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Sony clings stubbornly to smartphone business

Posted: 27 Nov 2014 ?? ?Print Version ?Bookmark and Share

Keywords:PlayStation? Hiroki Totoki? image sensor? mobile? Internet of Things?

While Sony's market share in regions such as Asia-Pacific, Middle-East/Africa, and South America hovered around 5 per cent, its share in China was only 0.9 per cent with the U.S. at a dismal 0.7 per cent.

"Under the current conditions," said Totoki, "we cannot compete in the mid to low-end product market. We'd be clobbered by our rivals in the price competitions on a market where we can't bring any differentiated products."

Changing smartphone market

Sony predicts that smartphone market growth!on a unit basis!will be led by the low-end models until fiscal 2017. Meanwhile, sales of high-end models, holding more than 50 per cent share of the smartphone market in value, will stabilise.

Smartphone price segment

Smartphone price segment (Source:Sony)

Smartphone market trend

Smartphone market trend (Source: Sony)

The Chinese smartphone market is expected to plateau, similar to the trends we've already seen in Europe, North America, and Japan. Meanwhile, the smartphone growth region will become Asia-Pacific, according to Sony. (See also Smartphone mania in ASEAN drives strong sales)

Sony's mobile business troubles are also internal. The company's redundant layers of mobile business organisations!including Japan, the U.K., and 13 other countries worldwide involved in sales operations!need to be streamlined.

Due to the growing cost required for smartphone development, Sony's competitors have been cutting their product offerings in half, observed Totoki. Sony's indecision led to the reduction of its models by only 30 per cent during the same period, resulting in the further hemorrhaging of the company's resources.

Open market vs. operator market

The sales of smartphones!until now!have been generally supported by mobile carriers who sell smartphone units along with subscriptions. But the industry is beginning to see the expansion of the open market channel for stand-alone smartphones.

Sony predicts the ratio of sales on the open market to grow especially among low-end priced models. The Japanese company, however, added that the sales of high-value added products are still driven by mobile operators.

'Select and focus'

Based on its own analysis, Sony presented four key measures it plans to take for its mid-term mobile business strategy.

First, revise sales and marketing strategy by region. Second, streamline product portfolio. Third, shift marketing focus from acquisition [of new customers] to retention. Fourth, reshape corporate structure and drive transformation.

There is nothing surprising about the measures Sony suggested above. There is no magic bullet.

More surprising is that Sony hasn't already taken such steps. All eyes are on Totoki now, as he holds the key to the execution of the three-year plan.

Unanswered questions include how Sony will ever be able to address the mid-to-low end product segment, or even compete in the high-end smartphone market three years from now. Even fuzzier is what Sony has in mind as an IoT strategy.

- Junko Yoshida
??EE Times

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