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Sony's mobile division made money in its last fiscal year through cost cutting
Sony reversed its money-losing trend for its mobile division during its recently completed fiscal year that ended on March 31, 2017. While that’s good news, the company also says the mobile group made money because it managed to cut costs, rather than boosting sales of its Xperia smartphones.
In its fiscal year financial results, Sony said its Mobile Communications division had generated an operating income of 10.2 billion yen, or about $91 million. This was compared to an operating loss of 61.4 billion yen, or about $550 million, in the previous fiscal year. Sony’s sales revenue for the last fiscal year came in at 759.1 billion yen, or $6.778 billion, which was down over 32 percent from the previous year. Sony said that it sold about 14.6 million phones in the just completed fiscal year, down from 24.9 million units in the previous year.
Sony said that it sold about 14.6 million phones in the just completed fiscal year, down from 24.9 million units in the previous year.
So how did Sony make money with such a big decrease in sales? The company stated its mobile group made a profit “mainly due to a reduction in operating costs including the benefit of restructuring initiatives”. Its profits were also boosted due to Sony choosing to focus on selling “high value-added models” in fewer markets around the world, along with lower restructuring charges and a better foreign exchange rate.
Sony’s president Kazuo Hirai has already confirmed that the company is planning to stay in the mobile business, but admitted that he does not expect its smartphone sales to compete with the current leaders like Apple and Samsung. Instead, Hirai says Sony is waiting for the next big shift in the mobile and communication market beyond smartphones, and staying in the business means that the company can continue to work with its many retailers and partners, rather than ditch them for short term gains.
Sony announced a bunch of new smartphones in its Xperia family at MWC 2017 in late February, but sales for those devices didn’t start until after Sony’s last fiscal year ended. They include devices like the mid-range Sony Xperia XA1, which will begin sales in the US on May 1 for $299. The company’s next high-end flagship device, the Xperia XZ Premium, is slated to go on sale later this spring, but the company has yet to announce a specific release date or price for the phone.
Do you think Sony’s decision to stay in the smartphone market is a good one, even though the head of Sony knows its Xperia phones will not get the same sales as its main rivals? Let us know your thoughts in the comments!