Sony Corporation reported its FY17 results yesterday, for the 12 months to 31 March 2018. Overall, at a Group level, Sony's results were good, with a 12% increase in revenues to 8,544 billion yen, and significant growth in operating income to 735 billion yen (from 289 billion yen last year). However, we've been accustomed to a less-rosy picture on Sony's smartphone business in recent years. This latest report was no exception.
Sony Mobile shipped 13.5 million Xperia units during its latest fiscal year. It was forecasting 14.0 million units for the year, so Sony ended up missing its target yet again. The result meant it shipped only 2.7 million units in its last quarter – this lowest since 2010. On a yearly view, it is also the lowest number of phones shipped.
Sony does not appear to have much confidence in the year ahead, forecasting that it will ship only 10 million phones in the fiscal year. This is in order for the division to remain profitable. The lower forecast is despite the recent revamped design language for its premium smartphones, including the Xperia XZ2 series. It could indicate that initial interest in Sony’s new range is not as strong as had been hoped.
On the earning’s call, management pointed out "changes in the business environment since January of 2018", which is something that other OEMs have referred to recently such as Samsung, when talking about weak demand for flagship products.
So given Sony’s ever dwindling mobile efforts, why not just shut the business down? Well the answer is linked to the importance of 5G wireless technology. Here’s what Sony CFO Hiroki Totoki said on 5G in relation to its smartphone business:
"I would like to say a few things about the importance of 5G wireless technology in the context of our strategy for the smartphone business going forward. By enabling high-speed communication, low-latency and simultaneous connectivity, 5G, which is expected to be commercialized in the near future, is a technology which we view as having immense potential, since it can connect all portable devices to the cloud.
“In order to fully utilize this leading-edge technology, we need to retain in-house our fundamental research capability and capability to create related applications. By continuing to work on 5G in our smartphone business, we are aiming to develop 5G technology as a competency that can be used across the Sony Group."
So it seems that Sony feels that it needs to invest R&D into 5G technology, which naturally fits within the smartphone business, keeping the division alive, but it will also be able to leverage the benefits of this R&D across other areas of Sony’s business.
It’s unfortunate to see that Sony has little confidence in driving mass-market smartphone volume anymore. It seems that nowadays the mobile division acts as more of a proof-of-concept for Sony’s technological prowess instead.
Sony image Credit: MAYAMA/EPA/REX/SHUTTERSTOCK
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