Sony CEO admits defeat in mobile

Kaz_Hirai_Xperia
Before I dive into this topic, we should get a few facts out of the way.

  • Sony makes premium smartphones
  • Those smartphones tend to be out of the reach for a majority of Android owners who typically spend no more than $200 on a phone
  • Sony was late to the smartphone game
  • Sony lacks retail and carrier partners
  • Sony has also never been able to mount a marketing and go to market strategy for their mobile devices
  • Sony accounts for around 1% of the mobile industry profits
  • Sony ships less phones in a year, despite having more models available than Apple does in a quarter (Samsung is not a good example as their sales figures include very low-end handsets as well, a market that both Apple and Sony don’t operate in)

Those facts should serve as a backdrop to the following news when Sony CEO Kaz Hirai spoke with AFR:

 A paradigm shift in how we communicate with each other occurs every 10 years or so, but if we don’t remain currently in the business then we don’t get to play or we don’t get to create the next paradigm shift of communication, we basically throw a towel in and lose all the relationships with our retailers and carriers around the world. 

As Paul Smith reported:

 Sony President Kazuo Hirai conceded it is no longer looking to win the handset game, and has its eye on what comes next instead. 

In some ways, the move makes sense. Sony is behind, and with each year that passes, no matter what they’ve tried, their sales have only decreased. Even an increase in sales would have to be by a magnitude of 10x for it to matter in the context of the greater market. As far as Kaz Hirai and Co. are concerned,

 he expected his phone division to be commercially viable, its ongoing participation in the hotly contested, but slowing, market would continue regardless of its ability to take market share from Apple and Samsung. 

So don’t expect Xperia phones to disappear tomorrow as Sony will likely continue to develop them. However, their goals are now more long term with the hope of keeping a relationship with consumers and retailers until the next shift comes. Problem is, that shift could come in two years or ten and until such time, their mobile presence will likely only erode more.

If there’s a silver lining for the company, it’s that Mobile is profitable, which ensures the development of new phones in the future. But what happens if the next “paradigm shift” hasn’t arrived and Mobile’s ever decreasing sales lead to a situation where overhead costs simply outweigh any return?

Kaz Hirai has mentioned on numerous occasions that they only plan on keeping divisions that are profitable, putting the strategy of keeping retailers at arm’s length in jeopardy and disappearing from the mobile conversation altogether. Of course you could argue that has already happened.

  • johala02

    I suppose Sony can not win compared to Apple and Samsung in mobile. But i

  • They might have carrier partners there but nobody is buying them

  • johala02

    We will see how the new Xperia XZs (coming soon) and the Premium in june will go. If the camera is great this time it might get some traction. Many of the “tech” interested customers read reviews and buy devices on the base of those.
    But time will tell.

  • P1l0t3

    As it is a sound strategy plan, it is also funny, in my case, to discover that in the mobile departement, I have moved towards Sony all together over time.

    I had blackberry, then iphone and finally my z5 dual.
    I had an asus tft101 transformer and now a z4 tablet.
    I had a LG Tv and now a sony (don’t recall the model).
    I used to play on PC and now i am mostly playing on PS4 (after upgrading my PS3).

    And so far, all this is not about fanboyism, but rather quality vs price and DESIGN.

    I sincerely hope that Sony will continue to use a design that is not like the other (or samsung trying to copycat apple…) This what distinguished them form the concurrence. Yes, the price is somewhat expensive most of the time, but so far, i have been using their tech on the long run and love it.

  • Their main problem has never been hardware. As you alluded to, the Xperia Z4 Tablet was and is sadly still the best Android tablet made, 2 years after its release. It was a beautiful piece of hardware and a powerful one as well. Last numbers I read, Sony sold less than 500K units.

  • P1l0t3

    indeed, and unfortunately, their only marketing stunts are the Bond movies – product placement – even if the last ones were excellent. But not as frequent as apple or samsung ads.
    So it may have a role to play in their 1% market share.

    What I love with Sony is that they do not try to do like the mass, but set them apart with their own design, technology and products. It was like that with the walkman, the z4 tablet at a certain extent (waterproof) and the playstation.

    In a way, i’m waiting for their next “disrupting” tech. Just hope I will still be there to see it ;P

  • The GOAT

    “What I love with Sony is that they do not try to do like the mass, but set them apart with their own design, technology and products. It was like that with the walkman, the z4 tablet at a certain extent (waterproof) and the playstation.”

    That defines the way I (and I’m sure many others here) have always thought of the brand.