Lessons for Apple in Sony's Fall

NEW YORK ( TheStreet) -- Sony ( SNE) once was what Apple ( AAPL) is now.

Under the late Akio Morita, Sony was where consumer electronics came from, an iconoclastic company that marched to the beat of its own entrepreneurial drummer.

Before there was the Cult of Steve, there was the Cult of Morita-san.

It's impossible for young people to understand today just how revolutionary the Walkman was in its time. It let us take our music, not the radio station's music but whole albums, with us wherever we went. And it ran on regular AA batteries. If the iPod is a telephone, the Walkman was a telegraph, the first revolution, not a refinement.

Sony posted its eighth-straight quarterly loss this week, the Washington Post reports. It was a surprise, because many investors believed new CEO Kuzuo Hirai, who came from the profitable games division, had started turning things around.

Hirai will be in New York on Feb. 20, where CNET expects he will unveil the Playstation 4, the first reboot of the game console since 2006. Gamespot says the new device is expected to retail for over $425, with biometric controls and cloud streaming.

To which investors are likely to say, ho-hum. Been there, done that. The earnings hit halted some momentum Sony stock had in January. Its market cap in dollars is now about one-fourth of its annual sales in yen.

What does this have to do with Apple? Apple is in a similar position to Sony in the 1980s when it was piling up cash and going from strength to strength. Sony put that cash into content, buying CBS Records and Columbia Pictures. Sony Pictures led the U.S. box office last year. Those assets may be worth more than the whole company is now.

David Einhorn has sued Apple to extract cash for shareholders, saying it should issue preferred stock tied to the company's dividend, Marketwatch reports. Einhorn accuses Apple of having a "Depression-era mentality" and says the $145/share in cash on its books needs to go to the company's owners.

Whether the cash goes to shareholders or to buying other companies matters less, however, than what new products and new categories Apple opens.

Its stock price problems would vanish if investors saw another iPad-like hit on the horizon. What disturbs us most is the idea the company is repeating itself, delivering new versions of what it already has rather than something truly new.

That's what happened to Sony. Its biggest hit was the Trinitron TV, and it has kept selling TVs to this day, even though flat screens are now commodities that don't wear out as tubes did. The Trinitron was Sony's Macintosh, as the Walkman was its iPod, and its failure to move on, to reinvent, to think differently, especially after Morita-san suffered a stroke in 1993 and retired in 1994, was its undoing.

Apple shareholders are right to be concerned. Cash, in the form of dividends or preferred stock, won't feed our hunger. Neither will acquisitions.

We need something new, something that convinces us CEO Tim Cook has a little of that Jobs magic in him, the magic Morita's successors, starting with Norio Ohga, failed to deliver to Sony.

We're right to need that. Because we saw what failure to innovate did to Sony. Until we're convinced Tim Cook can think different, Apple stock will languish -- no matter how financial engineers try to prop it up.

At the time of publication the author had a position in AAPL.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.