The Japanese technology and video game giant is in trouble, and the mobile phone division seems to be the culprit. Sony has forecasted a loss of 50 billion yen back in July, but now the figure has grown to a staggering 230 billion yen or about $2.14 billion. The official Sony report attributed the loss to “the impairment of goodwill in the mobile communications segment.” Eurogamer has further reported that this impairment comes to about 180 billion yen, over 75 percent of the whole amount. The massive losses Sony come in spite of the recent ongoing Playstation 4 success.
Sony has launched its own series of smartphones back in 2008 and tablets in 2012. The Xperia phones have initially ran on the Windows Mobile Os, but have switched to Android at the start of 2010 with the X10 version. Despite a huge variety of models available in several different countries, the sales failed to grow with expectation and resulted in significant losses for the company. Reuters suggests that in the U.S., the sales are limited by the phones being available solely on the T-Mobile network, which is only the fourth biggest carrier. Sony also faces massive competition from Apple and Samsung in the higher-end smartphone market.
President and Chief Executive Kazuo Hirai explained the company will keep mobile as one of their three core electronic divisions. He plans to stop “chasing market share” and instead evaluate market risks to focus on the most profitable regions. Significant workforce cuts are also likely, with as many as 1,000 employees of the current 7,100 mobile division staff looking to be let go. Hirai promised to pull the company out from its struggles back in 2012, but has received a lot of criticism for his decisions so far.
The mobile division seems to be significantly holding back the electronics department, which has been otherwise booming thanks to Sony’s latest gaming console. Sony’s massive losses come in spite of big Playstation 4 success, which had a great launch back in November 2013 particularly with Microsoft’s console instantly receiving bad reputation for its Digital Rights Management policies and the Kinect add-on requirement. Since its launch, Playstation 4 has topped the sales charts across the world every single month. Back in August, Sony reported that it sold over 10 million units worldwide. In UK alone, the sales officially passed the $1 million mark a little over a week ago, making it the second fastest-selling platform in that country after Nintendo Wii. Playstation 4 is currently available in 58 different countries all across the world.
Moreover, many cross-platform games have also seen greater sales on the Sony’s console compared to Microsoft’s. The recently launched massively-multiplayer online shooter Destiny is also undoubtedly proving a big boost to the sales, particularly by allowing last-generation console owners who buy the title to upgrade to Playstation 4 for free. The game is also currently a Playstation 4 exclusive in Japan, stealing an even greater market share from Xbox One.
Nonetheless, despite the huge and constantly growing Playstation 4 success, Sony is still reporting massive losses primarily from its mobile division. While Hirai has not given up on smartphones and tablets just yet, their future is uncertain. The new goals will likely see a focus on the high-end phones in most profitable countries, leaving some of the lesser models and smaller territories behind. Sony has already previously sold its computer division and divided television department into a separate unit, so mobile could eventually follow the same path. It seems gaming is Sony’s best bet at this point in time.