Sony Mobile switches focus to premium handsets as profit hit

Sony Mobile is switching its focus to a strategy aligned around premium handsets after warning that poor sales will lead to a heavy loss in its current fiscal year.

Sony plans to focus its efforts on premium smartphones as it forecasts deep losses in its mobile division for the current fiscal year.

In a statement to investors released today (17 September), Sony says it expects to report an annual loss of more ¥230bn (£1.3bn) in the year to 31 March 2015.

This is largely due to an impairment charge of about ¥180bn (£0.57bn) taken on the Sony Mobile division.

The 2015 loss compares with a ¥40bn (£228m) operating profit reported in the previous year. The company had previously forecast a loss of ¥50bn (£285m) for the fiscal year and has now opted not to pay a dividend for the first time since it became a listed company.

In light of disappointing sales – forecast to be up just 1 million on the previous year to 43 million units – and the reduction in value of its Mobile business, Sony has outlined a new strategy to concentrate on its premium handset lineup and reduce the number of models in the mid-range portfolio in certain geographical markets.

Sony says the strategy for the Mobile business has been revised to reduce risk and volatility and to deliver more stable profits, while the previous mid-range plan was focus principally on achieving significant sales growth and chasing market share.

The company says it was hit by “the competitive environment of the mobile business” as well as the “significant change in the market”, but did not offer further explanation.

A Sony Mobile spokeswoman said: “Sony Mobile is continuing to review its strategic product and geographical focus as part of its commitment to profit stabilisation and sustainable growth. No further comment on specific markets can be shared at this stage.”

In addition Sony plans to cut around 1,000 jobs of the 7,100 staff in its mobile unit over the current financial year – the cost of which could add to the unit’s losses in the short term even further.

The strategy revision highlights the struggle to stay competitive in a mobile market dominated by Apple, Samsung and Chinese manufacturers. The brand has just a 4.8 per cent share of the smartphone market, according to the latest figures from researchers IDC. Its struggle is particularly pointed in the US where its smartphones are only available on the fourth biggest carrier T-Mobile.

The announcement comes in the same month Sony unveiled its new flagship smartphone, the Xperia Z3, and the update to its wearables portfolio, the SmartWatch 3, at the annual IFA consumer electronics trade show.

In recent marketing campaigns for its mobile division, Sony has looked to highlight the way its devices integrate with other Sony services – such as PlayStation 4 and access to Sony Music – as a point of differentiation from mobile-only players.

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