Sony Mobile effectively exiting US market amid slowing sales of smartphones

Sony's new CEO Kenichiro Yoshida calls the loss-making division "indispensable," though half-hearted efforts in the US and struggles in carrier partnerships made Sony a minority player stateside.

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Sony is refocusing its smartphone division following losses, effectively exiting the US market following an operating loss of 97.1 billion yen ($879.5 million) for the fiscal year ending in March. Moving forward, Sony will focus on sales in Japan, Taiwan, Hong Kong, and Europe, where it has seen greater success.

"We see smartphones as hardware for entertainment and a component necessary to make our hardware brand sustainable," Sony CEO Kenichiro Yoshida told reporters during a press briefing, as reported by Reuters. "And younger generations no longer watch TV. Their first touch point is smartphone."

Sony smartphones have had enduring popularity in Japan and Europe, due to ties in the region--the company enjoys a close relationship with Japanese mobile network operators, while existing relationships built during the Sony Ericsson joint venture, prior to Sony assuming full control in 2012, have helped with sales in those regions.

However, Sony Mobile has faced significant difficulty making any headway in North America. The dual-function power button and fingerprint reader--a hallmark of Xperia devices until last year--had the fingerprint reading capabilities disabled in firmware in North America, for reasons which the company has never explained, though conflicting reports attribute to either a contractual obligation with network operators or unresolved patent issue. Sony's relationship with mobile network operators in the United States is functionally nonexistent, with no carrier-released phones since the cancellation of the Xperia Z4V on Verizon in 2015.

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Despite Sony's relative lack of presence in the smartphone market in the US, it remains the dominant Android manufacturer in Japan.

Sony previously announced the closure of manufacturing operations in Beijing, to shift production to Thailand to reduce costs.

Sony is not alone in facing difficulties in the smartphone market. "Globally the smartphone market is a mess right now," said Ryan Reith, program vice president with IDC's Worldwide Mobile Device Trackers, in February. "Outside of a handful of high-growth markets like India, Indonesia, Korea, and Vietnam, we did not see a lot of positive activity in 2018."

Considering Huawei's embattled position as a smartphone manufacturer, it is possible that a re-focused Sony could absorb a portion of Huawei's market share in Europe. Huawei sold 206 million smartphones worldwide in 2018, according to IDC. While roughly half of those were sold in China, both Huawei and Sony have seen greater success in Europe than in the US. Huawei's present misfortunes are unlikely to completely revitalize Sony Mobile, which sold just 6.5 million smartphones, according to their financial statements.

For more, check out TechRepublic's "Smartphone slowdown: Smaller phone brands getting shut out of the market," and "Tracking 5G: Ookla's coverage map tracks worldwide network rollout".

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Image: Sony