As we reported yesterday, Sony plans to sell off the majority of its once innovative but now resource draining battery division. We also reiterated that Sony's CEO had essentially given Sony Mobile until the end of 2016 to return to profitability or face the same ignominious fate. While many argued that the Xperia X series was not the right way to get there, Sony has just pulled a rabbit out of its hat. In the company's Q2 earnings statement, Sony Mobile has miraculously turned a profit.
That's not due to the Xperia X, XA and X Performance flying off shelves though. It's more directly attributable to Sony's intense and far-reaching streamlining, cost-cutting and efficiency improving efforts. That and a favorable exchange rate which actually contributed ¥4.4 billion to the company's bottom line. That alone is more than 10 times greater than the ¥0.4 billion Sony Mobile made.
In fact, sales are down a massive 33.7% from this quarter last year. This decline, along with the significantly greater contribution made by the exchange rate puts the ($4 million) profit Sony Mobile made in stark perspective. It's certainly nothing to get excited about, but it sure beats the $22.9 million dollar loss the division posted in Q2, 2015.
A favorable exchange rate actually contributed more than 10 times the profit Sony Mobile made.
It's unlikely the Xperia X range will suddenly boost Sony Mobile's fortunes and herald a return to Sony's former glory. But at least the phones seem to have no glaring flaws like other recent devices starting with the Xperia Z3+. The company has also managed to release the X series in the U.S. market before announcing their successor. This, sadly enough, is a massive improvement.
For Sony Mobile to do anything more than score itself a little breathing space, however, it is going to need to come up with a hit, and soon. Barely scraping by is certainly better than hemorrhaging money, but it's still a long way away from a meaningful business strategy. Things could very easily swing back to the red next quarter. All hubris aside, Sony needs to seriously rethink its smartphone lineup beyond just scaling back and trying to enhance profitability if it is ever to enjoy significant sales again.
Do you think Sony can come back from the brink? What do you think it should do?
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