Sony’s Profits Slump as Xperia Play Gets Set for Release

by Matt Klassen on April 22, 2011

While many technology companies of various stripes have made the successful transition into the mobile market—Apple being the obvious example—the truth is, the mobile game isn’t for everyone. As Sony Ericsson gets set for the long awaited (and oft delayed) North American release of its Xperia Play gaming phone (otherwise known as the Playstation Phone), news out of the company is that Sony’s profits are disappearing faster than the public interest in Charlie Sheen…so we could say that neither are ‘winning.’

The truth is, Sony has poured significant resources into its mobile division, a division that has given the company nothing but grief over the past few months as its been plagued with production delays, consumer scepticism, and astronomically high product prices, all of which has led to Sony to see a 50 percent drop in its Q1 profits.

So will the Xperia Play be able to reverse Sony’s fortunes? That depends on how much you’d be willing to pay for a dedicated gaming phone, for if its initial release in the UK is an indication of its pricing and accessibility, it won’t come cheap. Like I said, the mobile game isn’t for everyone.

While the earthquake in Japan has impacted most technology and mobile companies in the world, it seems to have hit Sony the hardest. Citing significant disruption in its supply line from closed Japanese factories, Sony posted a 48 percent drop in its income, with units shipped falling by 2.4 million, and a 19 percent fall in overall sales.

The reasons behind this sudden dip can certainly be attributed in part to the crisis in Japan, but also to the fact that Sony is focusing more on smartphones, which traditionally ships fewer units but makes more money. While Sony is optimistic about the future, it has warned investors that Q2 may not get any better.

But the surprising silver lining around this news is that two of Sony’s newest phones, the Xperia Arc and the Xperia Play, have accounted for some 60 percent of the company’s mobile sales over the quarter and in their second tier release both phones will finally hit the North American markets.

Had I not just stated the fact that the Xperia Play and the Arc accounted for well over half of Sony’s mobile sales last quarter, however, I would have been convinced by both phone’s UK release that Sony had made them completely inaccessible.

You see, while the world has been waiting to get its collective hands on Sony’s new Xperia Play, the market’s first dedicated gaming phone, Sony has made the phone so expensive that only the seven richest barons of industry can afford one…and I’ve heard they don’t do much gaming.

The UK mobile carriers that offer the Xperia Play have made it available for $165 on a two year plan that costs almost $60 per month. While that may seem standard for many leading smartphones here in North America, it puts it well out in front as one of the most expensive smartphones available across the pond. If Sony follows this same trend with its Canadian release on April 28th and its American release in early May, interested consumers could expect to pay quite a bit more than they would for any other big market phone.

But maybe just a high price tag should be expected from the market’s first gaming phone, as truth be told, Sony has cornered the gaming community with its Xperia Play being the first such offering out of the gate.

In the end, Sony is hoping that its faith in both the Xperia Play and Arc is well placed, praying that both phones make a significant impact in the North American mobile market. If they do, look for a reversal in Sony’ fortunes, if they don’t, look for a hard year ahead for the tech giant.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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