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Sony's New Profitability Plan Has No Room for Smartphones

27 November 2014, 6:59 am EST By Aaron Mamiit Tech Times
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Sony revealed plans of overhauling its smartphone business over the coming year in a bid to turn around the money-losing unit.

Hiroki Totoki, the new Sony mobile business head, admitted that the previous goal of growing into the third-biggest brand for smartphones in the world behind Samsung and Apple was too optimistic, adding that the ambitions for the unit will now be accordingly reduced.

Totoki said that the focus of the division will now be to return to profitability, even if sales for Sony smartphones will drastically decrease.

"Our urgent task is to make the business profitable even if we face declines in sales by 20% or 30%," Totoki said, underscoring Sony's decision to remain in the smartphone business due to its significance in developing consumer technologies for the future.

The new profitability plan for Sony will lead to the restructuring of its smartphone businesses, which was just recently seen by the company as a possible growth driver. Revamping its smartphone unit is now a top priority, as Sony continues to reverse the decline of its troubled electronics business.

Sony has shown several signs that the company has started turning around its electronics business, but the company keeps suffering from renewed downturns.

Under the leadership of CEO Kazuo Hirai and new CFO Kenichiro Yoshida, Sony will restructure its electronics business by rebuilding around the divisions of video games and image sensors, along with the company's entertainment unit that includes the Hollywood studio business and the music unit.

Sony has already sold off its PC division, spun out the company's TV business into a separate but still wholly owned company, and reduced costs in other parts of the company.

Sony is receiving its strongest growth through its video game business and its devices unit, which produces image sensors used in smartphones. The company said that it expects sales in the video game business to grow to between $12 billion and $13.5 billion in the financial year ending March 31, 2018, compared to the almost $11 billion for the current financial year.

For Sony's smartphone business, the company looks to bounce back from its struggles of competing in both the high-end sector against Samsung and Apple and the low-end sector against low-cost manufacturers such as Xiaomi.

Sony is planning to reduce the number of models of smartphones that the company offers, especially for low-end smartphones, in Asia and Europe. The company has already revealed its plans of significantly scaling back its smartphone operations in China.

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