Quocirca's changing channels Sony leads the market in consumer electronics when measured across its total product range. That range is so diverse that for every product it sells it faces a different set of competitors – some of who lead Sony in their particular area. Profits have suffered in the face of fierce competition and Sony is looking to expand its business from consumers to small and mid-sized businesses (SMB), where its market share is tiny. To achieve this, in Europe at least, Sony is seeking the help of the channel – how will it be received?
Sony has a good starting point – people like Sony. Its brand name is trusted in the consumer market and its products are generally considered to be reliable. Some gripe that Sony’s products are over priced, but having said that, most would be prepared to pay a small premium to own a Sony product over a little known brand. The trouble for Sony is that many of the brands it is competing with, if not already well known, are becoming so and the likelihood that consumer will pay a premium is diminishing. What of SMBs?
Sony believes it has products in a number of areas that will be of interest to SMBs including audio and visual communications, digital imaging, video display, PCs and storage. Sony accepts that it will have to modify some of these products for the SMB market. For example its VAIO PCs would need to have a different life cycle to suit the slow moving technology requirements of business compared to the fast moving tastes of consumers. To woo the channel Sony has set up a reseller program called ’Sony 1’. The name reflects the fact that before this initiative, resellers wanting to work with Sony had to deal with it as several entities – which most did not bother to do, choosing to stick with brands more readily associated with business. On paper the program has many of the features and benefits you would expect from a reseller program.
It was launched in April 2005 in five countries; UK, France, Germany, Spain and Benelux – more countries are planned during the next 12 months. Sony says that uptake by resellers has been ahead of expectations in many cases, with over 4,500 registrations in the UK alone. But in reality resellers who simply register are showing little commitment to Sony and many will have been lured by a free prize draw which plays to their consumer instincts rather than their business ones.
Sony has an accreditation process to help resellers to get skilled up. This involves sales training, setting aside demo facilities and web-site real estate, building a business plan, committing to lead generation and so on. So far, less than five per cent of the registered resellers have been through the process, but it is early days and Sony says this is in line with its targets. Accumulating certified resellers is one thing; making money from them is another. Sony’s quality and pricing will come under closer scrutiny from resellers than it does from consumers and hard pressed SMBs working on tight budgets will be less likely to pay the premium that some consumers seem prepared to. Sony will find itself up against some old hands in the SMB market who have years of experience of working with the channel. But at least Sony is increasing choice in a number of areas, which is in the interests of resellers and SMBs alike.
Please feel free to let Quocirca know your views on Sony’s channel initiative and if it represents an opportunity for your organisation; email email@example.com
Bob Tarzey is a service director at Quocirca focussed on the route to market for IT products and services in Europe. Quocirca is a UK-based perceptional research and analysis firm with a focus on the European market.