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Sony weighing up options if smartphones are unprofitable next year

Sony may consider "alternative options" for its Xperia smartphone business if the division doesn't look like breaking even after next year.

Published onOctober 7, 2015

sony xperia z5 compact first look aa (12 of 12)

Whether you’re a big Sony fan or unimpressed by its latest batch of smartphones, the past couple of years have been tough for the company’s mobile division, with dwindling revenues and an unimpressive share of the global market. 2016 looks to be the make or break year for Sony’s smartphones, as Chief Executive Kazuo Hirai suggests that Sony may begin looking at “alternative options” for the division if it doesn’t look like breaking even.

The company has given itself an ultimatum to try to return its mobile business to break even following 2016, before considering the fate of its Xperia brand. We don’t know exactly what the alternative options could be, but exiting the smartphone market altogether hasn’t been ruled out. Hirai has already presided over a number of important cost cutting measures at Sony, including the decision to axe the struggling PC business.

“We will continue with the business as long as we are on track with the scenario of breaking even next year onwards … Otherwise, we haven’t eliminated the consideration of alternative options.” – Sony Chief Executive Kazuo Hirai

Despite cost cutting measures and a number of restructuring efforts, Sony’s mobile arm is expected to post a 60 billion yen ($480 million) loss this year. Substantially higher than the 39 billion yen ($310 million) that it anticipated it would lose back in April. This makes it seem quite unlikely that Sony will be able to turn the division back to a profit in such a short space of time. Xperia smartphones make up less than 1 percent of shipments in the US and just 17.5 percent in its home nation of Japan.

Although Sony has continually made improvements to its high-end Xperia Z range of smartphones, some have argued that the similarities between generations have sapped broader consumer enthusiasm and interest for the range. Sony has been trying to build a portfolio for the growing mid-range markets, but price pressure from inexpensive Chinese brands continues to make this segment tougher to profit from.

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This isn’t the only company reshuffle on Sony’s plate at the moment. The electronics giant also recently announced that it is looking to give more independent control to its highly profitable image sensor business, in order to keep it competitive with the likes of Samsung and Omnivision.

2016 is going to be a crucial year for the Xperia range. Do you think that the Android space would be worse off without Sony in it?

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