The Word Is SONY...and Its World Is Tumbling

SONY...The most comprehensive entertainment companies in the world...Historically noted for creating its own in-house standards... Name synonyms to Reliability with Passion for Innovative Technology is reeling under sever pressure. A company with Annual sales of $69 Billion and employing over 160,000 people is looking for a break thru. Can its flag ship launch of PS3 with Blue Ray technology save "Sony World".

Play Station Launch Story:
Sony's trouble story began earlier this year, when the wheels were falling off the train when Sony started delaying the release of the new PlayStation 3. The first excuse Sony made was that licensing issues were causing the delay from Spring 2006 to November 2006, but that was not the real reason. At Long last when Sony Play station 3 (PS3) was released, on Nov 17th, Sony had horrendous shortage of game consoles to sell. Sony made the best of the bad situation or at least made sure that the launch got plenty of hype.

Technical details:
Technically PS3 is a very impressive creation. Sony took two radically new technologies and successfully incorporated them into a consumer product. The heart of the PS3 is a new Cell broadband engine processor, a joint development Of Sony, Toshiba and IBM.Games are delivered on Blue Ray Disc’s, a high definition DVD that can handle up to 50GB of data. The combination of a super fast processor optimized for Graphics and almost unlimited data storage allows game designers to achieve realism unprecedented in the console of games. The PS3 can play high definition Blue ray movies as well as normal DVD's... but will that be good enough?
The bottom-line Question becomes...Will the consumers find the PS3 worth $200 more than Microsoft Xbox 360?
Sony could have made this equation easier, if it used a month that the PS3 was delayed, mainly by problems in making the blue ray drive, to get the online component of the Play station experience (Play station Store) into shape. Its failure to do so is a major mystery. The most important component of the online experience will be multi player gaming and this is becoming major strength of the Xbox. Sony made a good move by making the Play station network free, while Microsoft charges $50 per year for Xbox Live...but will take a while as the sale of lot more PS3's before we could tell how good there online gaming is.
Sony clearly blew it with other network features as well. The Play Station Store is mainly a way to download games and high definition movie trailers, but the browser interface is very awkward to use. Strangest of all, the PS3 is devoid of the software required for connecting to other devices in the home like computers of other devices. For example if u want to play music on PS3 u have to connect a memory card and a external hard drive or a player such as an I-pod directly to the console and transfer the songs from the device to the consoles hard drive. The same is true for movies or other video and forget about playing any copy protected media such as songs purchased from I-tunes. Even if Ur the one of handful of people who bought the music from Sony connect store. They won’t play in PS3 and this is very odd.

Financial Details:
The future of Sony CEO Howard Stringer rest on the success of this shinny black PS3.
Sony is far behind its competitors in the fast growing LCD flat-screen TV market and has lost its decades-long edge in portable music devices to Apple Computer's I-Pod players. With the failure of its TV, Music electronics businesses and its up-and-down Movie business, it has relied more and more on the video game business to keep profits up. But now even its video game business can't save the company. In fact, it's the video game business that could put the whole company right down the toilet. Here is it why

Research firm iSuppli has reverse engineered the PS3 and has estimated that it will cost Sony $805.85-$840.35 for each unit sold. The materials price estimates do not include marketing, software development, or other costs, which will push Sony's total cost per console even, be higher. With Sony pricing the console at $499 and $599 depending on the model, it means that they will be eating a loss of between $241 - $306 every time someone buys a new console. In contrast, the materials cost for the Xbox 360 is estimated at only $501, and should continue to drop as the console ages. While Sony pays $200 to $300 for each raw Blue-ray drive, Microsoft pays only $20 for the simpler DVD drives. Of course, the single most costly item in the PS3 is the Blue-ray drive. Blue-ray would add at least another $200 or so to the price of the machine. And this cost is intended keeping in view promoting Blue Ray disc's which is a long term objective is for Sony.
Although the PS2 captured more than a 70 percent share of the previous generation of console sales, with Microsoft already predicted to sell 10 million Xbox 360 consoles and Nintendo selling 4 million of its new Wii consoles, Sony plans on making 6 million PS3 units before April. Let's say that they sell every one of them at full retail price. With what we know about the materials price -- particularly the price of Blue-Ray players -- let's say that they will lose only $270 for every PS3 they sell, The loss would be to an amount of $1.6 billion.
The bad news for Sony this year isn't restricted to video game competition. The company is also liable for a large share in the laptop battery recalls being conducted by Dell and Apple. Nearly 6 million batteries have been recalled in the past two months -- all of them manufactured by Sony. The battery fiasco alone could cost Sony as much as $500 million.
Devoting its cash reserves to losses in the video game and computing sectors, with no guarantee of future profits for another two years, could send the company's stock into a tailspin, once its investors realize the full measure of the grave situation for the company.

Here is how u can save Sony:
If u are also a great fan of Akio Morita after reading the book Made In Japan like me..
Stop complaining that the PS3 costs $600. In order to cut down on its losses,-- it'll require that you buy two games in order to get a machine. That'll boost the price for you to around $725 or so.
But there's more! Want an HDMI cable? That'll be another $100 to $125. Now we're at $850 or so.

You've got a Blue-ray player, so you'll want a few Blue-ray movies -- Sony titles only, of course. Buy six of them while you're at it! At an average list price of $25 each, we're talking another $150. That pushes our total price to an even $1,000.That'll go a long way to saving Sony.

Now who's going to save you?

ERP : Battle Space : SAP Dominates While Oracle Consolidates

Alright...this will be a Soap-Opera-Class Entertaining and Interesting Story to track all my life, as most of us do, As the dust never seems to settles in the battle of ERP dominance between Oracle and SAP. This would be long story made short with Quotes to hear from heads of both companies...and don't make any judgments from them since the twist in the story is still to unfold and will be long time before we can conclude...Check and Mate.

Larry Ellison, 62, CEO of Oracle, those who know him, say, He is a Master of Applying and Executing My all time most favourite Book -The Art of War-Sun Tzu’s precepts to the modern-day warfare of business competition.
One of basic tenet from the book notes,"A smaller force can beat a larger one by causing its rival to respond before thinking." exactly so..

Ellison Recent Key Remarks of SAP and its CEO:

"SAP appears to be rethinking their strategy as they lose application market share to Oracle and confront the difficulties of moving their application software to a modern Service Oriented Architecture [SOA],” said Ellison in the release. “They’ve just announced that they are delaying the next version of SAP applications until 2010. That’s a full two years behind Oracle’s scheduled delivery of our SOA Fusion applications.
And now [SAP CEO Henning] Kagermann is talking about an acquisition strategy to augment SAP’s slowing organic growth.These are major changes in direction for SAP."

Ellison's comments were "a complete misrepresentation'' of SAP's products and strategy, Walldorf, Germany-based SAP said the same day. Only once before, in 2000 when Oracle said it was first in sales of business-management software, had SAP issued a statement responding to Oracle claims. "Both times the distortion of facts about SAP were so significant we had to clear the record,'' SAP spokesman William Wohl said in an interview.

Now.. Why did Ellison do this ?
Ellison's tactics are meant to validate Oracle's place next to SAP.Ellison's efforts were aided by SAP in July, when SAP CEO Henning Kagermann said his company lost market share in the $25 billion industry for business-management software to Oracle and Microsoft Corp.
SAP never should have reacted to Oracle's statements because it makes customers and investors view Oracle as a peer to SAP, when they aren't.

"They are trying to set the boundaries of the discussion,'' Daniel Sholler, lead SAP analyst at Gartner Inc., a Stamford, Connecticut-based research firm, said in an interview.
"It has no effect on customers except to make it clear that Oracle should be compared to SAP.''

SAP and Oracle are in the middle of overhauling their software toward a so-called Service-Oriented Architecture, or SOA, which allows customers to upgrade and change management software more easily. SAP said all of its products will be able to run on the new platform by next year, and will only offer enhancements to that platform until 2010.

Actual Market Share:

According to Boston-based AMR Research, SAP had 20.6 percent of the applications software market in 2005, up from 19.5 percent in 2004. Thanks to $20 billion of acquisitions in two years, Oracle's market share almost doubled in 2005 to 10.1 percent from 5.2 percent.

The $10.6 billion PeopleSoft acquisition in January 2005 and the $5.85 billion purchase of Siebel a year later made Oracle the second-biggest maker of business-management software, behind SAP. In September, Ellison said the purchases allowed Oracle to "leapfrog'' over SAP in several industries, including retail, banking and telecommunications.

Ellison has also employed Sun Tzu's statement,"All warfare is based on deception'' in asserting that Zale, which SAP announced as a new customer about a year ago, will switch to Oracle because, the CEO said, the German rival "made some promises we knew they couldn't deliver.''

Oracle reported application license sales grew 80 percent in the first quarter. Stripping out sales from Siebel and other recent acquisitions, application license sales gained 47 percent.

Software license revenue, is a key barometer of future prospects as the company gains further revenue in the future off of maintenance and consulting.

“We’re rapidly taking applications market share from SAP,” Oracle President Charles Phillips said in the release. “Q1 was the second consecutive quarter that Oracle’s applications new license sales growth was 80% or more. That’s ten times SAP’s 8% new license sales growth rate in their most recently completed quarter.” taking absolute joy in poking its finger in the eye of rival SAP.

Charles Di Bona, an analyst with Sanford C. Bernstein, disagrees with Oracle's math. Factoring in Siebel Systems' third quarter sales, before its acquisition, Di Bona estimates Oracle's organic growth for the quarter at 2.2 percent.

Q Results For Oracle :

For the fiscal first quarter ended August 31 which blew away expectations across the board. Revenue totalled $3.6 bilion, nicely ahead of the Street consensus of $3.47 billion. The company reported 13 cents a share in GAAP profits, or 18 cents on a non-GAAP basis; both were several pennies ahead of Street projections. Database and license revenue grew 15%; application revenue grew 80%; services revenue was up 33%.
In its press release announcing the numbers, Oracle President and CFO Safra Catz said that the company “exceeded our guidance on every metric…we are now in year three of our five-year plan targeting EPS growth at 20% per year.”

Important Statments from Oracle :
"We think Oracle’s current strategy is helping us overtake SAP and win market share. Let me start with the first key success factors for SOA applications, and that is middleware... SAP is sticking with a proprietary approach to middleware while Oracle has adopted a completely standards-based approach from middleware and our next generation of fusion applications.
As the market more deeply embraces service oriented architecture, SAP’s non-standard ABAP approach to middleware is hurting their sales and helping us win share...
SAP has good industry knowledge and products in some industries, like oil and gas, but they lack industry-specific knowledge and products in most other industries.... Oracle’s acquisition strategy has moved us ahead of SAP in several industries -- banking, telecommunications, retail, and so on. Oracle will continue to acquire industry knowledge and products. We believe that SAP must do the same, or SAP will become progressively less competitive in several industries and continue to experience slowing organic growth." explians Larry Ellison.

"Well, I think it’s hard for our share gains to accelerate. I mean, SAP’s growth in their most recent quarter was 8% and our growth in our last two quarters was over 80%, so I cannot imagine that our rate of gain will accelerate, but I think our rate of gain against SAP will stay very, very high. I think it includes gains in ERP, gains in CRN, and gains in industry-specific applications" Ellison remarks.

The Other Side of Story: 85% win Rate for SAP

Oracle claimed 88 head-to-head wins against SAP.

Leo Apotheker an independent analyst team gave the detail of the analysis of head-to-head between SAP and Oracle.

"We chose not to compete on one of these deals. Six were not competitive situations, and all occurred before Q107 of August quarter, first quarter. Twelve of them we have no record on, so I cannot comment because we did not compete. We were not in the game. Seven were not a win against us. They must have counted some other wins. Four were indeed losses for us, so they did win four against us.
Just to put things into perspective, in this quarter, we had 247 competitive head-to-head against Oracle, of which we won 209. That is an 85% win rate."

"What we do is we take our sales figures. We compare it to the Oracle Siebel entity last year, compared to the combined entities this year, then you know that SAP has really gained market share again." explained Henning Kagermann, CEO, SAP.

Q Results for SAP:

SAP said net income rose to 388 million euros ($486 million), or 1.27 euros a share, with revenue up 11% to 2.2 billion euros.Software license revenue, a key barometer of future prospects as the company gains further revenue in the future off of maintenance and consulting, grew 17% to 691 million euros in the third quarter. Analysts had expected SAP to generate 14% growth.
License revenue had grown just 8% in the second quarter. “We reported a strong third quarter with an impressive win rate and double-digit software revenue growth in all regions,” said Henning Kagermann, chief executive, in a statement.
Oracle, SAP’s leading rival, reported a 19% profit rise in the quarter ended Aug. 31. SAP fared well in Oracle’s home market, with U.S. license revenue up 1 5%.
“This long track record of outstanding performance can be largely attributed to our successful strategy of growing SAP organically. This disproves our major competitor’s claim,” Kagermann said in a clear reference to Oracle.

Conclusion :
Oracle's enthusiasm for bad-mouthing the competition doesn't help the industry.
Oracle's made full-page advertisement that mimicked SAP's ad campaign.
The Oracle ad said: "Computer Associates (CA) Runs SAP.''
The implication was that CA's well-publicized troubles, including a $2.2 billion accounting fraud, were connected to the SAP software it uses. CA has applications from both rivals. These kinds of guerrilla marketing tactics, combined with puffed up rhetoric and carpet bombings are tedious distractions.

But ultimately, knowing how the enterprise software sales cycle works, experts guess, the playing field is far more balance than what either side contends.
For a while, SAP is just dominating Oracle (particularly in the U.S.).

Yahoo! Eating Peanut Butter, Finds its Structure Messy & Strategies Fuzzy

Straight from horse's mouth, allegdly from Senior V.P of Yahoo, Brad Garlinghouse, an internal memo was forwarded all over the place late Friday, and made head lines in WSJ Saturday morning.

Experts are guessing this was written with full knowledge that it would be forwarded outside the company, but it still has some strong statements about Yahoo's fuzzy strategy, its duplicate properties, and its messy structure. Among other things, it calls for 15-20% cut in headcount, which should get traders busy on Monday.

Here is the complete long Transcript obtained from WSJ.

Three and half years ago, I enthusiastically joined Yahoo! The magnitude of the opportunity was only matched by the magnitude of the assets. And an amazing team has been responsible for rebuilding Yahoo!
It has been a profound experience. I am fortunate to have been a part of dramatic change for the Company. And our successes speak for themselves. More users than ever, more engaging than ever and more profitable than ever!
I proudly bleed purple and yellow everyday! And like so many people here, I love this company.
But all is not well. Last Thursday's NY Times article was a blessing in the disguise of a painful public flogging. While it lacked accurate details, its conclusions rang true, and thus was a much needed wake up call. But also a call to action. A clear statement with which I, and far too many Yahoo's, agreed. And thankfully a reminder. A reminder that the measure of any person is not in how many times he or she falls down - but rather the spirit and resolve used to get back up. The same is now true of our Company.
It's time for us to get back up.
I believe we must embrace our problems and challenges and that we must take decisive action. We have the opportunity - in fact the invitation - to send a strong, clear and powerful message to our shareholders and Wall Street, to our advertisers and our partners, to our employees (both current and future), and to our users. They are all begging for a signal that we recognize and understand our problems, and that we are charting a course for fundamental change, Our current course and speed simply will not get us there. Short-term band-aids will not get us there.
It's time for us to get back up and seize this invitation.
I imagine there's much discussion amongst the Company's senior most leadership around the challenges we face. At the risk of being redundant, I wanted to share my take on our current situation and offer a recommended path forward, an attempt to be part of the solution rather than part of the problem.Recognizing Our Problems
We lack a focused, cohesive vision for our company. We want to do everything and be everything -- to everyone. We've known this for years, talk about it incessantly, but do nothing to fundamentally address it. We are scared to be left out. We are reactive instead of charting an unwavering course. We are separated into silos that far too frequently don't talk to each other. And when we do talk, it isn't to collaborate on a clearly focused strategy, but rather to argue and fight about ownership, strategies and tactics.
Our inclination and proclivity to repeatedly hire leaders from outside the company results in disparate visions of what winning looks like -- rather than a leadership team rallying around a single cohesive strategy.
I've heard our strategy described as spreading peanut butter across the myriad opportunities that continue to evolve in the online world. The result: a thin layer of investment spread across everything we do and thus we focus on nothing in particular.
I hate peanut butter. We all should.
We lack clarity of ownership and accountability. The most painful manifestation of this is the massive redundancy that exists throughout the organization. We now operate in an organizational structure -- admittedly created with the best of intentions -- that has become overly bureaucratic. For far too many employees, there is another person with dramatically similar and overlapping responsibilities. This slows us down and burdens the company with unnecessary costs.
Equally problematic, at what point in the organization does someone really OWN the success of their product or service or feature? Product, marketing, engineering, corporate strategy, financial operations... there are so many people in charge (or believe that they are in charge) that it's not clear if anyone is in charge. This forces decisions to be pushed up - rather than down. It forces decisions by committee or consensus and discourages the innovators from breaking the mold... thinking outside the box.
There's a reason why a centerfielder and a left fielder have clear areas of ownership. Pursuing die same ball repeatedly results in either collisions or dropped balls. Knowing that someone else is pursuing the ball and hoping to avoid that collision - we have become timid in our pursuit. Again, the ball drops.
We lack decisiveness. Combine a lack of focus with unclear ownership, and the result is that decisions are either not made or are made when it is already too late. Without a clear and focused vision, and without complete clarity of ownership, we lack a macro perspective to guide our decisions and visibility into who should make those decisions. We are repeatedly stymied by challenging and hairy decisions. We are held hostage by our analysis paralysis.
We end up with competing (or redundant) initiatives and synergistic opportunities living in the different silos of our company.
• YME vs. Musicmatch
• Flickr vs. Photos
• YMG video vs. Search video
• Deli.cio.us vs. myweb
• Messenger and plug-ins vs. Sidebar and widgets
• Social media vs. 360 and Groups
• Front page vs. YMG
• Global strategy from BU'vs. Global strategy from Int'l
We have lost our passion to win. Far too many employees are "phoning" it in, lacking the passion and commitment to be a part of the solution. We sit idly by while -- at all levels -- employees are enabled to "hang around". Where is the accountability? Moreover, our compensation systems don't align to our overall success. Weak performers that have been around for years are rewarded. And many of our top performers aren't adequately recognized for their efforts.
As a result, the employees that we really need to stay (leaders, risk-takers, innovators, passionate) become discouraged and leave. Unfortunately many who opt to stay are not the ones who will lead us through the dramatic change that is needed.Solving our Problems
We have awesome assets. Nearly every media and communications company is painfully jealous of our position. We have the largest audience, they are highly engaged and our brand is synonymous with the Internet.
If we get back up, embrace dramatic change, we will win.
I don't pretend there is only one path forward available to us. However, at a minimum, I want to be pad of the solution and thus have outlined a plan here that I believe can work. It is my strong belief that we need to act very quickly or risk going further down a slippery slope, The plan here is not perfect; it is, however, FAR better than no action at all.
There are three pillars to my plan:
1. Focus the vision.
2. Restore accountability and clarity of ownership.
3. Execute a radical reorganization.
1. Focus the vision
a) We need to boldly and definitively declare what we are and what we are not.
b) We need to exit (sell?) non core businesses and eliminate duplicative projects and businesses.
My belief is that the smoothly spread peanut butter needs to turn into a deliberately sculpted strategy -- that is narrowly focused.
We can't simply ask each BU to figure out what they should stop doing. The result will continue to be a non-cohesive strategy. The direction needs to come decisively from the top. We need to place our bets and not second guess. If we believe Media will maximize our ROI -- then let's not be bashful about reducing our investment in other areas. We need to make the tough decisions, articulate them and stick with them -- acknowledging that some people (users / partners / employees) will not like it. Change is hard.
2. Restore accountability and clarity of ownership
a) Existing business owners must be held accountable for where we find ourselves today -- heads must roll,
b) We must thoughtfully create senior roles that have holistic accountability for a particular line of business (a variant of a GM structure that will work with Yahoo!'s new focus)
c) We must redesign our performance and incentive systems.
I believe there are too many BU leaders who have gotten away with unacceptable results and worse -- unacceptable leadership. Too often they (we!) are the worst offenders of the problems outlined here. We must signal to both the employees and to our shareholders that we will hold these leaders (ourselves) accountable and implement change.
By building around a strong and unequivocal GM structure, we will not only empower those leaders, we will eliminate significant overhead throughout our multi-headed matrix. It must be very clear to everyone in the organization who is empowered to make a decision and ownership must be transparent. With that empowerment comes increased accountability -- leaders make decisions, the rest of the company supports those decisions, and the leaders ultimately live/die by the results of those decisions.
My view is that far too often our compensation and rewards are just spreading more peanut butter. We need to be much more aggressive about performance based compensation. This will only help accelerate our ability to weed out our lowest performers and better reward our hungry, motivated and productive employees.
3. Execute a radical reorganization
a) The current business unit structure must go away.
b) We must dramatically decentralize and eliminate as much of the matrix as possible.
c) We must reduce our headcount by 15-20%.
I emphatically believe we simply must eliminate the redundancies we have created and the first step in doing this is by restructuring our organization. We can be more efficient with fewer people and we can get more done, more quickly. We need to return more decision making to a new set of business units and their leadership. But we can't achieve this with baby step changes, We need to fundamentally rethink how we organize to win.
Independent of specific proposals of what this reorganization should look like, two key principles must be represented:
Blow up the matrix. Empower a new generation and model of General Managers to be true general managers. Product, marketing, user experience & design, engineering, business development & operations all report into a small number of focused General Managers. Leave no doubt as to where accountability lies.
Kill the redundancies. Align a set of new BU's so that they are not competing against each other. Search focuses on search. Social media aligns with community and communications. No competing owners for Video, Photos, etc. And Front Page becomes Switzerland. This will be a delicate exercise -- decentralization can create inefficiencies, but I believe we can find the right balance.
I love Yahoo! I'm proud to admit that I bleed purple and yellow. I'm proud to admit that I shaved a Y in the back of my head.
My motivation for this memo is the adamant belief that, as before, we have a tremendous opportunity ahead. I don't pretend that I have the only available answers, but we need to get the discussion going; change is needed and it is needed soon. We can be a stronger and faster company - a company with a clearer vision and clearer ownership and clearer accountability.
We may have fallen down, but the race is a marathon and not a sprint. I don't pretend that this will be easy. It will take courage, conviction, insight and tremendous commitment. I very much look forward to the challenge.
So let's get back up.
Catch the balls.
And stop eating peanut butter.