Sony may ditch smartphones and TVs to pursue profits in PlayStation and sensors

19 Feb 2015

Sony may exit TVs and smartphones to focus on areas like its PlayStation and camera sensor businesses in a move to boost profits 25-fold by 2018.

As reported in recent months Sony is instigating a strategic re-focus in order to focus on areas that actually deliver profits.

CEO Kazuo Hirai said yesterday he would not rule out an exit strategy for the mobile phone and TV business units.

Yesterday the company held its Corporate Strategy Meeting and in looking at the next three years is targeting a return on equity of for shareholders of over 10pc and an operating profit of more than 500 billion yen (US$4.2bn) by 2018.

It plans to do so by adopting a management philosophy that pursues more profit without necessarily more volume, greater autonomy for individual business units and re-positioning each business and defining them as either ‘growth drivers’, ‘stable profit generators’ or ‘area focusing on volatility management’.

Sony has positioned its Devices, Game & Network Services, Pictures and Music as ‘growth drivers’ for the next three years. It plans to invest heavily in the area of CMOS image sensors and grow the PlayStation user-base.

Sony described its Video & Sound group as a ‘stable profit generator’ but doesn’t anticipate massive growth in these areas. It warns that the market for single lens reflex cameras (SLRs) are continuing to experience commoditisation and one way to beat this is to continue to offer advanced mirrorless SLRs.

Volatility management

Sony made no bones about the fact that it has reclassified its TV and mobile communications businesses as areas requiring ‘volatility management’.

Sony said, “In view of this business environment, Sony will place the highest priority on curtailing risk and securing profits in its operation of these businesses. Since both markets are experiencing intense cost competition and commoditisation, Sony will strive to further increase the added value of its products by leveraging its in-house technologies and component devices. By carefully selecting the territories and product areas it targets, Sony will seek to limit its capital investment and establish a business structure capable of securing stable profits.”

Another key focus for Sony will be on recurring revenue business models in areas like video games and financial services.

To make the changes happen, Sony plans to restructure the management team, starting with splitting out the Video & Sound business unit as a self-sustaining subsidiary.

Other units that are likely to experience the same fate are the TV and mobile communications group.

Sony image via Shutterstock

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years