Sony details mobile profitability plans

Sony details mobile profitability plans

27 MAY 2015

Sony outlined a number of steps it is taking to return to profit in its mobile business, including effort to boost its position in the growing Internet of Things (IoT) market.

In a presentation to investors, Hiroki Totoki, president and CEO of the unit, noted that the company is looking to reduce operating expenses by simplifying and avoiding duplications, with headquarter functions centralised in Tokyo. It is also cutting headcount and reducing its operating units from 43 to 32, of which 20 are based in Japan.

In addition it is looking to prune its product line, with a 50 per cent reduction in the number of variants and a 60 per cent reduction in the number of platforms supported.

Sony is forecasting a 7 per cent decrease in shipments of its Xperia Z-series smartphones in 2015, but a 1 per cent increase in revenue from this business. But a 32 per cent decline in “other smartphone” volume will amount to a 22 per cent decrease in sales.

Geographically, Sony will continue to focus on Japan, “due to its high profitability”. Contrastingly, in Europe, profitability is low despite a relatively high market share – meaning the company will “aim to enhance profitability by improving model mix and strengthening product management”.

China has already been “dramatically downsized”, so Sony will continue to operate “in limited channels with minimised costs”. And in the US, it will look to minimise its losses by concentrating on a small number of operators and premium-segment devices.

According to Reuters, Totoki has warned that issues such as currency fluctuations could potentially have a bigger impact on its profitability than competition in the smartphone market.

With regard to new businesses, Sony Mobile said it will “accelerate the development of smart products with communication at their core” in the IoT space. It will also launch a seed accelerator programme, and collaborate with Japanese internet business So-net to benefit from the latter’s capabilities in customer management, billing, CRM and so on.

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Steve Costello

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