While Samsung, Apple, Lenovo, Huawei and LG are getting most of the headlines as the top 5 players in the smartphone wars by market share in early 2015, Sony’s CEO says his company will definitely stick around to battle its rivals in the mobile space in the future.
Hiroki Totoki, the CEO and president of Sony Mobile, said in a recent interview with Arabian Business that he views the opportunities for diversification in the growing market as huge. “Smartphones are completely connected to other devices, also connected to people’s lives—deeply,” he told Arabian Business in the July 4 story. “We’re heading to the Internet of Things era and have to produce a number of new categories of products in this world, otherwise we could lose out on a very important business domain.”
Totoki, who was appointed to head the company in November 2014, said that with that much at stake, there is no way that he will abandon that market, even though his company trails the market share leaders by a significant margin.
“In that sense we will never ever sell or exit from the current mobile business,” he said in the interview.
A January 2015 study from TrendForce showed Sony in the tenth spot in the global smartphone shipment rankings with a 3.1 percent market share, compared with leader Samsung, which had a 26.6 percent share. Apple came in second in the rankings with a 16.4 percent share, while Lenovo was third with a 7.4 percent share. Huawei, Xiaomi, LG, TCL, Coolpad and ZTE rounded out the top nine vendors on the list.
For Sony, it’s been quite a fall in those global smartphone rankings, according to TrendForce. In 2013, Sony was in the sixth spot in global smartphone market share with 4.1 percent, while in 2014, the company dropped to eighth place with a 3.9 percent share, according to the figures. Global smartphone sales in 2014 totaled about 1.16 billion units, while in 2015 that number is expected to hit about 1.29 billion, according to TrendForce.
For Totoki, getting Sony back into a better position in the mobile marketplace will means cutting back on expenses and employees, as well as finding new ways to compete, he said in the interview. “We are trying to decrease our costs by 30 percent to the end of 2016, and reduce our headcount by 20 percent,” he said. “We have set out our plan already and are just starting to execute it.”
Totoki told Arabian Business that he continues to battle rumors that his company will sell its mobile business due to a particular rough 2014, when it was hit with a large loss that came from $1.5 billion in write-offs related to its earlier purchase of shares from Ericsson in 2012. “But this was an accounting loss and did not impact our cash flow. Our cash flow is very healthy. But the accounting loss was so huge—that’s why people have speculated like this.”
Much of Sony’s recent troubles have come from the sales of cheaper smartphones from China and India—a problem that has also plagued competitors including Samsung, which is still trying to fight back to once again grow its sales.
For Sony Mobile to once again gain traction with consumers, all it could take is one hot product with leading technology features such as 5G connectivity and much improved battery life, he said in the interview.
“There are many players, many emerging players, and new companies that can jump into the industry,” he said. “The world has become flat and competition has become severe. And that’s good for us. We can change the competitive landscape with one new technology, or even one new product.”
In November 2014, Sony announced that it was following the lead of Samsung by 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 works to find the right path back to profitability and increased sales for its declining mobile unit.
The smartphone model reductions were meant to focus sales on fewer models to cut inventories and related expenses, while still providing consumers with competitive Sony devices, according to an earlier eWEEK story. Samsung announced a similar strategy in November by 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.