Sony Losing More than Ericsson

by Matt Klassen on January 23, 2012

Although Japanese technology company Sony waited until the new fiscal year to officially bring an end to its long-time partnership with Swedish telecom company Telefon AB L.M. Ericsson, it looks like consumers backed out of the deal ages ago, as the conglomerate posted its worst quarterly numbers since it grabbed on to Google’s Android lifeline three years ago.

In fact, slumping sales of its increasingly polarizing Xperia line of smartphones—including the first dedicated gaming smartphone, the Xperia Play, a device seemingly rife with functionality issues—and its ongoing restructuring leading up to the dissolution of its partnership with Ericsson has led to net losses of $316 million for the year 2011, with an astounding $265 million of that coming in Q4 alone.

While the partnership won’t officially dissolve until the end of the month, with Sony (particularly its mobile division) once again on the brink is there anyway for the company to recover its image, its product line, and more importantly, its profits in 2012?

One of the more telling details of Sony’s fiscal report was the fact that overall device shipments over the past year fell a staggering 20 percent. The sharp decline was due in part to the devastating floods throughout Thailand, which slowed the company’s manufacturing Sony’s official report stated. Further, the news of restructuring seems to have driven off most of the company’s potential Christmas sales, robbing them of that lucrative annual holiday sales boost.

“Our fourth-quarter results reflected intense competition, unfavourable macroeconomic conditions and the effects of a natural disaster in Thailand this quarter,” Sony Ericsson chief Bert Nordberg said in a statement. “We are aligning our business to drive profitability and to meet customer needs.”

For those that have followed Sony’s rise and fall in the mobile space over the last few years, this recent decline is reminiscent of the struggles the company had back in 2009 when it teetered on the brink of extinction before Android pulled it back. Despite the fact that its Android-powered Xperia line of phones still drives its mobile division, with the fact that sales are slumping throughout the company’s mobile catalogue one has to wonder who’s going to come to the rescue this time.

But don’t count Sony out just yet. Corporate restructuring, particularly after more than a decade of its partnership with Ericsson, is difficult and it’s going to take some time before Sony finds its own identity in the mobile market, one separate from any joint ventures it had before. If Sony is able to rebuild its mobile division, redesign its Android phones, and rebrand itself as a powerful and competent player in the mobile sphere, there’s nothing to say that this company couldn’t eventually see the same success as Samsung or HTC.

While I’m not one to start rumours, I have to think that one of the best ways to rebrand itself following its divorce from Ericsson would be another partnership, this time perhaps with a company like RIM who is currently struggling to keep its dominant footprint in the enterprise mobile space while it continuously bungles its newest Blackberry OS update…I’m just saying, weirder things have happened.

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

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