In the past two years, there’s been a lot of talk about Sony’s exit from the mobile space. Despite having only purchased their stake from Ericsson in 2012 which finally allowed Sony to take their mobile operations in house and truly control their own destiny, the division has yet to be profitable and in fact has been losing momentum.

Famously, Sony CEO Kaz Hirai said that no division within Sony is safe, referencing that that he’s not afraid to get rid of divisions that aren’t working and will not keep them around for legacy’s sake. This alone signaled to many that mobile and television could be the next to go.

Not so fast, says Hiroki Totoki, CEO and President of Sony Mobile. His statements after the jump.

Hiroki Totoki:

 The speculations arose because in 2014 we made a huge loss as a mobile business. It mainly came from the write-off of the goodwill of our impairment asset. When we bought back Ericsson’s share [in 2012], we bought back 100 percent of it. And obviously that price was high. We had to write it down and it made a substantial loss for the company. 

But according to Totoki, not all loses are the same and the reason for the initial financial loss had actually little to do with what Sony Mobile was doing.

 But this was an accounting loss and did not impact our cash flow. Our cash flow is very healthy. But the accounting loss was so huge — that’s why people have speculated like this. Before that rumour, we exited the VAIO business, which was the PC business. That led people to think that Sony would exit the smartphone business, as well. But the smartphone business is very different from PCs.

Smartphones are completely connected to other devices, also connected to people’s lives — deeply. And the opportunity for diversification is huge. We’re heading to the IoT (Internet of Things) era and have to produce a number of new categories of products in this world, otherwise we could lose out on a very important business domain. In that sense we will never ever sell or exit from the current mobile business. 

Totoki is clearly a smart person and understands that Sony’s exit from the PC business is vastly different than them exiting mobile. While criticized for it at first, IBM famously exited the PC business a few years prior to the major decline that PC has seen, recognizing that PC’s are increasingly becoming a commodity and are no longer at the center of the tech ecosystem.

Mobile, however, is and will likely continue to be that. In fact, it’s mobile and specifically smartphones that are now the hub for our smartwatches, fitness trackers, digital scales, home theater, and home automation. All the breakthroughs and advancements are now hinged and interconnected with mobile, a space that, if Sony were to exit, would have consequences for decades to come and truly turn Sony into an irrelevant company.

It’s also worth looking at Totoki’s final sentence:

 we will never ever sell or exit from the current mobile business 

Just the fact that he’s using the word current clearly opens a lot of wiggle room for Sony. Not that they or any other company is tied to specific statements that they make. But it also, to me – and I may be reading too much into it – leaves a wide space open for Sony to exit the smartphone business while staying in the ‘mobile’ space.

For example, companies like Fitbit, Withings, Jawbone, and Pebble all operate in the mobile space and lack any smartphone products. Of course, if Sony can compete and stay in the smartphone business, all the better as they’ll be able to control a greater part of the ecosystem and provide better harmony between their products, much like Apple does.

However, while not tomorrow or next year, if Sony’s mobile fortunes continue to decline, I wouldn’t be surprised if Sony exited the smartphone business while still keeping a strong presence in mobile. That’s to say, while mobile 5 years ago meant smartphones, it now means a whole host of products, allowing Sony to cut its losses while still being relevant.

Totoki also addressed Sony Mobiles turnaround plans which should see them be profitable in 2016.

Discuss:

Do you see a world where Sony would exit the smartphone business but stay in the mobile space?

[Via Arabian Business]