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Sony’s smartphones unit lost billions in 2014. What’s next?

In September, Sony told analysts that it expected to lose over $2 billion in 2014 thanks to an underperforming smartphone division. Obviously, that’s not sustainable, and on Tuesday, Hiroki Totoki, the head of Sony’s mobile unit, told investors how the company plans to change that next year. The new immediate goal: “To make the business profitable even if we face declines in sales by 20 percent or 30 percent,” Totoki said in the Wall Street Journal.

How is Sony going to turn around a business that’s currently losing billions? One first step is to slash its mobile phone line-up and reduce the number of regions where Sony sells phones. That will likely result in job cuts. Samsung announced a similar plan earlier this month. The emphasis on profits also indicates that Sony is likely to keep its high-end, high-margin Android phones around — like the Xperia Z3, a lovely device that is worth its premium. However, most of the expected growth in smartphone sales is in the low end.

One problem is that Sony smartphones aren’t widely sold in either the United States or China. The Sony Xperia Z3 is currently available from [company]T-Mobile[/company] and Verizon, but that’s the first smartphone Sony has sold in the past few years to get a timely United States launch. Sony has already indicated it plans to shrink its Chinese operation. From the Wall Street Journal:

Sony’s mobile business is relatively strong in Europe, Southeast Asia and Japan, which account for 34%, 27% and 23% of its total smartphone sales, respectively. But its presence in the world’s largest smartphone markets, China and the U.S., is limited, with sales in each representing only 3% of the mobile division’s total.

Sony isn’t going to stop making smartphones, though. Though the mobile business isn’t going to be a “driver of growth,” as had been hoped, Sony believes it needs to “keep a hand” in smartphones, because the technology is foundational and important to high-growth areas like the internet of things.

[company]Sony[/company] will shift efforts away from its mobile business in favor of its video game division, which makes the Playstation 4, and its devices division, which produces the highest-quality camera sensors for smartphones, including the [company]Apple[/company] iPhone.

One Response to “Sony’s smartphones unit lost billions in 2014. What’s next?”

  1. See that’s funny, they are committing suicide and for what?
    Cams are shrinking, consoles might be slightly dead soon,in phones they might not survive and in TVs they’ll lose share (and glasses could kill TVs anyway). Image sensors are ok but those are low ASP and margins could go away at some point soon.
    If they want to focus on content (cloud gaming has potential and they kinda lead there) it could work but then why not go Xiaomi instead of exiting markets and harming the brand value.
    I they are aiming for less than 2% market share in phones,they might as well give up but they would be better served by selling at cost and pushing content if content is their strategy. Consoles are about content not the hardware so they know how to do it, why can’t they apply that to phones and tabs too since what they are doing now is not viable.
    In phones the global price war is just starting, so the worst is yet to come for old phone makers. If they kill their devices,marketing their content will be a lot harder and could end up being fatal.
    Sony also seems to think that their brand still means something but that’s not the case anymore and they should adjust accordingly.