Sony has revised its forecasts for the year ending March 2015, and now expects to lose $2.1 billion.
That represents a further $1.7 billion loss over the company’s initial projections.
The reason Sony has given for this dramatic reappraisal is the disappointing performance of its mobile division. The company appears to have overestimated sales of its smartphones and tablets for the year.
In recent times, Sony has refocused under chief executive Kazuo Hirai on a leaner set of priorities. The company sold its unprofitable VAIO laptop brand, and reinvested in its under-performing smartphone line.
However, Sony appears to have made an error in aiming for the mid-range market. The company’s so-called “Mid-Range Plan,” which would see the company selling its phones with tiny profit margins in a bid to gain market share, doesn’t seem to have worked.
Undoubtedly the influx of affordable Chinese handsets into the market has had a major impact here, while Sony (as well as pretty much every other established phone manufacturer) has also been unable to launch anything with the simple high-value appeal of the Motorola Moto G.
Sony’s Mobile Communications department will counter this low and mid-range slump by “concentrating on its premium lineup” in certain key markets, and by “reducing the number of models in its mid-range lineup.”
The new Sony, then, will be pumping out a much higher grade of smartphone as standard.
Of course, with the PS4 performing well above expectations and the company’s continued innovations in photography, it’s not all doom and gloom for Sony. However, mobile was identified as a major area for the Japanese company, so this failure will undoubtedly hit it hard.