Can Sony Communications get Back on Track?
Yasir is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Sony Corporation (NYSE: SNE), one of the biggest electronic brands in the world, recently revealed that it had made significant losses. Sony Communications was one of the biggest loss making divisions along with Home Entertainment and Gaming. After switch from the "Sony Ericsson" branding to the "Sony" brand, the Communications division has released some incredible smartphones. However, after making a huge loss, the real question is: can Sony Communications get back on a profitable track?
Sony Communications - SWOT Analysis
Sony Communications has been the most troubling division; however, the company has already taken steps in order to get back on the right track. Sony Communications recently revealed that it would move its headquarters from Sweden back to Tokyo. Aside from that, the company has already cut over a thousand jobs in its mobile division. Obviously, it is going to take some time and the company is confident that it will get back to a profitable track in the near future. Sony still intends to use its Lund headquarters for Software and Application development. One of the major strengths of Sony's mobile division is the brand name itself. As the Ericsson name is completely gone, loyal Sony users might switch to Sony smartphones because of the brand name. Design is another strength. Sony is well known for its incredible electronic goods and design is one of the major selling points of its products. Sony's latest Xperia Smartphones look incredible, which is why one of the smartphones was featured in the latest James Bond film. This is what Apple (NASDAQ: AAPL) lacks and all iPhones look similar in one way or another. Another strength would be that Sony has remained with Google's Android Operating System, which is probably the hottest Mobile and Tablet OS. The Android OS, along with Sony's experience in design and hardware, equals success in the Smartphone market. Other than that, Sony's expertise in music, camera, and entertainment makes the Xperia line a better choice against competitors.
One of the major weaknesses of Sony Communications is the late entry in the smartphone market. The Sony Ericsson smartphones were never good enough to get the company on top in the smartphones market; however, the new Sony brand has the potential to beat all competitors including Motorola and Samsung. Sony also needs to improve the User Interface on its Xperia smartphones. The UI is not bad at all and is, in fact, pretty impressive, however, this has been similar in previous Sony Ericsson smartphones as well and there are hardly any noticeable UI changes in Sony's smartphones. Samsung has been improving its UI while adding various different features and add-ons. Similarly, Apple has also introduced a lot of interesting add-ons in the iPhone 5.
Sony has numerous opportunities in order to get successful with its line of Xperia smartphones. Sony's UI on smartphones and tablets is brilliant unlike other competitors including Motorola. Sony has the option of either changing or adding new things to its UI or to switch to plain Android, which worked out quite well for Motorola. Another opportunity for Sony Communications is to focus on gaming. Sony has been releasing PlayStation certified smartphones and users are still curious to what the PlayStation mobile has to offer. Currently in the beginning stage, PlayStation mobile can be a major turning point for Sony if it can create a unique gaming experience for users. Microsoft has been planning to take advantage of the Xbox brand for its smartphones and there is no reason why Sony shouldn't. PlayStation Certified means that Sony has taken steps in order to bring a better gaming experience to smartphones. This, however, is what holds back Apple's iPhone and even though there are millions of apps and games available, it still feels like casual mobile gaming. Sony has already made connectivity easier between its smartphones and other devices including its Televisions and Gaming devices and further cross connectivity here could also help Sony Communications.
Sony not only faces threats from Samsung and Apple, but also faces threats from other smartphone companies including Motorola and Samsung's experience and brand image in smartphones is one of the biggest threats for Sony if it wants to dominate the smartphone market. Apple is another close competitor, and with the latest additions of the iPad mini and iPhone 5, Sony has to come up with a quick answer. There were rumors that Sony was planning to release a signature Nexus X smartphone along with Google in order to mark a new Android update, however, this didn't happen. HTC and Samsung have already released Google Nexus devices and with LG's latest Nexus 4, Sony Communications might be left struggling in the smartphone market.
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yasirrfc has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple and is short Sony (ADR) and has the following options: long JAN 2013 $22.00 calls on Sony (ADR). Motley Fool newsletter services recommend Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.