Sony Merges Electronics Divisions, Hiding Staggering Mobile Losses
Sony hasn’t been selling as many smartphones as it once did, but Sony isn’t considering giving the mobile division the ax. Instead, it’s merging mobile with its TV, audio, and camera products to create a new unit called “Electronics Products and Solutions.” This has the benefit of hiding just how badly Sony Mobile does each quarter. No matter how bad you think it’s doing, it’s worse.
Sony says the move is about “synergy” and other corporate buzzwords. In reality, the mobile division is just a colossal embarrassment each time Sony releases quarterly results. Over the last four quarters, Sony Mobile has lost 100.6 billion yen or $910 million at current exchange rates. In fact, Sony Mobile lost enough in the most recent quarter to completely wipe out all of Sony’s profits from movies. Over the last year, it lost more than the camera division earned in profit.
The smartphone market is leveling off as we reach saturation, and Sony has failed to capture the global market like Samsung or Apple. It was one of the early supporters of Android by way of the Sony Ericsson partnership, but its sales are dropping like a rock in the increasingly competitive market. In Q3 2017, Sony moved 3.4 million Xperia devices worldwide, and a year later it had fallen to just 2 million.
Sony is on the verge of launching its latest flagship, the Xperia 1. Sony usually announces two high-end smartphones per year, but carriers in the US haven’t offered a Sony phone for sale in years.
So, why not throw in the towel? Pride is definitely part of it. Sony has been making phones for longer than modern smartphones have existed, and it doesn’t want to bow out of the market. Sony just wants to be a company that makes phones. The other reason is the transition to 5G. Sony says its mobile division is working hard to implement 5G wireless technology, but not only in phones.
Sony sees its in-house mobile division as a benefit as the industry moves toward 5G. However, 5G will also increase R&D costs dramatically. Sony might be anticipating even larger mobile losses, so hiding that inside the conglomerated Electronics Products and Solutions division will make its quarterly numbers look better. It’s still going to take something of a minor miracle for Sony to become profitable selling phones again, 5G or no 5G. Sony’s reorganization will take effect on April 1st.
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