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Sony Lowers Forecast After Mid-Range Xperia Device Sales Slower Than Expected

July 31, 2014 - Written By Cory McNutt

Sony and Samsung are very different companies, yet they are also very similar when it comes to smartphone sales – yes, you read that correctly.  It is no secret that Samsung blows Sony out of the water when it comes to smartphone sales…or just about any other products they sell.  However, Samsung could take a clue from the collapse of the once mighty Sony.  Samsung, up until a year ago, thought they would never see a decline in sales – they were (and still are) the smartphone king, selling more devices worldwide than any other company.  Samsung thought they were invincible, but look how quickly times have changed – their latest flagship, the Galaxy S5, is selling like a mere mortal device, and the latest rumors have them rushing to get the Galaxy Note 4 out the door to compete against the new iPhone 6 model(s) coming out at the same time.  We all know what happens when we rush a product to market…will they ever learn.

Some of you may be too young to understand what the name Sony meant in the U.S. and what a big deal it was.  The best TVs, audio and electronic equipment were all from Sony – I’m not talking about a $10,000 amplifier type specialty company – but if you were a middle – upper class American, you were proud to have a Sony product in your house.  They actually had a distribution chain and that is why it is so frustrating to see them unable to get us a damn smartphone – how hard can it be?  For whatever reason, Sony has slowly been dropping off the face of the U.S. – Samsung, LG and Vizio are the TV brands you see the most…what happened to Sony?

Sony just released their first quarter P&Ls that ended June 30, 2014 – overall it isn’t bad.  Sales increased 6-percent to $18 billion, and operating income went up…but one place it did not do well was their Xperia line of smartphones.  Sales dollars were up 2-percent, however, unit sales declined 2-percent.  The worst area was their mid-range Xperia models – they were unable to compete.  Sony had expected mid-range devices “to significantly grow mainly in emerging market countries.” That did not happen they say because of “increasingly competitive markets in various areas.”  Because of these figures, Sony is carefully reviewing its Mid-Range Plan (MRP) – in it, they cited: “In July Sony began a review of its Mid-Range Plan (“MRP”) for the Mobile Communications business.  This process is currently on-going, and Sony will continue to evaluate the financial and other consequences of changes, if any, in the MRP or strategic alternatives within the Mobile Communications business, as well as its financial performance.  It is possible that the above-described circumstances might result in an impairment charge against various assets, including goodwill, in that reporting segment.”

Sony’s higher pricing has always made it difficult for them to compete against the likes of Samsung and now the onslaught of cheap phones from China and India – and let us not forget the Moto G and now the Moto E devices, offering up quality and smooth performance for a fraction of what a ‘low cost’ Sony device would run.  Hit us up on our Google+ Page and let us know why you think Sony is doing so poorly in their Xperia line of smartphones…as always, we would love to hear from you.

Shipments of Xperia smartphone