Sony Mobile To Sacrifice Volume For Profits As It Struggles With Smartphone Business

Sony Mobile To Sacrifice Volume For Profits As It Struggles With Smartphone Business

Sony has had it tough in the smartphone business. The company decided to go solo in the smartphone network by acquiring Ericsson’s stake in Sony Ericsson in the year 2011 and renamed the company to Sony Mobile. Soon after the formation of the new company, Sony aimed to become the third largest smartphone vendor in the world. Unfortunately the goal was a bit too optimistic and the company has actually been finding it tough to maintain its sales in the past few quarters. To turn things around, the new Sony Mobile CEO Hiroki Totoki has decided that the company will shrink its smartphone portfolio in the coming year and target profit instead of chasing market share like it was doing so far.

The company is bracing itself for volumes in the smartphone business shrinking by as much as 30% in the near future. The aim going forward is to remain profitable and just maintain presence in the smartphone market instead of targeting market share or increasing unit sales of smartphones. Sony had already announced plans earlier this year of cutting down on its mid-range smartphone portfolio and focusing only on the high-end segment. In the coming year, the number of entry-level and mid-range Xperia models could be limited to just a few.

In its previous announcement, Sony revealed that the Xperia business was the main reason behind its losses and it was not expecting to make any profits from the mobile business this year and would be happy if it could get the business to break even this financial year. It has also lowered its full year smartphone sales forecast twice this year. As part of its turnaround plan the company will focus on the gaming and image sensor business to get the company back into profit.

Sony’s hopes of becoming the third largest smartphone OEM were never going to come true unless the company focused on the two key smartphone markets – China and USA. Sony has had limited presence in both markets. Sony did try launching a few exclusive Xperia handsets for the Chinese market but it couldn’t win much market share and has decided to move away from the Chinese market owing to the stiff competition there. As far as the US market goes, Sony has never had a good presence in the market and hasn’t been able to strike a deal with all the major US carriers. Its Xperia smartphones have so far been available only through AT&T and T-Mobile. The relationship with AT&T didn’t last long and while it continues to sell Xperia flagships through T-Mobile, which alone isn’t enough to make an impact in the American market as T-Mobile has the smallest market share among the major US carriers. The lack of extensive marketing has also been a factor behind the slowing sales of Xperia smartphones. Even though the company now spends a lot more on marketing its latest smartphones, initially Sony had ignored the need to properly market its smartphones to the global consumers.