Sony Reports Losses, Mobile Business to Blame
The mobile phone business since the beginning has been a tough one and in such a short time we see differing companies and manufacturers rise to the top, new technologies that we never thought would see in a handheld device was featured in almost every device we can get our hands on these days. Entering the smartphone era the market just gets tougher as we see big names like Nokia fall out of the sky out of nowhere while Samsung dominates. Sony was not the top mobile phone brand in the older era of mobile phones, but it was close and quite competitive.
Then it was known as Sony Ericsson but later Ericsson was sold off as development costs gets higher and Sony was bleeding money. Their computing division was not doing so well too, they had to close down VAIO division just recently to cut more losses. In the smartphone era Sony continues to show lackluster performance as well with the Xperia line. Specs wise and device wise we would say that they are great devices across the ranges they have but it does not reflect in sales numbers, in fact it is doing worse that what Sony expects it to be. So it is natural then that Sony reported a loss of $2.1 billion which translates to RM6.9 billion in losses. This loss also exceeds Sony’s forecast of $1.7 billion or RM5.5 billion of losses just slightly earlier.
Of course as business goes Sony would have to explain these losses to the board and shareholders. So it is a no brainer to blame the mobile division for this loss. Of course, why not? The mobile market, as mentioned has become one of the most hostile markets for manufacturers and companies to compete in with highly unpredictable outcomes. Of course there is also the fact that Sony is reluctant to enter one of the largest smartphone market in the world the United States which may significantly contribute to the losses incurred. Of course the company would also have to come up with a plan, a road map to correct the losses, to turn the reds in to greens.
So what would Sony do this time to turn things around. They actually have taken their first step to step up in the market by cutting about 1,000 jobs in their mobile division that makes up about 15% of their workforce. That is a natural step if you ask anyone in the business world, lay off employees they do not need, keep things lean. The next thing they plan to do is regarding the type of market they enter. They commented that one reason why Sony is doing so badly is due to the rise of low cost smartphone brands that is new to the market like Xiaomi. With brands like Xiaomi it is understandable why all major manufacturers are struggling in the lower-end smartphone market. Xiaomi offers unparalleled value with its low-cost, high-end hardware approach. Sony came up saying that they are not capable of competing in that market bracket any further as the market segment does not recognise the Sony brand and they could not charge a brand premium. From that standpoint Sony will be focusing more on the high-end smartphone market where customers pay a premium for branding. At least that is what Sony thinks.
As earlier mentioned Sony was also lagging behind in the United States and that is one issue they wish to rectify next year. As of now, Sony’s Xperia Z3 flagship smartphone is only available on one carrier in the United States. That, Sony admits is not enough and they will be trying to increase the brand’s presence in the market in the coming year. How? they did not say yet, but chances are that they would try to get their smartphones to all carriers to increase awareness.
It is a challenging business to be in, the smartphone market but yet Sony claims that it is one of Sony’s very essential division and they plan to keep going at it. Considering that so many iconic brands are pulling out, we would hate to see Sony go too with their highly potential XPeria line. It is true though that they need to step up in their game when it comes to marketing and getting their devices into the hands of the consumers especially in large markets like United States. Would that help much though, we do not yet know. There is also a chance that it is a little too late for Sony to make a move in the United States market but then again Xiaomi was a late comer in the industry and they succeeded with their no brainer strategies. So who knows.