Last year Sony Corp. sold off its PC division to an investment company. Besides, the company span off its TV division into a wholly owned subsidiary called Sony Visual Products in a bid to put its costs under control. This year the company is considering options for its TV and smartphone businesses, which includes sale and spin off scenarios.
Sony management recognizes that “no business is forever”, a source told Reuters news-agency. Although no deals are on the table, “every segment now needs to understand that Sony can exit businesses”, he added. At present it is unclear what exactly Sony might do with its businesses, but it is obvious that the company is losing money on TVs and smartphones.
Kazuo Hirai, chief executive officer of Sony, admits that his reforms have succeeded “in some parts but not in others.”
“Electronics in general, along with entertainment and finance, will continue to be an important business,” said Mr. Hirai. “But within that there are some operations that will need to be run with caution – and that might be TV or mobile, for example.”
Apple, Google and Samsung are the only companies who actually make money on smartphones. Due to cut-throat competition from various suppliers, many companies do not earn any profits selling handsets these days. To make the matters worse for Sony, a similar situation is on the market of televisions. It is relatively easy to obtain display panels, TV tuners, system-on-chips and software to build TVs. Therefore, to start earning on smartphones and TVs, Sony needs to re-organize the aforementioned business units.
“The mobile and TV businesses both require a drastic overhaul,” said Kota Ezawa, an analyst with Citigroup. “Without drastic reforms such as joint ventures or alliances, they will both be in the red three years from now.”
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KitGuru Says: While it is obvious that Sony TVs are better than devices from no-name manufacturers, Sony fails to persuade end-users in this. Moreover, Sony has consistently failed to persuade customers that its products work better together and there is a value in its ecosystem of its devices. If Sony gets rid of its TV or smartphone businesses, it will further devalue the family of its products.