Like clockwork, after getting back from CES and being dazzled by the extensive fleet of new products Sony had on display, a bucket of cold water has been poured over us which reminds us of the very real challenges that Sony faces. When speaking to reporters, including us during his opening keynote at CES 2015, Sony CEO Kaz Hirai noted that reforms have succeeded “in some parts but not in others.” Kaz was specifically referring to the resurgence of PlayStation, which just saw the PS4 climb past 18.5 million units sold and the embrace of their digital imaging business which has expanded beyond consumers into the medical field and perhaps automotive field in the future.

Where the company still lacks is its mobile and television division, which have each lost considerable grounds to rivals. The two divisions have singlehandedly caused billions of dollars in losses for Sony. To put that in perspective, Sony forecasts a 230 billion yen ($1.9 billion) net loss for the business year to March. Speaking behind closed doors, Sony seems to be further emphasizing that not all of their turn around plans are succeeding and that “no business is forever.” That comment is not only directed at investors, but to Sony divisions as well, iterating that

 every segment now needs to understand that Sony can exit businesses 

As you’d probably guessed, the segments in question are Sony’s television and mobile divisions. Details after the jump.

Kaz Hirai during his CES 2015 keynote:

 Electronics in general, along with entertainment and finance, will continue to be an important business. But within that there are some operations that will need to be run with caution – and that might be TV or mobile, for example. 

This news on its own isn’t all that surprising. In late 2014, Sony publicly stated that going forward, that their focus would shift towards PlayStation with less resources going towards their mobile and TV division. This of course didn’t stop Sony from announcing an array of 4K televisions at CES. As is with such matters, Sony can’t simply close a division overnight, and the situation will likely be fluid in the immediate future as the company continues to gauge audience reaction towards its new products. Once again Kaz Hirai:

 The mobile and TV businesses both require a drastic overhaul. Without drastic reforms such as joint ventures or alliances, they will both be in the red three years from now. 

While Sony is currently going at it alone in their quest to turn around their mobile division, which includes Xperia smartphones and tablets, and their television business, which boasts an extensive fleet of 4K televisions, it’s clear that Sony is actively eyeing other options. Those include completely closing a division which likely would be their TV business, seeing how the segment was spun off a few years ago from Sony exactly a scenario like this with minimum impact to the finances of the company as a whole. As for strategic alliances, that likely would relate to their mobile division which has been battered down by Apple, Samsung, and cheap Chinese phones. It’s worth noting that in the past year, Samsung has also seen their mobile division nose dive with profits down 60%. With many other companies such at Motorola, LG, and HTC also struggling in mobile space, Sony would most likely be best served by a join venture where the two companies can hopefully leverage each others R&D to create more competitive products.

While it will be some time before we find out the impact of CES and Sony’s new lineup of products, it’s becoming quite clear that divisions which were once synonymous with Sony, like their televisions, are no longer sacred. Furthermore, in order for Sony to succeed in the marketplace, they’re going to need a more comprehensive and long term plan that isn’t reliant on a yearly product cycle. One thing that’s clear however is that Sony is going to focus more and more on PlayStation and their digital imaging business. While this might be a short term retreat that bears the profits they so desperately need, it’s also a dangerous game.

The successful PlayStation division of today was singing a different tune 5 years ago where a more expensive PS3 was being beat left and right by the cheaper and less capable Xbox 360. In the last decade alone, Sony been forced to retreat over and over again by selling off divisions like VAIO, spinning off their TV business, and reducing their product portfolio. While every company should strive to cut off underperforming divisions and products, you can only cut so much before you’re left with a one trick company that can break based on a singular product. Though Sony’s strategy has been exactly this, I hope that they’re looking to balance things while looking at how they can fuel growth as well. In the end, no one cares how many divisions you have or if some parts are underperforming if the company as a whole is performing well.

Discuss:

If Sony Mobile is to consider a join venture, who would be their best option?

[Via Reuters]