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Vertical Integration at Sony

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Vertical Integration
Back in 2002, Sony geared themselves toward a vertical strategy as reported by Rob Weisenthal, VP and CFO of Sony Corp. of America, “Under the USA umbrella, we undertook a number of vertical initiatives for each operating division. These have already produced significant operational streamlining and financial performance improvements.” As discussed in his release, Weisenthal talked about Sony Pictures Entertainment and their strategy to restructure television operations, where core programming competencies were focused on. Film and television digitalization efforts have been expanded and have engineered a significant reduction in their corporate overhead. In addition, he mentionted that Sony Music has made long …show more content…

Future Vertical Integration
According to the article, Sony 's semi biz to pivot from vertical to horizontal, Sony plans to keep its research and development teams running strong, but will outsource key manufacturing processes. Even if outsourced, game processors will continue to be one of Sony 's main semiconductor products. The company intends to boost all the investment on Cell processor from the game business. Sony has invested a total of 460 billion yen (about $3.8 billion) on semiconductors over a three-year period. Of this amount, 200 billion yen ($1.7 billion) was spent on the Cell processor.
In the coming three-year "mid-term" period beginning next April, "We are considering decreasing investment in semiconductors greatly," Nakagawa said. Under the new policy, Sony intends to focus on three areas—imagers, game LSIs and system-on-chip LSIs for audio/video devices. Sony has about 60 percent market share in the imager market and is now reinforcing CMOS sensors as well. One hundred and fifty engineers were shifted to the imager section from audio/video sections to boost development. In the audio/video area, system-on-chip LSIs for TVs and Blu-ray Disc next-generation DVD products will be reinforced, but non-profitable chips such as GPS-integrated chips will be discontinued.
Sony 's semiconductor sales are expected to increase by 57 percent from 490 billion yen ($4.1 billion) to 770 billion yen ($6.4 billion) next fiscal year, ending March, owing

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