Sony Forecasts First Profit From Smartphones In… Years

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Sony has just published its Q2 2020 earnings report and there are some positive signs for its smartphone business. The company sold 800,000 Xperia smartphones in the second quarter of this year. That's double the number of shipments in the first quarter. More importantly, despite the COVID-19 pandemic induced global economic recession, the shipment number is down by just 100,000 units from the second quarter last year.

Sony's smartphone business has been on a downward spiral for the past few years. The Japanese electronics giant shipped only 3.2 million smartphones in the financial year 2019 (April 2019 to March 2020). That shipment number is less than half the total shipments in the financial year 2018 when it shipped 6.5 million smartphone units.

However, despite the poor show, Sony never lost hope and made some major changes to its smartphone strategy in efforts to return to profitability. It downsized its smartphone operations in several markets to reduce costs. The company also merged some of its consumer-facing divisions. Those efforts seem to be paying off to some extent.

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Sony now expects the Mobile Communications business to return to profitability for the first time in four years when it announces the fiscal 2020 earnings report in April next year. The company believes lower-cost Xperia phones will make up a large chunk of smartphone sales this financial year.

Flagship smartphones are apparently seeing lesser demand amid the global health crisis. Sony expects a rise in demand for high-end smartphones post this slowdown, though. Going forward, the company is also reportedly planning to switch back to the "three models" strategy for its flagship smartphones. We might see a compact, a regular, and a large (premium) Xperia flagship next year.

Sony saw a staggering demand for PS4 games in Q2 2020

With lockdown measures in place in several parts of the world, it's not very surprising that there's an increase in demand for home entertainment services. In its Q2 2020 earnings report, Sony says it sold a staggering 91 million PS4 games during the three months. The number marks an impressive 83 percent increase from 49.8 million PS4 games sold during the same quarter in 2019. 74 percent of the sales last quarter were digital copies with 18.5 million being first-party titles.

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Sony also registered 3.4 million net new PlayStation Plus subscriptions during the period between April to June this year. Total subscriptions reached 44.9 million by the end of the quarter.

Sales of the PS4 console, meanwhile, dropped by 40 percent during this period. That's not really surprising as Sony is expected to launch the PS5 this year. A slowing global economy may have played some part as well, though.

Overall, Sony reported a profit of JPY 228.4 billion (roughly $2.15 billion) in Q2 2020. It marks a mere 1.08 percent drop from JPY 230.9 billion the company posted a year earlier.

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