Earlier today, Sony released their preliminary Q4 FY15 earnings reports which translates to Q1 2016 results. As a whole, Sony has come a long way compared to five years ago. Under Kaz Hirai, Sony has been able to make PlayStation a money making machine, stop the bleeding in home entertainment and sound while turning a profit, and put together a very lucrative ‘devices’ division which is in charge of all the company’s semiconductor components which mainly supplies rivals Apple and Samsung.
Mobile, on the other hand, continues to be a struggle for Sony as seen by the chart above which depicts their Q1 2015 and 2016 sales. I’ve previously written a fairly extensive piece on why Sony Mobile is actually faring much better than all Android makers, including Samsung in some ways. If you haven’t already, I’d recommend reading that piece in order to put today’s numbers into better context. As Sony noted in their filing, they’ve seen an:
improvement in the product mix of smartphones, reflecting an increased focus on high value-added models
This has allowed Sony to enjoy a much higher ASP than its rivals and resulted in the division slowly turning things around from a financial standpoint. For the year, mobile will be recording an operating loss of ¥61.4 billion ($544 million) which is 57% higher than they had predicted a year ago. However, compared to the previous year’s ¥217.6 billion loss, it’s hard not to see things improving for Sony, even if it’s not evident when you look at their sales chart below which shows a significant year-over-year decline.
Again, note that this is from a financial standpoint. I know many of you might not immediately see Sony Mobile’s outlook improving and that’s because their focus is more wiping out losses from previous years and putting the division on an even footing before scaling again. We’ve seen others like HTC and LG attempt to regain marketshare without the financial discipline which – while from a consumer standpoint can be enticing as they’ve released all kinds of phones – has only decimated both companies financially as they dig deeper and deeper in the red. For Sony it’s clear: right the ship first, even if it means shrinking down their marketshare significantly and then begin to explore options of growing the division.
Way more analysis and charts on Sony Mobile after the jump.
The obvious consequences of Sony’s actions can be seen in their unit sales which has dramatically decreased. For better or for worse, this has been part of the company’s grand plan but for context, we’d have to look all the way to Q3 2010 to see similar sales numbers which you can see in the chart above. In fact, as the below chart shows, Sony has never recorded a worse Q1 sales as it’s had this year.
While it may be tough as a fan of the company to look at the above charts and find something encouraging, it’s worth putting into perspective that the company is on the path of losing less and less money each quarter. With the Xperia X family just around the bend and having been built from the ground up with no direct lineage to past products, Sony has the opportunity to release a new line of phones that has better manufacturing on its side (read: more cost effective to produce and in turn more profitable) and a clean report with consumers. The reality is that unlike the branding of iPhone or Galaxy, Xperia Z means little to most consumers and with the Xperia X, Sony Mobile can work towards a new identity.
Make no mistake, the company still faces challenges, most notably in lacking carrier support and marketing, but with a new division head in the US and a new factory dedicated to their own mobile devices, Sony has a chance to resurge from the long term path they’ve set out on healthier than ever.
As always, a reminder that all charts can be clicked on for much higher resolution versions.
Do you think Sony Mobile can rebound and that the company’s vision will pay off?