The Verge Places Sony, HTC, and LG on Android OEM Death Watch

Despite many players in the Android ecosystem, the only one of them that’s been able to turn a profit on a regular basis has been Samsung. Even the once darling HTC has been hammered hard in the past two to three years and everybody else like LG, Motorola, and whomever else you’d like to place on that list is doing even worse. Sony for it’s part was smart and transitioned their division to do lower volumes at higher ASP which has allowed them to remain profitable, though in just the tens of millions, which isn’t a lot.

The piece in question is from The Verge’s Vlad Savov where he argues that Sony, HTC, and LG are basically dead men walking. It’s worth noting that his piece was written prior to Sony’s Q2 FY16 earnings report which doesn’t paint a rosy picture for their mobile ambitions if their units sold is any indicator of their future. Savov writes:

If Android OEMs were just that, original equipment manufacturers, their jobs would be much simpler and easier. But in the modern smartphone world, it’s not enough to just design and build new gadgets to a high spec; you have to power them with your own tailored software, you have to support them with updates and security patches, and you have to price them enticingly, too.

One of the biggest challenges Android OEMs currently face is that the OS is starting to get more locked down (perhaps for the better because let’s be honest, most Android skins were garbage compared to the original OS) and the best way to differentiate one device from another is hardware. Arguably this should be Sony’s strong suit, a company born in the era of hardware – but without the ability to master software alongside it, Xperia has struggled.

Let’s start with Sony, the most endangered species in the Android realm. Sony only really knows how to make premium devices. Over the course of the past three years, its Xperia Z series has evolved at a breakneck pace, going from Z1 to Z5 to the present XZ, but it’s never changed in character. The typical Xperia flagship phone costs a lot and has the latest specs and an eye-catching design, but it also tends to launch without the latest Android on board, and its great camera is usually hamstrung by bad software. That’s exactly what I experienced with the Xperia XZ at IFA this year: beautiful on the outside, high engineering on the inside, but outdated Android and unconvincing camera software.

Even if Sony had been able to nail down everything about the Xperia XZ, they’re still faced with perhaps a bigger hurdle – the glut of still available devices.

As a fan of Sony, it pains me to watch the company repeat the same mistakes every year. The new XZ arrives in October with specs and software equivalent to the ultra-affordable Xiaomi Mi 5 of this spring or this summer’s excellent OnePlus 3. So the XZ is thus late to the party, more expensive, and, other than that handsome four-letter brand, not unique in any meaningful way. Better alternatives also exist in Sony’s self-selected premium tier, where the iPhone 7, with its freshly minted iOS 10, is going on sale this week, following record presales in the United States. By next month, Google will be serving up its own new phones with the latest Android on board, and Sony’s efforts will barely register as a bleep on phone buyers’ radar.

I don’t think that, in the grand scheme of phone purchases, Sony and Apple ever compete but the iPhone doesn’t certainly make life any easier for Xperia phones as it sets a bar for everybody to strive for. From there, we’re either seeing cheaper Chinese phones that come close (or close enough) to Xperia phones to take away any advantage they might have (especially if they come at a fraction of the price), and now Google is starting to get into the hardware business in a more serious way.

To make matter worse, between the top end of the smartphone industry being dominate by Apple and Android playing the race-to-the-bottom for the sake of marketshare (and this is prior to a lot of Chinese OEM’s getting into the game), it’s hard to see their endgame. It’s fine if Sony wants to play the roll of Apple (the irony here) and be the maker of premium Android handsets. But to fulfill that roll, Sony needs to make the best Android handset possible, meaning topnotch hardware and software, with a competent marketing campaign, and availability that makes purchasing one of their phones not a chore and currently, they’re falling quite short of that.

Just earlier today, I wrote a piece about how in Q3 2016, Apple’s iPhone sales accounted for 104% of the mobile industry’s profits. If we take pride out of it, I’d love for Sony to lay out a strategic reason for why their mobile division should exist but as Sony CEO Kaz Hirai has stated many times, if something’s not working, he’s not afraid of closing it. Let’s just hope they don’t consider making chump change each quarter (Q2 FY16 brought in just shy of $50 million) as “working.”