Sony's smartphone struggles continue as other areas look up

The company expects all products areas except mobile to make an operating profit during its fiscal 2016

Sony's CEO Kazuo Hirai has some difficult decisions to make as consumers continue to shun the company's smartphones, resulting in continued losses.

The company on Thursday reported a net loss of ¥126 billion (US$1.1 billion) for its latest fiscal year, which ended on March 31. Year-on-year, Sony's revenue increased by 5.8 percent to ¥8.2 trillion.

Not surprisingly, Sony's Mobile Communications unit, which develops the Xperia smartphones, gets part of the blame for another year in the red.

The future of the mobile division has been very much up in question since a new head of Sony Mobile Communications was appointed in October last year. Sony has announced layoffs and pulled the plug on the PlayStation Mobile platform, but hasn't been able to turn around its fortunes.

During Sony's fourth quarter, running from January to March, revenue was flat, but the number of phones it sold dropped.

Faced with Apple and Samsung's domination of the high end and competition from new and old Chinese vendors at the low end, Sony and other companies such as HTC are struggling to get people to buy their phones. Sony was the tenth largest phone maker in 2014 with a 2 percent market share, according to Gartner.

While Sony expects all other segments to make an operating profit during the fiscal year ending March 31, 2016, Mobile Communications will still record a loss, the company said. If Sony wants to turn around its smartphone fortunes, it needs to break the mold a bit more, and give away more of its content, including movies, Nick Spencer, senior practice director at ABI Research, said in a recent interview.

But it seems the company has already planned for a different future. In February, Sony announced its latest turnaround plan that will see increased spending on the games and network services division, hoping to attract more gamers to the PlayStation and its PlayStation Network.

Along with music and movies, the company is also betting on the unit that makes image sensors for smartphones. The sensors will get more funding, to be spent on research and increased production.

The company's goal is ¥500 billion in operating profit for its fiscal year to March 31, 2018. In the short term, the goal is to turn around to a ¥140 billion profit in the current fiscal year ending March 31, 2016 from a net loss of ¥126 billion in the previous year.

Send news tips and comments to mikael_ricknas@idg.com

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Mikael Ricknäs

IDG News Service
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