Sony to cut smartphone workforce by half by 2020 amidst weak sales
A third consecutive year of losses for the companyBy Humza Aamir
In brief: It's a weird time for Sony. The PlayStation 4 is soon to hit 100 million in sales but its mobile business workforce is going to be chopped in half by 2020 as it only managed to sell 6.5 million Xperia units for the fiscal year 2018, as opposed to 13.5 million in the same period last year (FY2017).
The smartphone industry is viciously competitive. Unless you have the brand cache of Apple or OnePlus or your next flagship manages to tick more checkboxes than anyone else's flagship released last week, the chances of survival or staying relevant are very slim.
Another reason might have to do with one of the worst downturns faced by the global smartphone industry. According to US research company IDC, worldwide shipments are expected to be around 1.3 billion units, a decline for the third straight year in 2019 for the highly saturated market.
Just ask Sony, which in its earnings report published recently, revealed grim news for Xperia fans as its mobile communication segment reported a "significant decrease in smartphone unit sales."
To prevent further damage, the company is going the usual route of saving costs by downsizing. According to an estimate from Nikkei, by March 2020 Sony will see 2,000 job cuts from 4,000 employees in its smartphone segment. Some of these affected employees in Japan will be shifted to other divisions while those from Europe and China will be offered voluntary retirement. Sony also plans to limit its smartphone sales operations in Southeast Asia to focus on Europe and East Asia.
Sony's Xperia brand of phones does have a niche following but brand loyalty won't be enough to keep its mobile business afloat. The company frequently churns out average phones and even its premium flagship devices are refreshed every six months that are good all rounders but don't seem to have a USP, and the novelty of owning one wears off quickly when its replacement is right around the corner.
The company's recent offerings, the tall and narrow 21:9 Xperia 10 series and the soon to be released Xperia 1, pale in comparison to the risky but exciting foldable screen efforts from Samsung and Huawei or even the traditional flagships from these smartphone giants.
If this trend continues, Sony may end up selling its mobile division like it did with its PC business VAIO years ago or shut it down altogether considering it's the only division left making losses for the company.