Sony Corp. CEO Kazuo Hirai is trying to win back customers from Apple Inc. with new Xperia smartphones. Adding two former executives of the iPhone maker to Sony’s board next month may help.
Eiko Harada, who spent seven years as head of Apple in Japan, and Tim Schaaff, who worked for the iPad maker until 2005, have been nominated to become directors at Sony’s annual shareholder meeting June 20.
Hirai cut jobs and sold assets to help the Tokyo-based company post its first annual profit in five years, as consumers once drawn to its Walkmans and Bravia televisions now flock to products from Apple and Samsung Electronics Co. Winning customers with Xperia handsets is key to his plan to revive Sony’s unprofitable electronics operations by bringing what Hirai called “inspiration” to its hardware.
“It would help Sony to gain outside board members that have expertise in businesses that Sony is trying to strengthen,” said Koki Shiraishi, an analyst at SMBC Nikko Securities Inc. “It is common for a company to approach people with experience at a growth company.”
Sony nominated three directors to its board for approval by shareholders next month, replacing four who will retire, including Chairman and ex-CEO Howard Stringer.
The third pick, Joichi Ito, is a director of Massachusetts Institute of Technology’s Media Lab and also at the New York Times Co.
The additions to the board come as existing directors discuss whether to adopt billionaire hedge fund manager Daniel Loeb’s proposal for an initial public offering of Sony’s entertainment business that includes a Hollywood movie studio and music operations. Talks on the plan from Loeb’s Third Point LLC, a Sony shareholder, are at an early stage and “it’s important that the board will discuss this and come to a decision that represents Sony’s stance,” Hirai said earlier this month.
While Sony’s smartphone unit is expecting 27 percent growth in shipments this year, it remains dwarfed by Apple: Sony expects handset sales of 42 million units in the year ending March 31, whereas Apple sold almost 48 million iPhones in the December quarter alone, Bloomberg data show.
Sony’s market share in the worldwide smartphone industry rose to 3.8 percent in the first quarter of 2013 from 3.6 percent a year earlier, data compiled by Bloomberg showed. Samsung and Apple together controlled 49 percent of sales.
Harada worked for Apple for 14 years, leaving in 2004 after spending his final seven years as head of Japanese operations. He then joined McDonald’s Holdings Co. (Japan) as CEO to revamp the Japanese operations of the world’s largest hamburger chain. Harada shut about 600 unprofitable or small restaurants, upgraded the menu and lured customers through partnerships with NTT DoCoMo Inc. and Nintendo Co. for online services at outlets.
Harada’s expertise and successful career at Apple, as well as his experience in businesses that face consumers directly, were some of the reasons he was nominated, Hirai told reporters at a May 22 briefing.
As for Schaaff, his experience in Silicon Valley can help Sony as the electronics maker increasingly focuses on expanding network businesses, Hirai said.
Schaaff joined Sony in 2005 from Apple, where he held positions including vice president of Interactive Media. His contributions at the U.S. firm included managing the development and maintenance of its QuickTime platform.
“I doubt Sony can catch up with Apple after all this time, it may be better to gain talents from a totally different field,” Yuuki Sakurai, president of Fukoku Capital Management Inc., said in Tokyo. “It’s hard to say whether these nominees will help Sony, as it’s not very clear to investors where the company is heading.”