Sony Mobile to Shift Focus on Premium Smartphones in India

Predicting what Sony Mobile will do in the future is one of the toughest tasks you could ask an analyst, tech pundit, or fan to do. That’s because despite Mobile finally squeezing out a profit, something which they’ve never been able to do, it was mostly due to foreign currency exchange rates and cost cutting measures. Regardless of all this being part of the plan, Sony Mobile’s market share continues to shrink. For context, Apple and Samsung will sell in a month what will take Sony a year to sell.

All of this is a long winded way of saying that when it was revealed that Sony would defocus on India, USA, China, and Brazil, not too many fans were all that shocked. Upset? Absolutely, but shocked? Not really.

After all, while Sony is executing a specific business plan that’s guided them towards profitability, if not curbing the huge losses from the division, a product and go-to marketing strategy still seems to be extremely elusive. Plus, how can Sony ‘defocus’ on the US when they never really focused on it?

Now we have some official information from Sony that debunks some earlier info and sheds some light on where they plan on going forward.

Vijay Singh Jaswal (pictured left), head of Xperia business, Sony India, talking with Times of India:

Sony Mobile drove transformation in FY15 towards a profitable and sustainable company globally including the areas mentioned. As part of our transformation, we are sharpening our focus on select products and sales channels

It’s unclear if Sony has had a change of heart and plans on focusing on India once again or if there was something lost in the original reporting. My guess is that it’s the latter. Taking on India is no small endeavor and it’s unlikely that within such a short span, Sony has decided to change gears. As to what Sony plans to offer:

Considering the recent shift, our marketing strategy will now revolve around offering premium products in the smartphone segment,

While in the past, Sony had never specifically focused on India, the phones they did offer were always mid-tier devices like the Xperia C5 Ultra and Xperia M5. This didn’t mean that Sony wouldn’t bring offer flagship products to India but when they did, they either arrived late or their followup schedule was inconsistent at best.

Now those in India can expect to see devices like the Xperia Z5, the current flagship Xperia X, and Xperia X Performance launched in the world’s second largest smartphone market in a more timely and strategic manor. For Sony, this translates to reaching a country that’s ever so rising financially and is often times compared to where China was 10 years ago.

If Sony is able to capitalize on this growth from the start, the upside is obviously great. At the same, the smartphone market of today is very different from even 5 years ago with ASP of Android handsets in 2015 being around $254. In 2016, that number is likely closer to $200, making it difficult for anybody other than Samsung to sell premium Android devices. The upside of course is that if Sony, whose handsets hover around a $420 ASP can do any form of meaningful volume in India, the revenue potential and likely profits as well will see an enormous uptick.

Another thing that Sony has going for itself in India versus that of the US and even China is brand loyalty. Where in the US, Sony enjoyed a high mindshare among consumers in the 70’s, 80’s, 90’s, they were a brand that failed to transition well into the new century and were eventually replaced by old and new companies like Apple, Samsung, Vizio, and Sonos.

As for China, the country lacked then lacked the financial strength that it enjoys today (especially the consumer where their middle class is now greater than the population of the US) and so by the time they were able to adequately afford premium products in large volumes, Sony’s time in the spotlight had faded. As for India, throughout the decades, the Sony name has continued to resonate with consumers.

But India isn’t China and while there are similarities between the two countries, a direct correlation cannot be drawn. For one thing, India charges huge tariffs on imported mobile products and the only way to avoid it is to either have 30% of the device manufactured locally or prove that the phone is ‘cutting edge’ and that it cannot be made locally.

So far, even Apple has had issues with Indian officials which has made iPhones pricer in the country – though their struggle to meet India’s guidelines is likely more politically driven and less on what constitutes as cutting edge which would allow them to either skip the tariffs or be forced to source certain components locally.

This brings into question some major challenges for Sony who’s had a poor track record at navigating different territories and doesn’t have the resources of Apple and Samsung. After all, the US is a much simpler market to understand (different than penetrate) with four major carriers and a handful of big box retailers.

In India, all that goes out the window where carriers and retailers are replaced by smaller, individually owned electronic shops and a consumer that have a wildly different shopping pattern than that of the West.

If Sony is able to enter India with more than hopes and dreams and execute on some form of strategic vision, the upsides can be huge. After all, if India didn’t matter so much, Apple wouldn’t be doing everything it can to gain a strong foothold which means that despite the dramatically different mobile landscape, the world’s second largest country is still in its infancy when it comes to premium smartphone penetration and that it’s still up for grabs.

Hopefully we’ll learn more at Sony’s IFA 2016 keynote. Comically, the ToI article ends with: