Sony is reducing the number of Xperia smartphone models that it makes and sells and is dropping the development of new smartphone models for the huge China market as the company seeks to find the right path back to profitability and increased sales for its declining mobile unit.
The smartphone model reductions, reported Nov. 25 by Bloomberg, are part of a plan to focus sales on fewer models to cut inventories and related expenses, while still providing consumers with competitive Sony devices, according to the story. In addition, Sony Chief Financial Officer Kenichiro Yoshida said the company will also cut its television model lineup back over the next three years “to help create a business that could withstand a hypothetical 30 percent drop in sales,” the story reported.
Interestingly, this product-cutting strategy is the same path announced earlier in November by Samsung, which is reducing the number of smartphone models it offers for sale around the world by about 25 to 30 percent as it works to right its bottom line after several disappointing earnings periods.
Overall, Sony’s quarterly loss for the second quarter ended Sept. 30 grew to $1.2 billion, while it also took a $1.5 billion write-down for its Xperia phone business and cut its phone sales forecast for the second time this year, reported Bloomberg.
Yet, as I read this news, all I could think about was my amazement about how long it took Sony and Samsung to figure out that by building and offering so many smartphone models that they might not just be hurting their rivals but could also be cannibalizing sales from their own competing devices.
Choice is a great thing for consumers, but sometimes too much choice is ridiculous and can hurt more than help.
Of course, Sony and Samsung aren’t the only mobile device makers that are going through tough times lately. Let’s not forget BlackBerry, where the formerly dominant mobile company is in the midst of a multi-year recovery and rebuilding mode.
So just how hard is BlackBerry trying to increase sales? Well, earlier this week the company launched a rebate offer of up to $550 to iPhone owners willing to trade their iPhone 4S through iPhone 6 smartphones in for a new BlackBerry Passport phone. Now THAT is a hard push for sales growth, I’d say.
Maybe there is a lesson here for device makers.
Build quality, feature-filled devices in multiple price levels and segments to take on your competitors. Then stop. Building variants on your own devices isn’t helping but could be cutting into your own sales of other devices. It’s enough to compete with rivals. Don’t escalate the smartphone wars with a battle against your own products just to increase your model lineup.
Sony and Samsung can tell you their own tales of woe, if you don’t believe me.