I'm no Donald Trump, Alan Sugar or even a Jerry McGuire for sure but here's a fact that might just shock you. Sony have made a loss on every single television it has sold in the last seven years. This means that the best way to do harm to them as a company is to buy a TV from them.
So is this an isolated practice? Let's look at some others:
- Amazon are subsidising every Kindle Fire sold to the tune of $50. This kind of makes more sense when you understand that the kindle is a mobile portal to the Amazon shopfront. Nonetheless the fact remains that if it were priced with a reasonable profit margin it would most likely cost another $150 more. How would you feel paying $350 for a Kindle Fire? It doesn't look so tempting now.
- Google have not made a cent out of Android. Again Android is a loss leader (well a giveaway, actually) in order to ensure that the google advertising revenue stream is retained in the mobile world.
In this world of artificial stock market valuations, ipo's, market shares it's worth actually stopping once and a while to figure out that companies have to make money to survive and invest. And the only company I can think of that genuinely does this is Apple. I can't imagine Apple running a product for seven months at a loss, never mind seven quarters or seven years.
Every now and again it'll launch a device that doesn't meet expectations. Remember the iPod Hi-Fi and the G4 cube. However when these misses occur as a company it is ruthless in cutting its losses and focussing on products that are doing well. And that's just as it should be. Loss leaders and market share grabs are fine but somewhere down the somebody needs to show the money .. or else what's the point?
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