It’s no secret that Sony has been struggling to make a breakthrough in the smartphone market in the last year or so, but its slowing handset sales have previously been offset by its other stronger business segments. However, the company’s latest quarterly financial results reveal that even Sony’s historically strong image sensor division is feeling the strain from the competitive smartphone market.
Overall though, Sony is making more money this year, net profit grew 33 percent over the year to reach ¥120.1 billion ($1 billion). While sales revenue remained mostly flat at ¥2.58 trillion ($21.5 billion) for the quarter, operating profits grew by 11 percent to ¥202.1 billion ($1.69 billion), following some strong growth in the company’s gaming and movie divisions.
We’re most interested in Sony’s mobile unit, which didn’t perform quite so well in terms of sales. Revenue fell by 14.7 percent year-on-year, as a result of poor smartphone sales and a “strategic decision not to pursue scale”. It seems that the release of Sony’s latest Xperia Z5 flagship line has done little to improve the company’s struggling smartphone presence. Sony has been making major efforts to cut division costs though, both in the research and marketing department. As such, operating income increased from ¥10.4 billion ($86 million) to ¥24.1 billion ($199 million) over the year.
Perhaps more worryingly for Sony, sales revenue from its more lucrative image sensor business have also declined over the past year. Operating revenue from Sony’s device division, which includes the company’s battery and imaging components, fell by 12.6 percent year-on-year, as demand for smartphone sensor components dropped “significantly” in the quarter. Not only was this figure hurt by Sony’s falling smartphone shipments, but the company also saw sales to external customers drop by 7.5 percent. Sony’s Exmor range of image sensors had been proving popular with smartphone manufacturers around the world, especially in the high-end market.
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Sony has also been pumping cash into additional research and development projects for image sensors and camera modules, in order to stay ahead of competition. Combined, this led the division to switch from a ¥53.8 billion ($445 million) profit in Q3 2014 to a ¥11.7 billion ($97 million) loss in the same quarter during 2015.
Other Sony divisions have fared much better, with PlayStation 4 gaming revenue up 10.5 percent and Sony Picture box office revenue increasing by 26.9 percent. However, Sony is yet another large electronics company struggling to eke out profits from the competitive smartphone market.