Without grand plans for China, U.S., Sony set to lag in smartphones

TOKYO Fri Oct 11, 2013 8:07am EDT

Sony Corp's President and Chief Executive Officer Kazuo Hirai speaks during the Sony Corporate Strategy Meeting at the company's headquarters in Tokyo May 22, 2013. REUTERS/Toru Hanai

Sony Corp's President and Chief Executive Officer Kazuo Hirai speaks during the Sony Corporate Strategy Meeting at the company's headquarters in Tokyo May 22, 2013.

Credit: Reuters/Toru Hanai

TOKYO (Reuters) - Kazuo Hirai's plan to restore Sony Corp to lasting profitability rests in large part on its smartphones leapfrogging rivals to become the world's third-biggest sellers after the Apple iPhone and Samsung's Galaxy series.

But that goal remains some way off. Sony's CEO, installed last year with a brief to turn the serial loss maker around, said on Friday that for now, Sony has no big plans for the world's two largest smartphone markets, China and the United States.

Instead, Hirai said Sony, which aims to rise to third position from its current ranking of seventh, will focus on Europe and its home market in Japan, which collectively account for 60 percent of its smartphone sales.

"Those two are the most important areas for us and we'll put substantial resources there. But not yet for the U.S. and China," Hirai told a gathering of journalists.

"It's not realistic to try to do everything at once. In the U.S. we'll start gradually."

In the U.S., only the fourth-largest carrier T-Mobile US Inc offers Sony smartphones. Meanwhile, Sony has been unable to compete in China with homegrown brands from ZTE to CoolPad despite contracts with the three largest carriers.

Sony is not among the top five smartphone brands in either of those markets, according to research firm IDC. Its global share of the smartphone market was a modest 2.2 percent in the second quarter of this year, according to research firm Gartner, trailing the likes of LG Electronics Inc and Lenovo Group Ltd as well as Apple Inc and Samsung Electronics.

Hirai has positioned mobile devices as one of the three pillars for a turnaround of the company's electronics unit, which relied on help from a weak yen to post a profit in the latest quarter - its first quarterly profit in two years.

The other two key divisions are games, where the PlayStation 4 console due for launch next month has drawn strong pre-orders, and digital imaging, where Sony dominates the production of image sensors for smartphone cameras.

Against that background, smartphones could end up the weakest link in the strategy.

NOT EXCEPTIONAL

"Their devices are OK but frankly not compelling. They're fine, but they're not exceptional," said Benedict Evans, an independent mobile and telecommunications analyst based in London.

"But the deeper problem is that when you're selling devices made on someone else's platform it's extremely difficult to differentiate."

Even in its home market, where Sony ranked No. 2 in the latest quarter behind Apple, the outlook has become tougher. Last month Japan's largest carrier, NTT DoCoMo Inc, which in its summer campaign favored Sony's Xperia over other domestic brands, struck a deal with Apple to carry the latest iPhone.

Still, Hirai said the Xperia's established reputation in Japan should help to see off the threat from Apple. "We have strong brand recognition here for Xperia's hardware and services," Hirai said.

The company has set a target of selling 42 million smartphones worldwide in the financial year to next March, an increase of 27 percent from a year ago.

In 2012, Samsung shipped 218.2 million Galaxy phones while Apple sold 135.9 million iPhones, according to IDC.

(Reporting by Reiji Murai and Sophie Knight; Editing by Edmund Klamann and Kenneth Maxwell)

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Comments (2)
isawesome wrote:
I agree,instead of concentrating on the U.S were the brand isn’t even known. they should concentrate places like Europe and Japan , marketing is too expensive, Samsung spend over 1 billion dollars just on it, Sony does not have that amount of money. It would be better to penetrate the U.S market once they have a good amount of share in other non-emerging markets, sony seems to do good in emerging markets, so concentrating there would be smart. Unify!!! geez, I can’t blame them they layed off most of their best engineers and Apple and Samsung snatched them. over the years.

Oct 11, 2013 3:46am EDT  --  Report as abuse
roberttubere wrote:
I once updated a Sony phone’s software through their support site which crippled the phone function. When I called their service hotline for help about this, the very first question to me was whether I’ve read the software update’s disclaimer. From the speed at which the disclaimer question was tossed at me, it was clear there were quite a number of users who’d face this same problem before me. Not sure about others, but that made me ditch the Sony brand for good.

Oct 13, 2013 11:57am EDT  --  Report as abuse
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