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Sony looking to scale back mobile operations

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Japanese consumer electronics giant Sony indicated it may be ready to throw in the towel on mobile handsets. In review of its overall corporate strategy, Sony is trying to convince investors it is focused on profitability and “Return of Equity” and has accordingly classified its business units according to how much it thinks they will contribute to this aim.

“Growth drivers” are business groups that Sony reckons might improve their profitability in the next few years. These include the gaming, media and music divisions. “Stable profit generators” are divisions that are profitable, but unlikely to become more so, such as the imaging, video and sound divisions.

“Areas focusing on volatility management”, apart from being a heroic exercise in corporate euphemising, is also the classification given to the problem children of the portfolio. For these the emphasis is on things like “curtailing risk” and limiting capital investment, and no amount of euphemising can disguise the impression that Sony feels these categories are more trouble than they’re worth.

Only two divisions have been put in this corporate last chance saloon: TVs – which is hardly surprising since everyone has been struggling to make money out of them for a while – and Mobile Communications.

So, in essence, Sony is signalling a desire to limit its exposure to the mobile market – specifically smartphones – and maybe even pull out of it entirely some day. “By carefully selecting the territories and product areas it targets, Sony will seek to limit its capital investment and establish a business structure capable of securing stable profits,” said the statement. “The Company will also continue to explore potential alliances with other companies in these areas, in response to changes in the business landscape.”

The smartphone market has rapidly matured to the point that hardly anyone makes money from the hardware. This situation isn’t helped by the fact that Apple owns the premium end, but Android OEMs have long struggled to differentiate their devices and have consequently faced commoditisation.

Sony also said it plans to split out certain business units which, as was the case with Nokia, can sometimes be the precursor to a sale. However, as BlackBerry has found, it’s not exactly a seller’s market for smartphone OEMs right now.


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