Sony could be preparing to ditch its ailing smartphone division
Sony may have begun its recovery following a massive cyberattack, but its bad luck isn’t going to stop there. The Japanese company continues to endure heavy losses thanks to the decline of key divisions, and sources say it is considering the sale of its smartphone business as CEO Kazuo Hirai tries desperately to turn things around.
Sony was once a consumer technology behemoth, riding high on the incredible successes of products like the Walkman and the PlayStation. But thanks to stronger competition, things started going downhill in 2000, and its market cap of $100 billion plummeted to just $18 billion by 2011.
Since taking the reigns in 2012, Hirai has been taking significant steps to cut losses and turn Sony around. He slashed its workforce by 6% — around 10,000 people — back in April of that year, following a loss of 520 billion yen (approx. $6.36 billion), which was Sony’s worst up to that point.
The company then announced plans to sell its U.S. headquarters building for $1.1 billion back in January 2013, and in February of last year, confirmed another 5,000 jobs would be cut. Sony also sold off its Vaio PC business to focus on smartphones and tablets.
Now those devices are at risk. Reuters reports that Hirai and his deputies are considering the sale of Sony’s TV and mobile phone divisions, both of which have seen sales decline amid increased competition — not only from high-end rivals, but from new companies selling more affordable alternatives, too.
Sony’s smartphone struggle is a little similar to that of HTC’s; despite launching a series of excellent devices that get glowing reviews, sales continue to fall. Sony’s flagship Xperia phones deliver better design and software than comparable rivals from the likes of Samsung, and yet for whatever reason, they’re nowhere near as successful.
Sony has now cut its earnings forecasts six times under Hirai, and it is predicting a 230 billion yen (approx. $1.9 billion) net loss for the business year ending this March. As a result, the company has been forced to suspend dividend payments for the first time.
As a ’90s kid who grew up with the Walkman, the Handycam, and the original PlayStation — and longed for an expensive Vaio laptop — it’s a great shame to see Sony struggling. But Hirai has been keen to stress that sections of the company are still very healthy.
Sony’s imaging sensors — which aren’t just found in Sony devices but also third-party handsets like the iPhone — are hugely successful. The PlayStation 4 is also doing tremendously well; with 18.4 million units sold so far, it’s bashing competition from Microsoft’s Xbox One and Nintendo’s Wii U.
“Electronics in general, along with entertainment and finance, will continue to be an important business,” Hirai told reporters at CES in Las Vegas last week, according to Reuters. “But within that there are some operations that will need to be run with caution – and that might be TV or mobile, for example.”