Rivals too powerful Sony to give up custom market, an unwise decision

Guide: On the last day of October, Sony announced its second-quarter earnings for the year ended September 30, 2014, with sales rising 7.2% per cent year-on-year, to 1.9015 trillion yen and a net loss of 136 billion yen.
On the last day of October, Sony unveiled its second-quarter earnings as of September 30, 2014, with sales rising 7.2% per cent year-on-year, to 1.9015 trillion yen, and a net loss of 136 billion yen, despite a sharp expansion from 19.3 billion yen a year earlier, compared with the 230 billion trillion yen previously predicted by analysts. Sony's answer to the report, which gave investors a disappointing transcript, was a drag on the decline in the mobile business. To that end, Sony also quickly unveiled the solution – its mobile presence in China will shrink sharply and stop developing specific phone models for the Chinese market, although Sony (China) has also stressed that the move will not affect the strategic positioning of the Chinese market.

Failure: Competitors are too strong

Sony's new earnings report is not all that bright. Data show that Sony's gaming and Internet services business revenue during the earnings of 309.5 billion yen, operating profit of 21.8 billion yen, PlayStation 4 game host sales also increased by 83% over the same period last year. Meanwhile, Sony's home entertainment and audio business also performed well in the second quarter, with sales of television operating at 199.7 billion yen, up 14.7% per cent, operating at 4.9 billion yen, reversing losses of 9.3 billion yen in the same period last year.

However, the mobile business, which had been placed high hopes on by Sony, has been the biggest drag on its performance, with 172 billion trillion yen operating losses, affecting Sony's second-quarter operating profit by 99.5 billion yen compared with a year earlier, when quarter lost 85.6 billion yen. Earlier in September, Sony had just revised its expected earnings for fiscal year 2014 as of March 2015, from the original 50 billion deficit to 230 billion deficit. At that time, Sony Group CEO Hirai said that the main reason was the beginning of July this year, China's mobile phone manufacturers increased power, competition intensified, the company's mobile phone business into a bitter battle, Sony will redesign the medium-term plan for the business.

And that's why, in the meantime, the report Sony also announced that it would cut its smartphone sales forecast from 43 million to 41 million, the second time this year to downgrade smartphone sales forecasts, and Sony also announced the replacement of mobile business executives, executive director and senior Vice President 10 o'clock Yu-Shu as the With a view to readjusting the sluggish mobile phone business.

Sony Mobile will slash the size of its mobile presence in China, according to a recent note from Sony (China) to the Nanfang daily, and a sizeable portion of the downsizing plan that Sony Mobile is about to implement in the world's 1000 employees will come from China. Sony Mobile will also stop developing specific phone models for the Chinese market, but will consider offering a full format model.

Analysis: It is unwise to abandon the custom market

Industry analysts disagree on the "retreat" options that Sony has made. Some experts said the move would be effective in saving research and development spending, streamlining models and boosting the competitiveness of a single product of Sony's smartphones. But there is also the view that the future could be a dilemma for Sony to simply shrink its operations in China without taking more effective measures.

"In fact, Sony smartphone in the product strength is not inferior to domestic competitors, and even Samsung, HTC and other international brands also have the power to challenge, but in product layout and channel operation, Sony is indeed a lot of problems." "Guangzhou Izumo Consulting analyst told reporters that the current smartphone market, especially Android smartphone products, the homogenization of the competition has entered the white-hot stage, in the high-speed popularity of smartphones has gradually come to the end of the background, cost-effective gradually become consumers more important to purchase elements. "In this category of products, Sony has a clear short board, especially in the market to occupy 50% of the share of the 2000 yuan below the low-end products, Sony a few achievements, so naturally difficult to be sought after by the market, even in the operator channel is also difficult to get enough support." ”

Liu Zhenghao said that today, Sony to stop the development of specific mobile phones in the Chinese market, it appears to be able to reduce costs, but in fact, the "localization" of the reverse. "At present, more than 50% of the domestic mobile phone channel is still controlled by operators, although the operator's custom subsidy is decreasing, but the online channel is not mature, public channels are not enough to force, the Sony mobile phone to give up the custom of the market is not a smart move." ”

In fact, another international brand maker HTC has encountered similar problems with Sony. But since the end of last year, HTC chairman Wang has made more marketing efforts to embrace the low-end market, the business situation in the past three quarters gradually showed signs of improvement. HTC has been profitable for three consecutive quarters in the first three quarters of this year, according to earnings figures, while HTC said in its Friday forecast that it would be at least flat or even slightly larger than last year in the four quarter. "In the reversal of HTC's performance, targeted development of China's midrange smartphone market has played a big role." "With such a successful case, Sony has opted for a strategic retreat, and the chances of success will be slim if the future is to return," Liu Zhenghao said.