of innovative design but failed technology. Just look at Betamax. It makes great-looking products, but has been slow to react to market changes.

IT firms have begun to encroach, manufacturing DVD players, TVs and more recently media stations. So instead of having five rivals, Sony now has 50 or more.

The life cycle of technology is now shorter than it has ever been: a product can reach the market in three months, and Sony will have to improve this part of its business. It makes large margins in its consumer electronics business, while IT firms have low margins. Sony will find them aggressive rivals: they can sell for less, but are able to live off less.

Another problem is with CRT televisions - those 2ft-deep TVs that are soon to become a thing of the past. LCD TVs will take over, but Sony until now has not invested in the technology. Only recently has it agreed a deal with Samsung.

Sony is also being hit in the world of computer consoles, with Microsoft and others creating increased competition, and in personal stereos, with Apple shifting large numbers of iPods.

Richard Seymour

To understand Sony's malaise, one must look at all Japanese 'post-war miracles'. Sony, like Honda and Shimano, grew from a single seed, an unlikely organism called a Japanese individualist. The organisations grew around their founders like an onion, reflecting their personal characteristics: Honda, technologically aggressive and philosophical; Sony, cerebral, modest, curious and iconoclastic.

For 40 years until founder Akio Morita died in 1999 and the company restructured, Sony ran on a powerful mixture of spotting other people's technical advances (transistors, Trinitron and so on), which it then commercialised, alongside wry behavioural observation. When the hive loses its queen, you either create a new one or you totally restructure. Sony has not managed either properly.

It's not a question of Sony just taking its eye off the ball, either. It has lost its intellectual epicentre in the way that Apple has rediscovered its own over the past five years. But Sony's problem is a micromodel of Japan's big problem at the moment. The country is suffering from a crushing lack of self-confidence brought on by the collapse of its economy.

TREATMENT

- Create more technological partnerships, such as the deal with Samsung.

- Change routes to market and reduce the cost of getting goods to market.

- Avoid becoming too premium a brand. You can't argue with the brand name but avoid becoming the equivalent of a Rolex in the watch world: they cost twice as much but do exactly the same job.

- Sony is being outgunned by Korean and other foreign companies because it has forgotten to look carefully at the consumer.

- Learn to start with people and pull nascent technology towards their emotional and practical needs, just like it used to do.

- Put a globally aware team of humanists back in charge.

- Study Apple, and remember what it was that made it great.