Sony comments on mid-range Xperia review: Focus on profitability over scale

by XB on 5th August 2014

in News


Sony-logoFollowing the news last week that Sony was conducting an internal review into its mid-range Xperia business, we have some comments below from management reflecting on the decision and what it means for Sony’s future strategy in mobile.

Sony intends to review the number of mid-range of handsets it offers. This has been something that has been clear to many of us for a while – Sony offers too many handsets in the low/mid-range that do not differentiate against the competition. The company also plans to focus on profitability over scale, this probably means we will see a concentration on the premium segment going forward.

Check out the full quotes below, taken from various management including Kenichiro Yoshida (Group CFO), Steven E. Kober (CFO of Sony Corporation of America), Hiroki Totoki (Senior Vice President of Business Strategy) and Dennis van Schie, SVP Sales & Marketing at Sony Mobile.

On the recent results within the mobile segment

“The Mobile Communications segment recorded a JPY 2.7 billion loss in the quarter, primarily because an increase in marketing and R&D expenses did not yield the expected increase in unit sales primarily in our midrange. For the full year, we have lowered our forecast from 50 million units to 43 million units. However, going forward, we are going to continue to pursue cost reductions in order to offset the impact of this revision as much as possible.”

Number of Xperia models to be reviewed; focus on profitability over scale

“Going forward, we will deploy country-specific strategies, maintain strong relationships with carriers and strengthen our position as a premium brand, all in an effort to build a profitable business model. We have already began to review our product line-up and the number of models in our portfolio. We will also prioritize profitability over scale so as to reduce the risk associated with this business.”

Mobile will remain a core part of Sony’s business going forward…

“Mobile business is one of three key business parts within the Electronics business. Mobile is absolutely part of the core business of Electronics. One reason is that smartphones have absorbed many functions of Sony’s product line-up, including camera, Walkmans and part games. So we have to deal within the smartphone business anyway.”

…although that could change at any time

“But what is within the core Electronics business is a strategy issue. And the strategy may change in accordance with a change in business environment. So in the future, we may change this current strategy or the definition of a core business. If that will occur, the timing will be at the next corporate strategy meeting scheduled in May next year.”

On the United States push

“We do still have a plan to expand into the U.S. market in an incremental way. We are currently feeding our ability to collaborate with our other divisions such as the Game division. U.S. telecom carriers want to enhance their data ARPU. So what we are trying to provide is streaming music as well as the streaming game functions, combined with the Xperia smartphones. In such a way, we will try to approach the telecom carriers in the United States.”

Future mobile strategy

“As for the strategy of the Mobile business, we will reduce a portion of the middle-range product line and concentrate on the profitable countries and telecom carriers, such as we do in Japan. Originally, the Sony Xperia smartphone began as a high end or flagship product. This is the year that we started to expand our product range to the middle end. During the course of reviewing this mid-term problem, we will re-evaluate the product line strategy. Maybe we will focus more on the high-end side.”

How Sony plans to succeed

“To succeed, we will make sure that we stay lean and fit to deliver on our promise to excite our consumers with innovative mobile experiences and stunning high quality devices, while also driving further sales by ensuring our mid-range portfolio delivers great Sony experiences to wider audiences in this highly competitive segment. The market is changing for sure. But we are more committed than ever to success and believe we are very well positioned to adapt and adjust to that change.”

Via Sony Mobile Blog and Seeking Alpha.

  • how sony can succeed is to keep the symmetry the quality the build material the design language

    for me they can keep their omnibalance design just make bezels thinner it’s already perfect don’t mess with it

  • Levered

    If you want to success, please drop your price and make very good spec for mid-range…

    Just compare with other china brands :p

  • Subham

    What about our comments over mid-range devices updates?

  • El Snajdo

    “Maybe we will focus more on the high-end side” – yep, that sounds about right; concentrate on making one line work for you (make them great, and update them quick for a long time):

    * Zx Main
    * Zx Compact
    * Zx Ultra
    * Zx Tablet (maybe two of those, 8 and 10-inch devices)

    I was truly amazed seeing the line-up of Sony phones the first time I started Update Services, there’s way too many phones.

  • Raphael

    Sea-Jin Chang, author of ‘Sony vs Samsung’ thinks Sony will become a movies and music corporation after exiting consumer electronics businesses. Philips did the same move quite brillantly.

  • Abhimanyu

    With the rise of OEMs like Xiaomi, One Plus and others, it’s a very tough battle in the Entry level and mid-range segment. Sony better scrap its Entry level phones off and focus on becoming a OEM that offers high-end phones with no compromise.

    Z – Flagship range (Xperia Z, Z2, Z1 Compact, Z Ultra and the likes)
    S – Upper Mid-range (Xperia SP, ZR and the likes)

  • SopNaw

    If you look closely outputs of smartphone in the high-range category since the Xperia Z, we can notice that:

    Xperia Z –> Z Tablet
    Xperia Z1 –> Z1 Compact
    Xperia Z2 –> Z2 Tablet
    Xperia Z3 –> Z3 Compact

    And vice versa… If this is the Sony’s strategy, i personally find that is not stupid, because there release one compact and one tablet per year. However for the basic high-end, yes it is sure that is no big change because of the release every six months.

    Also, as the Ultra Z and Smartwatch 2 was released with the Xperia Z1, the Xperia Z3 will surely not be accompanied with only the Compact version… But certainly a replacement of Z Ultra and Smartwatch 2, perhaps. We’ll see.

  • MarkLastiwka

    The volume of high end devices actually isn’t a problem, it’s the low to midrange. They release too many devices with little to no differences between them. The manufacturing and software support for each device increases exponentially with each new device with no actual benefit.

    Release less than 5 low-mid range devices worldwide a year and focus on making the software the best.

  • Prateek Bhanushali

    I think pricing is the main factor for slow pace of Mid devices. You get many options within that bracket with some extra features, so it seems to be the deal for customers there. As Sony mentioned about the Country-wise Strategy may work great if well executed !!!

  • Celso Ishikawa

    Agree…. one should tell the japanese genius from Sony that desing sells better than tech specs.

  • Vuyo Ncube

    Just give it to us straight. The T3 and C3 should have been the same phone. The E1 and M2 should have been the same phone. That would have made things a little more streamlined. Sony Mobile isn’t the only manufacturer bloating the midrange market with pricy phones but I hope they react quickly to that.

  • SopNaw

    We criticize the many mid-range Sony but do not forget that it is the only brand who offer the most beautiful phone design (not crap like Samsung) in mid-range compared to others. But I agree they leave a lot of mid-range.

  • fouzan alam

    You should also focus on sony xperia sp.

  • Fouzan Alam

    Sony Xperia sp should get android 4.4 update.

  • Abdul Ghani

    This is just an idea what Xperia z4 specifications should be

    1 screen in 2 versions full hd and QHD
    2 camera the new curve lens technology with f1/1.6 Glens

    3 internal storage should be 32 gb and 64 gb with micro SD card or make 2 micro SD card one can increase internal storage one for normal use

    4 processor the QHD should have snapdragon 810 and full HD one snapdragon 808

    5 ram should be minimum 3 gb but preferred 4 gb

    6 the full HD one should have at least 3600+mah battery with 5.3 inches screen size and the QHD should have more than 4000+ mah battery size

    7 for camera software hire some good software engineer for good clean class software so it could beat everyone in the competition

    8 new design is needed

    9 ui needs new face keeping it simple is good but just new style

    10 pricing should be normal not over charge it

    http://www.change.org/petitions/sony-mobile-fix-the-camera-software-sony

  • Raj Singh

    You should get a new phone.

  • Looser99

    Its people like you who creates a bad reputation for us all Xperia SP users. I have already seen two comments of you indicating that Xperia Sp should get 4.4 kitkat update which is not even this article related topic. You have made it absolutely essential to criticize you and not if all the Xperia SP users. Shame on you bro. Keep your mouth shut and wait for an official confirmation of Xperia SP NOT getting a kitkat update. Then you can mourn everywhere. What a moron !

  • shanefalco

    xperia m2 is a terrible midrange…big screen with ridicolous definition and 8mpx camera very poor!!!

  • Looser99

    Its people like you who creates a bad reputation for us all Xperia SP users. I have already seen two comments of you indicating that Xperia Sp should get 4.4 kitkat update which is not even this article related topic. You have made it absolutely essential to criticize you and not if all the Xperia SP users. Shame on you bro. Keep your mouth shut and wait for an official confirmation of Xperia SP NOT getting a kitkat update. Then you can mourn everywhere. What a moron…

  • azzido

    I wish Sony will create next Z Ultra and next Z tablet with the best cameras available, like about 5 inch flagships. I do not see the reason why these devices do not have latest / best cameras with flash and this is the only reason why I did not buy it yet. I really hope Sony will release Z Ultra and / or Z tablet with the best cameras on board. If yes and you will do not mistake in other aspects = you have my money.

  • manutd

    when I think of xperia z3,then the future is not that bright!releasing flagship,only by name,and not hardware,is so tupid!what is the point of xperia z3,if it has nothing different than xperia z2!this is the worst sony phone ever!

  • guest

    Then you wake up? Sony is looking to hire you… Hide away :)…

  • Prateek Bhanushali

    Yep…. I wonder just how worst an 8mp cam performs- The answer is M2 :/

  • jonyah

    This is exactly what they need and I completely agree with the 8″ tablet. I drool over the Z2 tablet, but it’s bigger than I want, so I’m not buying it. Honestly, I don’t need a tablet, but if they brought the Z2 in a 8″, I’d buy it just because I can, haha.

  • jonyah

    And you still known nothing concrete about it. Talk about jumping the gun calling it the worse phone ever. Not to mention it will still have the highest specs of any Sony. Maybe it won’t be a jump as much as you wish, but how in the world does it get the title of “worst Sony phone ever”?

  • Abhimanyu

    Let me know when you get back to planet Earth from your dreamland.

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  • Sander Puus

    The exact same thing was said when z2 was about to be released – z2 is worst bcoz z1 is the same… There is no way a newer device would be extremely different/better than its predecessor with the current flagship release tactics that sony has currently that is six months. Technology is evolving fast but not that fast so it would satisfy the likes of you and some other

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  • Guest

    HAha, Exactly..

  • roeshak

    They make too many devices. Period! High end and mid range. Change tact and soon Sony!

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  • shanefalco

    XPERIA P PHOTO TEST:
    http://www.telefonino.net/Sony/Schede-Tecniche/n2371/Sony-Xperia-P_foto.html

    XPERIA M2 PHOTO TEST:
    http://www.telefonino.net/Sony/Schede-Tecniche/n2774/Sony-Xperia-M2_foto.html

    The winner is xperia P product in the 2012!
    dear Sony worse instead of better yourself? wake up it’s time!

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  • Beniamin Florin Copoiu

    You are forgeting the z ultra ;)

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  • QBerto

    Go home, u’re drunk & high

  • Kent Gaga

    i’m a sony fan but i have to say the designs are great but the built quality is awful.
    The E1 has a cheap plastic back that feels very cheap
    the M2 has a glassy looking plastic back that is not “flat” at all, you can see the curves when putting it under light source and it’s easily scratched
    the T2 ultra’s back is also easily scratched (but still looks the best among the ones that i;m mentioning here)
    the c3 back cover feels cranky and cheaply made

  • Alfino Setya

    Yes, Sony should just focus on hi-end market like Apple and satisfy your customer with high quality devices. And don’t be the next Samsung which going down slowly because they didn’t satisfy their customer and never listen to them, and keep flooding market with crap devices but never update them all.

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  • Afzal Zainal Rddz

    Make it wider global market available And fast release. Sony should step up their games. Not fghting with major branding anymore but with small branding cause their already making a huge step on device spec and fetures. Sony releasing to many midrange with no gab of diff between device that can cause confusion. end up customer buying others device that had all in one comparing sony with 2 diff midrange device. I can see that mid range user used their device longer then flagship user.

  • Abdul Ghani

    its the camera software sony has ruined it since the launch of xperia z to z2 ….see the 20.7 hardware is top notch but it fails to beat a 13 mp inferior hardware

    http://www.change.org/petitions/sony-mobile-fix-the-camera-software-sony

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  • SopNaw

    No, i have not forgotten. I did not say because we have not seen a replacement for him like Z Ultra (high-range specs), but i made a little note at the end.

  • SopNaw

    Yes… I agree with you in some points. If i compare by example the SP to M2, yes i find it was a fail, because i personally prefer the plastic of the SP, the design, the screen… And the specs is pretty similar.

  • Battal Aljadei

    Please enough with these blurry GLens !

  • roeshak

    For me Apple has the best strategy. One phone per year. That’s why they are the most profitable mobile manufacturer in the world and by some margin.
    6 months is no where near enough to produce anything meaningfully new so why bother.
    Sony’s portfolio is way too big. High end, mid range and low end. The don’t have the resources to support this and so user experience suffers. Diluting the brand does Sony no favours because all that does is diminish the value of the brand. It creates uncertainty. Who wants to buy a device knowing that it’ll get replaced in the pecking order just 6 months later. Even less in the case of z2 which will be replaced just 4 months after general availability.
    I’ll use my brother as an example, he’s been waiting for the z2 to become available in his region but now that it is, he’s not buying because he’s waiting to see what z3 has to offer. Now that he’s learnt that the z4 might be released next year with advanced camera optics and a much bigger sensor, he’s now waiting until next year. The uncertainty created by Sony’s ridiculous policy just cost them a sale. If there was confidence in the brand, my Bro would probably have bought the z2 this year and upgraded again next year but Sony’s policy put that to rest.
    It’s a bad policy and there’s no evidence that it’s of anti benefit. Shipments and sales are down two quarters in a row and that trend is looking more likely to continue.
    Apple as I said, are the example to follow. Their formula works best simply because it’s the one consumers are happiest with. Considering that support is critical to the user experience, you can see why their strategy works. Also the brand retains in value, iPhones don’t drop in value anywhere near as fast as other devices. Sony devices drop in value much faster than any other brand.
    Sony’s got wrong with their strategy, just as they have with the bezels and TN panels before that. Trouble is they’re a Japanese company and the Japanese are notorious for their inward looking. I fear the original Z last year was a false dawn, there’s more bad news to come for Sony. They can’t succeed like this!

  • honglong1976

    I would go with the following strategy (for example). Have an E1 (Economy) M1 (Mid Range) Z1 (Top Model) T1 (Tablet). Then just increase each year. E2, M2, Z2, T2. Etc. Only 4 models to update, quicker updates, less r+d. How many models do Apple have and they are the leaders?

  • honglong1976

    Simple is best, less confusing and easier to provide updates. Then while you have free resources fire those idiots of write the camera software and start poaching staff from samsung, apple because with the same camera sensor, they work miracles!

  • Abdul Ghani

    well this is the best way 4 models and a tablet

  • josesl16

    Apple is successful and profitable because brand-worshipping from iSheeps, teens and old people who doesn’t care about its limitations(because between inside its walled-garden it’s super simple to use), and most of all, most of all by ripping-off customers by pricing it almost twice what it is worth(which in turn actually works in Apple’s favor because it’s considered as a brand that displays prestige and luxury, holy crap!), and maybe even the portrayed smooth & reliable inside its limited features.

    The rest of your point is ridiculous, 6 months is not enough to produce anything meaningful so don’t bother? People who buy a device for the sake of keeping with the latest and greatest but complain because they are given more options every few months is pretty retarded. Spend more money or put up with it, and don’t be so insecure.

    Although, I do agree that Apple has the advantage of retaining value, which can also be used in your favor by buying the previous flagship just a few months after it launched, but then again it doesn’t work for insecure people like you.

  • roeshak

    It’s got nothing to do with security or insecurity! It’s simply about value for money and a flagship for a year has more value than one that only holds for six months or less.
    In a very competitive market, you have to inspire confidence in buyers and this policy certainly doesn’t do that!
    Most people wouldn’t feel confident buying a phone for an amount of money if they think they can get a better one for the same amount a few months down the line and so on and so forth! The proliferation of flagships also increases the devaluation of those same flashships over time.
    Consumers don’t benefit if all they get in return for all these negatives, is an incremental upgrade.
    Sony too doesn’t benefit from it either. There’s nothing to suggest that it gives any commercial advantage. I don’t see too many people falling over themselves to praise Sony for giving us a more rounded aluminum frame as that, if the rumours are true, is what we’d be getting with the z3 above the z2 from a hardware perspective. What’s the point of that if the result is attention being taken away from an already capable flagship in the z2.
    Samsung will release the galaxy alpha to rival the z3 compact and the note 4 this year. You won’t see a replacement for the s5 until the s6 is unveiled next year. Technology isn’t advancing at a rate that justifies the 6 month cycle.

  • ryq24

    Sony’s failure to improve in the mobile division is cause by the sudden quick rise of Chinese phone makers like xiaomi, lenovo, huawei and other smaller companies which are offering cheaper phones with better specs. And some of them makes better phones than sony quality wise with better features and soft wares .

  • lol

    the problem is no one tell sony about this strategy.

  • manutd

    well,worst…nothing new,really,nothing new,so what;s the point of existence of z3???

  • manutd

    wrong…IPS screen and 3gb of ram,so that’s a thing that I would pay for,not to mention higer battery and cpu and some little extras.can’t say the same about z3,just a bit more power from the cpu and that’s all?a 4000mah battery would make me change my mind and buy it.but I’m not selling the z2 for z3

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  • Sander Puus

    Selling up 6 months old device in order to get latest isn’t the point here unless you don’t know anything better to do with your money, in which case I am happy to give you my bank account information… The cycle is about pepole coming off from contracts either one or two years so they don’t have to wait for don’t know how long before upgrading to a new contract deal. As for specs wise – yes battery is and always will be a thing to whine about. Plus the spec sheet of Z3 isn’t official yet so anything is possible

  • Jaywalker

    Good luck with that ! Premium means quality. Many Sony mobiles have failed. So people who paid premium goods received medium level goods. That hurts. On the other hand, go where the money is: UAE, Qatar, US. Forget the rest. They don’t mind if they waste 1000 USD for a Sony. This planet is too poor for Sony mobiles. Unless they will come up with a better camera, a revolutionary battery, something new and useful not all sorts of mumbo jumbos, I don’t see them in top 5 any time soon.

  • Sony is always looking at the higher range but never down at the mid and low end.
    And ridiculous pricing! I own a ZR and wonder why I bought it when I saw my friend has got a better Asus ZenFone 5 which performs much better than the ZR.
    Very disappointed in Sony

  • InspectorGadget80

    First fire Kaz Hiraz. 2nd update software from mid range to flagship SONY! 3rd release your damn phones on every carrier if you want to succeed and earn more profits here in the U.S. if you want to earn our money.

  • josesl16

    Okay, I can see where you’re coming from.

    But you might be overestimating the value of the long-term value of a newly-released phone vs the value of more choices that are available at the time of purchase.

    That is, the commercial advantage of releasing more phones in a same time period compared to other competitors who don’t is it provides a fresh choice for those potential customers who are looking to buy a new phone. For example, a user who broke his Z2 somehow and is willing to shell money to buy a Z3 since its out, or someone who is changing brands and looking for a new flagship. In both cases, Sony can have a somewhat-competitive advantage by offering a fresh flagship while the new iPhone or Galaxy S is not yet out, especially ‘in a very competitive market’.

    And again, the quick devaluation of Sony flagships also mean people who wants to save money can possibly buy a previous-iteration Z1 or Z2 since, if you say, their value drops so fast after they’re out. That’s another commercial advantage, no?

    So again, it’s probably about long-term value vs choices, since which benefits you the most might be, indeed, subjective. In other words, no matter what rate a technology is advancing in, the period of product release cycles, longer or shorter, have their pros and cons, and I guess a balance just have to be found which suites the target customers the most.

    The rounded aluminium frame is another thing, I still like the two-tone color a little bit more but either is fine for me. Though, I’ll really have to wait until its released first. The specs is more of a problem to me, they’re not a big enough jump even for an incremental upgrade. Another of Sony’s mistakes?

  • roeshak

    I see all your arguments and in theory they seem plausible. In reality or actuality, whichever way you want to look at it, things don’t quite pan out so.
    Confidence is key and the 6 months cycle just creates confusion and insecurity. I used my Bro as an example. If Sony had a yearly cycle, he probably would have bought the z2 as planned and upgraded next year to the next flashship.
    But talk of z3 changed that and now with rumours of the z4 coming next year with much improved camera hardware, he’s decided to wait for that. They’ve essentially lost a potential sale this year because of this confusion.
    You can accuse him of insecurity but it’s insecurity that’s created by Sony’s own approach to things. It just leaves a negative impression on consumers and I cannot see any commercial benefit to it. Shipments and sales are declining not rising!
    Htc used to do the same a few years back. Sony copied this move from htc. Trouble is, it damaged htc and they ultimately ditched the yearly 2 flagship releases business. It didn’t work out well for htc and it won’t for Sony.
    Samsung releases two flagships but they’re aimed at different segments of the market. They don’t conflict with each other. Yes they release a lot of variants specific to certain regions like the lteA S5 which was built specifically for South Korea to take advantage of cat 6 lte. LG have a g3 of the same variant. They are not new models, just variants.
    The 6 month cycle just devalues the brand. It just says, a Sony flagship means a little less than a flagship from Apple, Samsung, htc, and LG.

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