Sony says high-end smartphone market is contracting

Discussion in 'Article Discussion' started by XB, Aug 10, 2020.

  1. XB

    XB Guest

    [​IMG]Sony reported its fiscal first quarter results last week covering the three months to 30 June 2020. The actual performance for Sony’s mobile business was not that interesting – Sony shipped 0.8 million smartphones, a slight decline from the 0.9 million units sold in the same period last year. Sony’s latest flagship, the Xperia 1 II only launched in select regions towards the end of this quarter, so it wouldn’t have impacted the results in any significant way.

    Given all of the uncertainty around coronavirus (COVID-19), Sony is not providing granular unit forecasts for the full year position. However, it did confirm that the Electronics Products & Solutions (EP&S), with which Sony’s mobile smartphone business sits, will see operating profits fall by 31% from 87.3 billion yen last year to 60 billion yen.

    However, within this, Sony confirmed that the mobile business would turn a profit in the year which is a testament to the restructuring taken place. Sony shipped 3.2 million smartphones in the last fiscal year, and we would expect a broadly similar number given Sony’s profit ambitions for the division.

    Sony didn’t talk too much about the impact of COVID-19, but did confirm that its factories in China and Thailand used to make smartphones are currently operating as usual. As you would expect, retail sales globally have fallen significantly with the onset of the pandemic, particularly for digital cameras.

    What we found interesting though, was the company’s comments on the mobile market, saying that it had seen a “deceleration of the smartphone market and a shift to midrange and moderately priced models in that market resulting from the impact of the spread of COVID-19.” This was in reference to its mobile imaging sensor business, rather than specifically its own smartphones, but there’s no reason to believe the trends for its own smartphones would be any different.

    Sony went so far as to say that the “high-end smartphone market is contracting” with all volume being captured by the entry and mid-ranges. This is a wider theme that other manufacturers have been reporting, and no doubt spurred by the pandemic.

    The trend of ever-increasing smartphone prices had to stop somewhere, and now the consumer is much more resistant to the $1000+ smartphone, given that some very competent mid-range phones pretty much do most of what you need a smartphone to do.

    It will be interesting to see how against this backdrop, Sony’s Xperia 1 II flagship has fared. It may even spur the company to focus more on the super mid-range in its future product roadmap. Time will tell on that side, but what do you think Sony’s focus should be on right now in the mobile space? We’d love to hear your comments below.

    Sony representative on declining high-end smartphone market


    “Currently, the business environment surrounding us is deteriorating because of COVID-19. The high-end smartphone market is contracting and that is going – shifting towards mid- and low-end zones, that’s the volume zone now.

    Whatever we see now, we don’t consider to be a long-term trend because at a certain time, this impact of the coronavirus will somehow be absorbed, so that the smartphone market as a whole is not declining all that large. So the transition or the shift we’re seeing currently is only temporary, we believe. But though they are temporary, for this year and for the next year, more mid- to low-end products will sell. That’s for sure.”

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    Thanks Alvin, Diogo, Josh and Moses!

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