Sony is going through some troubled waters at the moment and it doesn’t seem as if the immediate future looks much better. Earlier this year the Japanese electronic giant posted a net loss of over $1 billion for its 2013-2014 financial year, which ended in March. However Sony forecast that it would sell some 50 million mobile phones from April 2014 to March 2015. Unfortunately things didn’t go as expected and in September the company adjusted its forecast and lowered its sales target by some 7 million, to 43 million units.
According to the Wall Street Journal, Sony is yet again preparing to reduce its smartphone sales forecast by several million units. It is believed that Sony intends to reduce its presence in many of the world’s emerging markets, especially in China. This means that Sony will reduce or stop making altogether entry-level handsets. It seems that Sony has decided that introducing entry-level models for emerging markets was a mistake.
Although the Xperia brand will remain core to Sony's smartphone business, the brand has been struggling against cheaper handsets from Chinese OEMs.
Although the Xperia brand will remain core to Sony’s smartphone business, the brand has been struggling against cheaper handsets from Chinese OEMs. Sony’s Chief Financial Officer Kenichiro Yoshida said that the smartphone business unit will focus on high-end models and won’t seek a major share of the global market.
Sony isn't the only one feeling the pitch.
Last month Sony released more bad news for investors when it announced it would write down $1.68 billion off the value of its smartphone business. It also lowered the earnings forecast for the current business year to a loss of over $2 billion. Sony isn’t the only one feeling the pitch. HTC is in the middle of a turn around after a period of loss making, and Samsung is expecting its Q3 profit to plummet 60% compared to last year. However some companies are managing to do well. LG is expecting record sales this year, while Xiaomi has just taken over the top spot in the highly competitive Chinese market.
Sony will hold a meeting with investors in November, where it will reveal its updated smartphone business plan. If you want to know more about why Sony’s mobile business is doing so badly then read our very own Robert Trigg’s excellent analysis: Why is Sony’s mobile business in the red?