Sony: No longer developing smartphones specifically for the Chinese market

Sony's net loss was 136 billion yen (about $1.2 billion) in the previous quarter as of September 3, compared with a net loss of 19.6 billion yen over the same period last year, according to Sony's previous earnings report. Sony said in September that it would include an amount of about 180 billion yen (about $1.65 billion trillion), which is related to the value writedowns of the mobile sector. Under the competitive pressure of cheap smartphone makers such as Millet, Sony CEO Hirai Kazuo Hirai recently admitted that the company's smartphone strategy had failed and announced a 15% cut in the total number of employees in the mobile sector. In Thursday, Sony appointed Hiroki Totoki as head of the mobile division, hoping to accelerate its recovery. Sony will largely withdraw from the China Mobile market, and the company is making more efforts to repair the smartphone business in the face of a difficult situation. "We are at a stage where we need to rebuild our profits," said Kenichiro Yoshida, Sony's chief financial officer, Kita. We plan to cut down the Chinese business drastically. Although he denies that Sony will completely withdraw from the Chinese market, the company will no longer develop and sell handsets specifically geared to the Chinese market. Sony's weaker-than-expected sales in the world's largest smartphone market prompted the company to cut its smartphone sales target from 43 million to 41 million, the second time Sony has cut its sales target in six months. Before that, Sony's rival Samsung Electronics had confirmed that its quarterly earnings had been the worst in three years, largely as a result of the decline in smartphone profits. Some market analysts point out that it is not effective to simply shrink China's business without taking appropriate investment measures to capture future growth opportunities. Hisashi Kuroda, portfolio manager at Meiji Yasuda Asset Management, said: "Either launch an attack now or simply give it up and avoid being caught in a dilemma." Sony will hold an investor meeting on November 25, which is expected to provide detailed information on its mobile strategy. Despite the dismal performance of the mobile business, Sony's total revenue in the last quarter continued to grow from 1.77 trillion yen in the same period last year to 1.9 trillion yen, mainly due to strong sales of PlayStation 4 games consoles. Sony says its total sales have reached 21 million since the game was launched last November. Kita also pointed to signs that Sony's restructuring measures have begun to work. Sony's previous measures include selling its PC business and splitting the television division. Sony's electronics business made a profit in the first half of the fiscal year, and its television division, which had been profitable for two consecutive quarters, was the number one for 10 years. SonyWill cut operations in weak markets such as Latin America, and so will reduce the annual sales forecast for LCD TVs from 15.5 million to 14.5 million units. "The biggest problem is that investors can't believe Sony will be profitable," Kuroda said. The reason for Sony's current predicament is that the company did not make strategic investments to improve its competitiveness in previous restructuring measures. Sony said it still expects the net loss to be 230 billion yen in the current fiscal year up to next March. Sony's rival, Sharp, had already lowered its annual revenue forecast to 2.9 trillion yen, largely because of the impact of the Japanese government's revised business-tax measures in April. Panasonic, meanwhile, has raised its net profit forecast by 25% to 175 billion yen, due to strong sales of its solar business. Panasonic has achieved a strong recovery since withdrawing consumer electronics and shifting its focus to residential and auto parts.