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Sony to shrink its smartphone line-up as it seeks to return to profit

In an attempt to return its mobile division to a profit, Sony will cut its smartphone product line-up and impose cost cutting measures next year.

Published onNovember 25, 2014

sony xperia z3 compact review aa (10 of 21)

After posting successive quarterly losses and repeatedly slashing its smartphone sales forecasts, Sony plans to impose cost cutting measures on its mobile and TV divisions. The tech giant will instead be relying on its video game and image sensor businesses to boost profits over the next three years.

This year Sony has reduced its smartphone sales forecasts from 50 million units down to 41 million. Last quarter the company posted a $1.2 billion net loss, with a hefty chunk taken up by mobile losses and advertising. Long term sales figures show that Sony’s mobile shipments have failed to demonstrate any real signs of growth over the past three years, despite global shipments continuing to increase.

Sony stated that its goal is to return its struggling TV and smartphone sectors to a profit, even if sales slide a further 30 percent. It will accomplish this mainly by reducing the size of its product line-up. The company will announce more detailed plans before the end of March 2015.

We’re not aiming for size or market share but better profits, – Sony Mobile Division Chief, Hiroki Totoki

On the positive side, sales at the company’s device division, which contains its lucrative image sensor business, could rise by as much as 70 percent, to generate revenues worth 1.5 trillion yen ($12.7 billion). Demand has already improved recently due to increased adoption of Sony image sensors by Chinese smartphone manufacturers, as well as use in high-end Apple and Samsung handsets.

Sony will also be relying on strong growth in its latest Platstation 4 gaming console to help offset smartphone losses. Sales for the company’s video game division are forecast to reach as 1.6 trillion yen ($13.6 billion) next quarter. Unfortunately, Sony’s impressive game streaming to mobile feature doesn’t appear to have helped handset or tablet sales.

Changes are clearly necessary if Sony hopes return its mobile division to a profit. We will have to wait until next year to see what sort of state Sony’s smartphone business is left in after the measures and what implications this has for the Xperia range.

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