As featured in Wireless Watch
The smartphone kings have become the old guard almost overnight but as new names like Xiaomi move in, the more established brands are turning to tactics old and new to revive themselves.
According to Reuters, Sony is considering selling its handset business altogether, after a string of refocusing efforts. Having bought Ericsson out of their joint venture, the Japanese firm hoped to be able to exploit its big brands and inhouse design expertise more effectively in the mobile world, and CEO Kazuo Hirai put smartphones, along with content, firmly at the heart of its his recovery plan over two years ago.
However, while the Xperia smartphones have been well received, and Sony has restructured its mobile activities around those higher margin items, it has not achieved its commercial goals. Its market share continues to dwindle and it has never managed to harness its more famous brands as it might have done. The long awaited PlayStation-branded phone never materialized, while Sony killed off its successful Walkman handsets – and when that venerable music brand was reborn at the CES show last week, there was only a high end player, not a phone.
With up-and-coming Chinese phonemakers on the look-out for acquisitions to gain scale and well-known brands – as in Lenovo’s purchase of Motorola and even TCL’s revival of the Palm name – this might be a good time to offload Sony Mobile, though the reports said no specific deal was on the cards, and other options might include strategic partnerships.
“Electronics in general, along with entertainment and finance, will continue to be an important business,” Sony Corp CEO Kazuo Hirai told reporters. “But within that there are some operations that will need to be run with caution – and that might be TV or mobile, for example.”
Towards the end of last year, Sony appointed a new head of the mobile, Hiroki Totoki, and said it would reduce the number of smartphone models it made in order to increase profits. “Our urgent task is to make the business profitable even if we face declines in sales by 20% or 30%,” said Totoki in November. Sony has reduced its smartphone shipment forecast for its current fiscal year, which ends on March 31, from 50 million units to 41 million, and in October, took a $1.5 billion impairment charge on the business.
By contrast, another struggling Asian vendor, HTC, can see the light at the end of the tunnel. It reported its first quarterly revenue increase for more than three years in Q414, and was profitable for the third quarter in a row. Sales were $1.5 billion (NT$47.9 billion), up from $1.34 billion a year earlier, the first gain since the third quarter of 2011. Net income was $14.73 million, beating the $6.64 million analyst forecast.
After those figures, HTC felt confident enough to map out a growth plan, and another profit in the fourth quarter. This will focus, like those of its rivals, on expanding its base technologies and designs to the wider range of connected products. It will now develop offerings, to be marketed in parallel with the smartphones, in four categories – Connected Life (sharing of personal media with gadgets like the RE camera); Connected Self (organizing mobile health, fitness and other personal areas); Connected Entertainment (access to content); and Connected Home.
The company said it aimed to launch at least one product in each of the categories by the end of the year.
According to CNET, Jeff Gattis, executive director of marketing for HTC’s emerging devices business, said the firm would have to rely on partners in some areas, and be selective about its choices. We “can’t afford to just throw products into these categories that everyone else is in and expect to win. For us it’s being thoughtful in each of these four categories in a way that is unique and differentiated,” he said.
The newest approach to handset design for 2015 is the modular phone, as seen in Google’s Project Ara and several Finnish start-ups founded by former Nokia people. The first public ‘market pilot’ of the Lego-like Ara concept will come later this year, after the second developer’s conference in February, and ahead of that, Google has released the second major release of its toolkit, enabling third parties to create and submit modules. These will be certified and accepted into the Module Marketplace in a similar way to an app store process.