A recent Wall Street Journal article talked about whether or not Sony Corporation is gaining momentum in the smart phone market. Sony actually moved up from being the sixth largest maker of smart phones in the world to the number three slot for the third quarter of 2012. Sony’s share of the global smart phone market was 4.8% for the third quarter, according to International Data Corporation (IDC), but analysts believe this is no reason for Sony to jump for joy about their smart phone business. Sony’s gains were mostly the result of huge losses of market share by Nokia, HTC and RIM (makers of the Blackberry).
The smart phone market is dominated right now by Samsung and Apple, who hold 31.3% and 14.6% market share, respectively. No other company holds more than 5% market share, so they are by far the ten ton gorillas in the industry. One of the things about the industry is that the only companies making money are those that are making the higher end handsets, like Samsung’s Galaxy and Apple’s iPhone. Makers of cheap phones are struggling to squeeze profits out of the sales they generate, so the higher price point part of the industry is where all the interest lies among investors and analysts.
Mark Newman, an analyst at Sanford Bernstein recently said, “The smartphone market is increasingly bifurcating into premium (above $450) and low-end (below $200).”
Sony was once synonymous with high quality in everything it did and its CEO, Kazuo Hirai, believes the key to returning the company to greatness is speed. He recently said, “We need to execute with a lot faster speed, which means faster decision-making, faster execution.” Many analysts agree, and many consumers hope Sony will regain its position as a very high quality electronics company. The speed Hirai is talking about needs to be applied to Sony’s efforts across the board if they expect to gain ground in the smart phone market because their competitors are not slowing down their efforts to gain even more market share.
If the product Sony unveiled in September is any indication of their outlook in the smart phone industry, they aren’t making a big splash. Xperia is the phone that reviewers panned in September for being pretty underwhelming and seemingly tying its fate to Sony’s proprietary accessories. As with many of its earlier products Sony has built both the hardware and he software to encourage users to use more of its products.
Even as far back as the 1980s, Sony was an innovator whose brand became synonymous with its products. The Walkman, the Discman, the Betamax were all products that became referred to interchangeably with their product category. But, with the company’s credit rating being recently downgraded to “speculative” and their core strategies in question, many question whether Sony will be an electronics giant in the future like it was in the past. It’s been a while since the Sony brand name has been on the minds of consumers when they thought about high quality smart phones and it may be a while before that comes to fruition if Sony’s competitors have anything to say about it.
