Why Sony is exiting smartphone business

By Kul Bhushan | Updated 19 Feb 2015
Why Sony is exiting smartphone business
  • Sony's decision to no longer pursue sales growth in competitive smartphone business has left many disappointed. But, didn't it seem inevitable as their phones never got the traction like Samsung phones.

Sony has revealed a changed strategy that extensively focuses on camera sensors and PlayStation business, also that could see it exiting from TV and smartphone sectors.

According to the company CEO Kazuo Hirai, Sony is no longer pursuing sales growth in highly competitive areas such as smartphones, but aims for 25-fold profit within three years from camera sensors and PlayStation gaming business. "The strategy starting from the next business year will be about generating profit and investing for growth," said Hirai, while not ruling out “considering an exit strategy”.

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Sony's exit from the smartphone business will certainly leave a huge gap in the mobile phone industry, which has of late gotten more competitive, especially in terms of price. Back in India, Sony continued to face strong competition from the Korean giant Samsung, and then local brands such as Micromax and Karbonn. Entry of Chinese brands such as Xiaomi only made it tougher for Sony.

According to TrendForce, Sony's global smartphone market share fell from 3.9% to 3.1%, ending at the 10th position, even behind the likes of ZTE and Coolpad.

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However, the biggest possible jolt to the company comes in its native country Japan where Apple grabbed a significant 51% of all smartphone sales in November. Counterpoint survey says Japan has traditionally been a strong market for Apple, but now "it is becoming increasingly difficult for competition to challenge Apple's dominance in near- to mid-term.” Source: CNET

While rise in popularity of cheaper phones can be blamed for Sony's sluggish performance, the company should also own up for not doing enough to beat the competition. Though it is understandable Sony didn't want to get into low-end phone and price wars in order to maintain its brand image, the company also could not come up with the kind of innovation Samsung and Apple brought in their phones.

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Sony's phones have been good upgrades in terms of software and hardware, but it perhaps lacked a wow factor that was the key to popularity of Apple and Samsung in the global market.

Sony's restructuring decision may turn out to be a right decision. However, its profitable image sensors heavily depends on Apple, which uses them on the iPhone, and Samsung. As The Verge points out Sony does provide sensors to various other high end phones, but Apple and Samsung lead in terms of sales. If Apple plans to go for another supplier for sensors or build it own, Sony may have to go back to drawing board.

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Sony has remained one of the top consumer electronics companies for over two decades. We'd expect the company to continue bringing innovation in the near future.

Also read: Sony at CES 2015: 4K TVs, smart glasses & more

Sony Xperia Z3 Review

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Kul Bhushan
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