It was only a year ago that we ran an article stating that Sony were looking to become a bigger player in the smart phone market by planning to ship 65 million units from April 2014 – March 2015. This figure represented an increase of 55% over the previous fiscal year’s sales. That figure was deemed a little optimistic and a more feasible target of 50 million was set for the year. Things don’t seem to have worked out quite as planned for the Japanese tech company though. Sony first trimmed the sales target down to 43 million units and are now allegedly looking to whittle that number down even further. Just how much the sales forecast will be reduced by is unknown, with the most accurate number being ‘several million’ as reported by the Wall Street Journal.
Sony has recently decided to pull its entry-level handsets from some emerging markets such as China, a move that will further reduce Sony’s global footprint. This is a consequence of last months $1.68 billion write-down from Sony’s smart phone business and also the lowered earnings forecast that saw a ¥230 billion ($2.1 billion) net loss.
So, what’s gone wrong for Sony? Most of us would agree that they put out some great looking hardware with a lightly customised Android operating system on-board with good build quality. But the six month cycle for its flagship device would appear to actually hinder sales rather than spur sales on, causing confusion rather than appeal. Another factor would be the rise of the Chinese handset makers, who produce cheaper smart phones with value-for-money hardware, this means that Sony just can’t compete on price in the emerging markets. This isn’t helped by Samsung and Apple sharing the majority of the smart phone market between them, with HTC, Motorola, LG and the rest of the smaller players all fighting for the scraps.
Sony’s smart phone business was once the rising star of the company, propping up the company’s profit margins. Now it seems that Sony’s new plan is to concentrate on selling the higher-end devices, and give up on expanding the global availability of its smart phones. They’ve also said that 15% of it’s smart phone business employees would be cut, this comes to around 1,000 workers that will be looking for alternative employment by March 2015. This is in stark contrast to its ambitious plans just a year ago.
Sony’s 3rd Quarter earnings results will be announced on October 31st, it will be interesting to see if Sony have any other strategies to shore up their smart phone business’ profitability. Tom came up with a few ways they could improve their standing here, and the short and sweet answer is that Sony make too many similar handsets. Yes, I know Samsung do as well, but that’s a whole different can of worms for another day. It would appear that Sony have fallen into a similar trap as HTC once did. Too many smart phones that were too difficult to differentiate from each other. Here’s hoping that Sony manage to turn it around, because they do produce some stunning devices. How do you think Sony can sort out their smart phone business? Let us know in the comments or at our Google Plus page.