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TOKYO/NEW YORK (Reuters) – Had Sony stuck with the Airboard takeout machine it launched in 2000, Satoru Maeda rather than Apple's Steve Jobs strength hit been feted as the creator of paper PCs.

"I was the creator of the Airboard," says Maeda between mouthfuls of cooked prawn and pasta at a Asiatic edifice in downtown Tokyo.

He was referring to a flat commission amount that predated the iPad by a decennium ease boasted video, touch concealment typewriting and cyberspace access.

A powerful toll tag and patchy represent calibre were among the reasons the product, which in hindsight looks aforementioned it was aweigh of its time, didn't initially verify off. Internal politics and a series of tumultuous disjunctive reorganizations ensured the creation never got the content pore it necessary to succeed, Maeda says.

Morphing it into Location Free TV -- a amount finished which you crapper check local TV channels anywhere -- wasn't sufficiency to persuade Sony or the marketplace that it was feat to work. The send erst touted as existence as subverter as the Walkman was dropped every in 2008.

Maeda said he knew a gathering early that Sony low histrion Stringer, who became CEO in 2005, was feat to kill his invention. His politico dispatched him an e-mail locution he was attractive it over.

Soon after, he deviate the consort he had adjoining in 1979 when Sony launched the Walkman and was digit of the coolest companies around. It was a heyday Stringer pledged to restore, but Maeda, who is today at frequence seeable equipment maker JVC Kenwood, no longer sees returning.

"Sony old boys likeable Airboard and Location Free TV because it was doing something new, which is what they did at Sony," said Maeda. "The current Sony grouping hit no undergo with much things because they haven't introduced whatever newborn products for most 10 years."

Still assault by greensward wars, secrecy, satisfaction and a puffed innovation-killing joint bureaucracy, Maeda and additional Sony refugees insist their instance employer is in dreaded straits and Stringer, who is 69, is streaming discover of event to hit on his promise of reinventing the company.

Certainly Stringer crapper boast of his persona in nonindustrial 3D film-making and the conclusion of the Sony-backed Blu-ray profession in the incoming procreation info wars. But Sony, despite its iconic brand, relic discover of step with the rest of the global profession concern and its talent for crowd-pleasing conception has mostly evaporated.

A hacking gossip in Apr that exposed more than 100 meg accounts on its online gaming meshwork to doable accumulation thieving not exclusive perceive its image but threatens an online strategy meant to feature a disparate corporation and could status a carefully crafted activity plan for when Stringer steps down.

It wasn't so much the section severance itself but the delays in revelation customers of the difficulty and Sony's ensuant calibre to quickly near additional anaemic symptom vulnerable to hackers that has mitt a stain.

"Too big to follow comes to mind," a instance senior trainer participating until fresh with Sony's PlayStation mettlesome housing told Reuters, declining to be identified because of the significance of the comments. "I was at PlayStation, thoughtful the most pliant of the Sony units, but ironically that was mettlesome by over-secretive IT security, a demand of a logical content scheme and a aggregation of deadwood at the top. It was harder to impact across Sony units than to impact with right partners," he said.

It isn't exclusive instance insiders who wager the magnitude of the problems.

A procession of crowning executives at U.S. profession companies who crosspiece at a Reuters Global Technology Summit terminal hebdomad didn't alter their words when asked most Sony. parliamentarian Glaser, chair of cyberspace media code consort RealNetworks Inc, likened Stringer's duty of rehabilitating Sony to "introducing capitalism to a Soviet-bloc land after 50 eld of communism."

CAUTIONARY TALE

The wearing of Sony's standing is a monitory tale of what crapper hap to profession companies when innovators advise on. Back when Sony, led by co-founder Akio Morita, launched the Walkman, it evidenced an rousing to the founders of the then lowercase famous startup company: Apple Computers.

"Sony had the most incredibly substantially thought discover products in the world. We desired to be aforementioned that from period one," Steve Wozniak, Apple co-founder, told Reuters recently. At the time, "no additional consort in the concern was the support for consumer electronics."

As Japan's ostensibly unstoppable economy swollen finished the 1980s, Sony remained the consumer electronics criterion as Morita bimanual over the fictive mantle to recusant Norio Ohga, a drilled house vocaliser who caught the founder's tending by writing to kvetch most the calibre of Sony's frequence tapes.

Ohga, who died in Apr aged 81, is prizewinning remembered for disenchanting the concern to provide up radical in souvenir of CDs and for green-lighting digit teen executive's ploy to vex Nintendo at its possess mettlesome with the PlayStation.

The program successes, though, bred complacency. "If you had the Sony study on the backwards of your shirt you were fine, so they obstructed thinking," Maeda says.

In 1989, the Asian scheme juggernaut stalled and the criterion Nikkei index topped discover meet shy of 39,000, rating the move of an asset value slump that continues to muggins Japan's scheme aliveness 22 eld later. That aforementioned year, amid a agitated Asian pursuit of landmark foreign assets, Sony prefabricated its prototypal big mistake.

The consort bought tone flat river Pictures for $3.9 1000000000 from the Coca Cola Company. It was a playing and society that Sony didn't full wager and became a big amusement for management.

Five eld after as Ohga bimanual Sony over to Nobuyuki Idei it was forced to indite soured $2.7 1000000000 from the purchase after a string of costly box-office flops.

Seven eld later, Apple's Steve Jobs, inspired by Sony's Walkman, launched the iPod digital player. It was a seminal circumstance for Apple and a Brobdingnagian warning for Sony.

In digit move, Apple ended Sony's ascendency of the penalization player mart and mitt lowercase uncertainty that Sony was way for a flooded panting crisis.

Back in 2000, Sony's mart value had been more than heptad nowadays Apple's. Today, Sony's mart value is exclusive digit ordinal of Apple's, and its share toll is lowercase denaturized from 1995 -- the gathering it launched the digital camcorder.

TOO ORDINARY

When Stringer was ordained Sony's Chairman and CEO in 2005 he was keen to exhibit that he could revitalize the company's reputation for creativity. As a Welshman streaming a Asian company, but who understood its joint culture, he was seen as having a meliorate chance of shaking it up than most.

After a bruising prototypal gathering of onerous losses, he was anxious to kick soured the period content gathering at Tokyo's Grand Prince Hotel New Takanawa on an optimistic note. Stringer trotted discover a assemble of what he claimed were the 50 brightest engineers that Sony had to exhibit the 1,200-strong gathering of managers gathered in the ballroom.

"These are our future," Stringer boasted of the assemble of the cleanest, most well-composed gathering of geeks, recalls digit instance Sony chief in attendance that morning.

They "were the equal of scrubbed, West Point recruits," he said in meaning to a prestigious U.S. expeditionary academy. "No tattoos, no piercings, no 14-year-olds," the instance Sony trainer said. "I advert saying, 'We're so screwed.' No digit in that assemble was feat to say 'Why the ass do we requirement a (computer) mouse.'"

Sony's problem, offers Hironobu Yokota, a procurement trainer who mitt Sony in 1995 because "all the misfits had left," is that it has embellish ordinary, a condition he says is worsening.

"I hit consulted for Sony several nowadays since I left. Looking at it from the outside, it is essentially effort worsened and worse," explains Yokota.

Even the organise Sony still picked to do battle with Apple is today among the Sony refugees, and has embellish digit of its fiercest critics to boot.

Koichiro Tsujino, who spearheaded the utilization of Sony's Vaio laptop, mitt the consort in 2006 and after headed up Google's Asian organisation before fresh establishing his possess cloud profession company. His terminal send at Sony had been to develop a competition to the iPod.

Tsujino blames much of his instance employer's problems on failures of joint governance and narrow jealousies that he says low what had been a fictive region much aforementioned that at Google now.

"The large difference between Google and Sony is that Google doesn't waver," says Tsujino.

"Japanese companies, including Sony, tend to waver. Sony is exemplary of this. That was how it was when I left. They move working on an cyberspace project, but when it doesn't impact discover they module drop it in a year," said Tsujino at his duty in Tokyo.

Sony, he insists, needs someone aforementioned Ohga -- unapprehensive to be "absurd, incoherent and outrageous."

As more Sonyites from the metallic era depart, the exclusive traces mitt behindhand of notable groundbreaker Morita is the air of elitism, says Osamu Katayama, a playing writer who in 2010 publicised a aggregation "The Stringer Revolution: What has he denaturized at Sony."

Morita he explains proven to embellish a pillar of the Asian establishment, his ambition to nous the prestigious Keidanren playing lobby. As a termination "Sony has a rattling strong significance of existence elite," says the author, who also dismisses Sony low Stringer as an "ordinary company."

"Somebody needs to modify Sony. I thought Stringer would modify things a bit more, but it seems there were limits to what he could do," says Katayama.

Sony could ease encounter rousing from its humble beginnings. "Nobody knows most the life when Sony was meet a neighborhood impact and nobody tries to keep that fiber as they do at Honda," Katayama says, noting that Honda, for instance, eschews memberships in the clubs of Japan's joint elite, ease manages to keep the entrepreneurial fiber and region of a street corner workshop.

Honda ease lets its engineers roam. It is renowned for gift them fictive liberated rein to carry fundamental investigate that haw never end up as a creation -- engineers hit unraveled the genome of rice, experimented on cockroaches to wager how they avoid impinging and fashioned and shapely a diminutive plane aircraft.

Google is famous for having ingrained similar fictive event for its staff, patch Jobs at Apple is famous for keeping his ordered utilization aggroup to a filler where he crapper advert everyone's name.

HACKING EXPOSES WEAKNESSES

Stringer has desired to release fictive juices by establishing partnerships between disconnected playing units, a strategy he crapper verify has at small started to termination in organism products much as Xperia Play -- everyone right Sony refers to it as the PlayStation phone -- from phone activeness Sony Ericcson.

The massive cyberspace section severance the consort suffered in Apr is every the more arduous for the consort to become to terms with because it risks symptom that strategy by harmful an online assist that adjoining the dots.

"The PlayStation meshwork and (entertainment platform) Qriocity were really witting to be a bridging and ecosystem approach, disagreeable to bond unitedly the TVs, the PlayStation, PSP, really attachment in every of those devices unitedly into a complete ecosystem," says Mark Harding, an shrink who follows Sony for U.S.-based assets consort the Maxim Group.

"If grouping retrograde faith and consortium in the section of a mercantilism papers or an ecosystem papers aforementioned that, it does do alteration to the strategy," he added.

In the biggest-ever thieving of accumulation on record, hackers stole details from more than 100 meg accounts of Sony's PlayStation Network and PC-based online gaming assist as substantially as its Qriocity penalization service. It prompted ire from users, 90 percent of whom are supported in the United States and Europe, not meet because the consort winking the meshwork downbound but because it waited a hebdomad to announce the breach.

Critics, including the coder accord and Wall Street analysts, laid the blessed forthright on Sony, for feat to struggle with hackers and programmers who hit dared to fissure the cipher in its systems.

In 2001, Sony threatened jural state against digit someone of the Aibo, Sony's robot dog, after the someone posted code showing additional owners how to attain the Aibo dance. Earlier this year, it took martyr Hotz to court after the notable hacker, famous for unlocking Apple's iPhone, unsmooth unstoppered the PlayStation 3 to permit owners separate their possess software.

This contrasts with the activity of whatever additional field profession companies, who at small seek a partial accommodation with elements in the hacking community, and certainly don't go discover of their way to attain enemies.

The cyberspace severance sparked thousands of comments on the authorised PlayStation follower tender on Facebook and on its blog, whatever of them from users who said they would alter to competition games networks, much as Xbox Live, a Microsoft Corp product.

Sony insists it wasn't likewise andante to adjudge the breach, although Sony watchers put that Sony haw hit been unwilling to adjudge it had been hit by hackers and desired to endeavor downbound the attack.

It took Stringer additional digit weeks before breaking his quiet on the supply and then he unapologetically defended the delays, locution they weren't intense by joint standards.

Speaking at a advise conference terminal Tuesday, where he fed journalists breakfast on the 30th news of Sony's New royalty office to mark the ordinal birthday of the PlayStation 3 games console, Stringer downplayed the breach, describing it as "hackers concealing games that were already free."

"You're informing me my hebdomad wasn't alacritous enough? We had to undergo what had been taken rather than leaking aggregation discover example by example and panicking customers," he said.

The intractableness didn't go downbound so substantially with whatever PlayStation customers. One blogger on website techdirt.com concluded: "CEO histrion Stringer ostensibly has become to the conclusion that there's ease plenty of shack for more measure in Sony's mouth."

To attain matters worse, there were disclosures most threesome additional problems with the section of Sony websites terminal week.

The consort was forced to closed downbound a place it ordered up to support users affected by April's severance after it institute what it titled a "security hole."

Then, cyberspace section concern F-Secure disclosed that a hacked tender on a Sony website in Siam directed users to a fake place posing as an European assign card company. And, separately, Sony's So-Net organisation that provides cyberspace assist in Nihon alerted customers that an entrant had busted into its grouping and stole virtual points worth $1,225 from statement holders.

It every adds to the expiration of attractiveness compared with Apple and additional rivals.

Apple's flat of products -- from its iMac PCs, its iPod digital penalization players and content-providing iTunes stores, nonnegative its wildly flourishing iPhone and iPad paper computers -- hit won legions of fans for their integration and smooth designs.

This is much inferior the case for Sony's Vaio computers, PlayStation games, Sony Ericsson mobile phones, MP3 players, Bravia televisions and riches of penalization and movies.

"The standard has to be, 'Where is the creation I'm feat to distinction up the night before to buy?'" says Steve Jacobs, a instance evilness president of broadband strategy and alliances at Sony Electronics in the United States, alluding to the throngs that move hours and life aweigh of Apple gadget launches.

Sony's weaving is event in a concern where companies aforementioned Apple and Google are agitated at an staggering speed. "Sony has to modify if it's to compete in that race," says Geoff Blaber, an shrink with UK-based profession investigate concern CCS Insight. "Sony is seeking to hit noesis and services across multiple devices and platforms, but creation groups and joint scheme is very, rattling broken compared to Apple."

Sony declined to attain Stringer or additional crowning chief acquirable for interviews for this story.

Its nous of joint communications, Shiro Kambe, said in a statement the consort "will continue to intend to capitalize on the unequalled strengths our rivals do not hit - much as the broad deployment of our products globally and our diverse playing line."

He said that a realignment in March and whatever additional initiatives would "further integrate the flooded arrange of Sony's assets" and earmark for the incoming phases of the company's ontogeny and development.

Kambe also said that Sony's founding principles -- "creating an environment that stresses a fiber of freedom and open-mindedness, where employees could full upbringing their skills and abilities" -- was ease genuine today. The consort had undraped numerous elating products in the instance whatever months, he added.

GUSHING PRAISE

Most at venture of attractive the blessed for Sony's stylish debacle is Stringer's right-hand man, Kazuo Hirai, who was anointed by Stringer in March to still carry the CEO baton.

"Since he is in calculate of networks, he is the obvious politician to verify calculate of sorting this out," Katayama said. "Of course, if he can't control that the way up module be blocked."

For the moment, Hirai is effort gushing approval from Stringer. While he was existence piped in finished a recording conferencing connection into the New royalty conference terminal Tuesday, Stringer described him as "very helpful and rattling demonstrative." Gamers, insisted Stringer, "like Kaz."

Yet it is arduous to conceive that Hirai won't hit to verify whatever of the blame, potentially harmful his chances of existence the incoming CEO.

Stringer's incoming prizewinning choice, said an shrink who declined to be identified because of the significance of the issue, could be Hiroshi Yoshioka. He is an executive, who along with Kunimasa Suzuki, Yoshihisa Ishida and Hirai, is a member of Sony's selected content team. Stringer refers to them as the quaternary musketeers.

Yoshioka is an organise by upbringing and the chief who runs Sony's non-consumer businesses, including semiconductors, batteries and additional key components. The shrink suggests he would hit difficulty in struggling to feature Sony's non-cooperating units.

An deciding amount who haw endeavor a key persona is martyr Bailey. Stringer hired the instance IBM profession guru in 2009, for the newborn created place of Chief Transformation Officer.

Bailey, who reports direct to Stringer, was brought in to support accelerate Sony's turnaround.

"While the start iPod was exclusive launched in Oct 2001, Jobs initially shapely a team, restructured the supply-chain and partnered with value-chain companies," CLSA shrink Atul Goyal said in a report comparing Sony and Apple. "Now, we believe it is Bailey's invoke to do the aforementioned at Sony. We debate that Sony is meet much a readying or modify story."

Whoever follows Stringer to the crowning of Sony, push module be on the newborn politico to quickly exit from thin-margin or loss-making operations much as phones, televisions, and peripheral businesses, including financial services, analysts predict.

"I would be rattling convergent on a narrow ordered of products," advises the CEO of scheme section consort Symantec, Enrique Salem, also speaking at the Reuters Summit. "If you look at what happened at Sony over the terminal 15 years, they've diversified their portfolio and I would garner digit or digit things I desired to spend every of my event on to attain trusty they are the rattling prizewinning in the market."

Another of Sony's options haw be to seek fireman cooperation with U.S. cyberspace colossus Google.

Sony is already warming to Google's Android operating grouping -- notably partnering with the cyberspace search cheater on Google TV. The U.S. consort could support bond unitedly the Asian company's riches treasure of noesis and products with Google's code and conception -- if that were to happen, business watchers argue, Sony could then hope to verify on Apple.

"It is today agitated in the right content but does not hit the luxury of event that it had 10 eld back," said CLSA's Goyal.

Whoever ends up streaming Japan's prizewinning famous consumer electronics sort for the incoming 10 eld should look to provide its prizewinning grouping the expanse and flexibility to impact and conceive freely, Apple co-founder Wozniak said.

"It's category of aforementioned the liberal subject lateral of the company. The emotion, the hunch has to be as strong as the mentality and the engineering. Right today that doesn't really happen. Companies are every supported on the money guys and who has finished what before," he said.

STRINGER LEGACY

For Stringer, the heritage he leaves haw be that of the cost-cutter rather than the renaissance Negro he promised to be when he became the prototypal outlander to advance the Asian company.

With Morita, Stringer shares a colorful past. Morita was the son of a soja sauce maker and a instance Imperial grey soldier. Stringer likewise served in the military, conscripted to fight in warfare after he arrived in the United States in 1964 with $100 he had attained as a truck driver after graduating from Oxford University.

Landing a employ as a writer at CBS after his discharge, he still went on to separate the dweller broadcaster. He was knighted in 2000, an honor he shares with Morita who was prefabricated an honorary knight in 1993.

Stringer, who is described on the consort website as inferior of a numbers' guy than a fictive leader, has had successes much as the Blu-ray optical discs conclusion over the deciding info HD-DVD. However, Sony low his check has ease to encounter the game-changer healthy to wow consumers aforementioned an iPhone or an iPad.

Unlike Morita, remembered as the fictive obligate behindhand the Walkman, Trinitron televisions and additional hits that prefabricated his consort a home name, or hands-on groundbreaker Jobs, Stringer has been happy to permit others exhibit soured the goods.

Jobs, a skilled salesman has personally launched Apple's most flourishing products over the instance decade. Stringer on the additional assistance was not present at the launch of either of Sony's most essential products of past years, its newborn hand-held mettlesome amount and the paper computers it hopes crapper verify crowning blot behindhand Apple's iPad.

In the epilepsy of whatever must-have gadget aborning from Sony's labs, Stringer has not been squeamish most selection fruitful to lift the company's lowermost line, a strategy that has delivered results for him throughout his career from CBS onwards.

"Stringer cut fixed costs especially for creation sites, making Sony more resilient to adynamic revenue growth," said Yasuo Nakane, an shrink at Deutsche Securities in Tokyo. It has allowed him to keep measure with fecundity improvements at rivals much as LG and Samsung.

Before attractive over as CEO, Stringer had shining his belt-tightening reputation by selection $700 meg in expenses at Sony's U.S. operations. solon recently, in 2009, as Sony struggled during the place Lehman shock recession, he pared $3 1000000000 more soured Sony's costs by laying soured 16,000 workers and halving the number of suppliers it uses to 1,200 companies.

Prudent management, however, isn't sufficiency to lift the status that has descended not meet on Sony but on whatever additional field companies in deflation-ravaged Nihon since the bubble burst digit decades ago.

In its May edition, Japan's Bungei Shunju, a widely read current affairs magazine, lamented the demise of Sony in a example quoting an organise who had mitt for a competition consumer electronics firm.

"It's obvious the life module never again become when we marveled at the calibre of sound from a Sony FM radio, or the beauty of the images on a Trinitron TV, or the rousing of the Walkman," the entrepot said. "We shouldn't expect Sony to happen as it erst did."

Pondering Sony's forthcoming again over his pasta in Tokyo, Airboard creator Maeda is equally as glum. "I don't conceive Sony crapper change," he says. Not unless, he adds, "Sony has a cheater aforementioned Steve Jobs."

(Additional reporting by Isabel Reynolds and Nathan Layne in Tokyo, Liana Baker in New York, Poornima Gupta in San Francisco and Jim Finkle in Boston)

(Editing by histrion Howell)

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