Apple to Buy Sony?

There are rumors that Apple may be interested in buying Sony, the Japanese icon of industrial design, and one of the biggest electronics success's of the century. Some are saying that Apple acquiring Sony would be a good thing, as seen here and here, while others, of course, are saying the opposite, that it would be foolish.

It seems incredible that Apple, the once former underdog, and one that people kept predicting would be going out of business any day now, is now even in the position to consider acquiring a giant such as Sony, is amazing and stands as an incredible testament to Steve Jobs managerial skills.

Apple, despite the fact that it's stock has been pummeled over the recent economic turmoil, is still worth far more than the Japanese legend: some 109 billion to Sony's 44 billion! Not to mention that Apple has virtually no debts and has close to 20 billion dollars just sitting in the bank makes it even more viable for Apple to acquire just about anything that it wants these days!

Williams Pesek (linked above) says that merging with Apple will help Sony because of the "cool factor". He states:

"Few words roll eyes like "synergies," and yet Apple and Sony would enjoy a bull market in them. Sony needs to restore the "cool factor" it once had and Apple now owns. Apple needs Sony's content — movies, music — to sell to its iPod and Apple TV enthusiasts. Why negotiate deals with record labels and film studios when you can own them?

Apple probably wouldn't mind controlling the Blu-Ray technology that analysts say offers lucrative revenue streams. Sony would give Apple the game franchise it lacks. Its camera line-up also could serve Apple well — an iCamera, anyone? Or an iPhone equipped with one of Sony's high-definition camcorders? And don't forget Sony's impressive stable of patents.

Japan also is a market that Apple has yet to dominate. It's not just Japan's flagging economy. It's also about the large number of domestic rivals with a high level of name recognition in a fiercely competitive market.

You won't find a more mobile-phone-obsessed population anywhere than Japan. Adding some Sony designs to the iPhone alone could mean huge profits. And Apple might find Sony's distribution channels helpful in boosting its Asian business."

Yes, I agree that there are many, many advantages for both Apple and Sony in such a move, but also, many, many risks. For one, on the positive side, Blu-Ray is the future and it would be nice to see Apple controlling it. Secondly, the music and movie entertainment aspect is a huge one. This is one that would be a great asset for iTunes and give Apple even more control and sway (as if it doesn't already have that it in spades already!) and make it a little harder for the music companies to threaten or gang up on Apple, as it has been clear that they have been doing of late.

A third positive for Apple would be Sony's manufacturing capabilities. Televisions, cameras and other electronic gear could eventually be woven into Apple's portfolio. I do believe, that Sony actually owns a fair bit of manufacturing plants that could easily be turned into facilities to manufacture iPods, iPhones, Macs, or whatever? Yes, it would cut out a lot of middlemen out of the picture, reducing Apple's costs and raising it's margins, which are already among the highest in the world.

A fourth possibility that could benefit Apple would be that it could make it easier for Apple to conquer the Japanese market as already stated. Sony is a leader worldwide, but it is especially so in Japan and it could give Apple an image that few foreign firms could ever hope to match, and one that could greatly enhance it's mind share among the gadget craze Japanese, something that so far has been difficult, if not down right impossible for foreign firms to do thus far.

Are there negative for Apple in any Sony merger or acquisition? Yes, of course, as I stated above. For one thing, Sony is not governed from the top down as is Apple is with Steve Jobs. No, sadly, it is governed, more or less, like Microsoft and other huge business's - by committees. This is a way of doing business that is anathema to Apple. It prevents a company from being able to move on a dime the way Apple is famous for. A lot of people could never get around to designing, let alone bringing to market a product such as the iPhone, OS X, the iPod, etc., because the various competing committees involved would all be at logger heads with each other and stifle such products in the process and long, long before they ever had a chance to see the light of day!

I'm not sure what they would call any potential merger or acquisition, but knowing that both companies, apart from their management style, are very much alike and that they both bring a very lot of very desirable technologies and assets to the market, (Sony holds over 25,000 patents!) I believe that such a merger or acquisition, on Apple's part, is at least worth serious investigation.

However, the question remains: would such a scenario actually be good for Apple, or for that matter, Sony? I don't know, I'm not an expert on such matters, but I do know that Steve Jobs has long held Sony in high esteem, a model of what Apple wanted to be, and despite any negatives, I bet that the positives of such a merger or acquisition, no matter how small the odds may be, would still have to be very intriguing for Jobs.

With all that said, I'm sure that before Apple would ever seriously considers acquiring Sony, regardless how tempting it might be, that Mr. Jobs will do what he has done in the past: he will do what is best for Apple! Personally, I like the idea of Apple acquiring Sony, but not if it is going to drag either one or both companies down. For now, the odds of Apple actually seriously considering such a move is very small to my way of thinking. But, then again, what do I know?

And thats my 2 cents 4 this raining (and I do mean rainy!) Monday, February 18, 2008.