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Sony to Cut Smartphone Orders From Taiwanese Suppliers

March 23, 2015 - Written By Tom Dawson

 

Sony has long been a force in the consumer electronics business, but over the past few years the company has shrunk a little bit, and 2014 was not exactly the best year for the company financially. While their PlayStation division is making the company a lot of money thanks to the success of the PS4, their mobile division continues to lag behind, and is in fact losing the company money. It doesn’t look like Sony have given up on the mobile market however, instead it looks like they’ve vowed to rethink their overall strategy. This means producing less low-end and mid-range smartphones and focusing on the profits to be had from high-end devices like the Xperia Z3 and the recently announced Xperia Z4 Tablet.

Anyone in business will know that ordering more stock than you can sell quickly from your suppliers is not a good idea, and neither is having lots of stock lying around. As such, Sony’s latest move is to cut down on how much stock they order from their outsourced suppliers. According to DigiTimes, Sony is to adjust their “sales ratio of low-margin products” in order to lower their operating margins to as low as 3%. For Sony, the road ahead doesn’t look all that fantastic in the mobile arena, with predictions for the fiscal year of 2017 – 2018 to be somewhere in the region of $7.497 – $8.33 Billion of revenue. This is down from the $10.8 Billion for the fiscal year of 2014 – 2015. However, the changes that Sony propose should take them from a negative operating loss of roughly 16% down to as low as 3%. Specifically, Sony is to reduce orders with Taiwanese suppliers that provide them with lower-end devices and handle production of certain lines.

Sony might not be the most successful mobile vendor out there these days, but it would be a shame to see them fade away and be sold off. With Samsung producing something great in the form of the Galaxy S6 and Galaxy S6 Edge, competition is to become fierce throughout 2015. Hopefully though, a reduction on operating costs and less lower-end devices will lead to a more successful and profitable Sony Mobile. Devices like the Xperia Z4 Tablet prove that Sony can create great Android devices, so hopefully 2015 could be a big year for the company.