Sony to Incorporate Its Game, Audio Expertise Into Smartphones
Sony Corp. (6758) plans to draw on its skills in video games, cameras and audio players in developing smartphones and tablet computers as the company tries to narrow the gap with Apple Inc. and Samsung Electronics Co. (005930)
“We’re going to promote mobile product development that will use our expertise,” Kunimasa Suzuki, an executive vice president overseeing mobile products, told reporters in Tokyo today, without giving specific details. “We are strong in digital imaging and game players and also have audio products.”
Sony, whose Xperia handsets don’t rank among the top five brands globally, is trying to expand share in a smartphone market that Bloomberg Industries estimates at $219 billion. Boosting mobile-device sales will help Chief Executive Officer Kazuo Hirai as he takes steps including 10,000 job cuts this fiscal year to stem four consecutive annual losses.
“Even though Sony has been slow to expand in smartphones, there are still chances to catch up with competitors, given the market has plenty of room for growth,” Keita Wakabayashi, an analyst at Mito Securities Co. in Tokyo, said before Suzuki’s comments. “Sony needs to use its experience in making a range of popular products such as games and audio players to come up with smartphone models that can attract more customers.”
Sony rose 1.6 percent to close at 890 yen in Tokyo trading, narrowing its loss this year to 36 percent.
Suzuki today reiterated Sony’s target to sell 34 million smartphones this fiscal year, and to generate 1.8 trillion yen ($23 billion) in revenue from mobile devices such as tablets and smartphones in the year starting April 1, 2014.
The company plans to turn its mobile-phone business profitable in the year beginning April 1, 2013, Shiro Kambe, a spokesman, said Aug. 2, without specifying how much the unit loses.
Sony is moving its mobile-phone division’s headquarters to Tokyo from Lund, Sweden, after buying out Ericsson AB’s half of their 10-year-old venture for 1.05 billion euros ($1.3 billion) in February.
Sony had a 3.5 percent share of the global smartphone market in the second quarter, according to Stamford, Connecticut-based Gartner Inc. Samsung topped the rankings with a 29.7 percent share, followed by Apple with 18.8 percent.
The Japanese electronics maker needs to strengthen product development and marketing to survive in the industry dominated by Apple and Samsung, said Suzuki, who was promoted as part of a new management team Sony unveiled in March.
“If we follow through what we have started, we will be able to achieve a certain target,” he said, without providing specific details. “It’s not possible that only two companies will survive in an industry that’s grown significantly.”
Sony’s full-year sales target for smartphones trails Samsung’s quarterly sales of the devices, which allow users to perform a range of functions including reading books online and shooting high-definition photos.
Samsung’s second-quarter smartphone shipments more than doubled to 50.5 million units, a record volume for a single vendor, even as global sales grew at the slowest pace in almost three years, researcher Strategy Analytics said in July.
“How Samsung is making money at its smartphone operation suggests there is similar potential for Sony,” Wakabayashi of Mito Securities said. “It may be the only realistic area that can drive Sony’s growth, as there is little sign for the TV market to recover and other electronics businesses are also grim in terms of profit.”
In April, CEO Hirai listed three areas of electronics businesses that he would focus on: mobile devices, games and digital imaging. The emphasis on the three core businesses follows 714 billion yen of losses at Sony’s TV business in the past eight years as demand for its Bravia models slumped.
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