Why we are wrong about Sony smartphones?

Everyone thinks that Sony as a
smartphone company is a failure which means, we believe that
the phone of Sony are not sold. In Q2 2020 Sony phones made
revenue of 695 million but in Q2 2021 this number
increased to 871 million which means
revenue increased. But the revenue didn't increase
because the phones are costly, so that the profit
margin will also be more. No! that's not the reason. Revenue increased because
of the increase in the sales. That is, what is visible to everyone,
it is not the same in reality. Sony phones would seem like
a big failure from the outside, but they are in a
huge profit from inside, because their strategy worked.

Now you'll ask which strategy? We'll have to go a
lot back in the story let's start from the roots. You might have heard
about Song Ericsson this is the same company which
used to make such feature phones, The same company
previously had shares of Sony, but in 2011 Sony and
Ericsson got separated. Then in 2013, Sony came into smart
phone market individually for the first time, and they launched their first
smartphone called Sony Xperia Z. Now, this Xperia Z had
two differentiating factors, first was 4g, second
was water resistance.

And these factors were
not normal for that time. So they followed this same
process for 1-2 years they launched the same
kinds of phone till 2015-2016 but the progress
was very less because around 2016 there
all their businesses were in a loss, and only smart phone business
was not in a bad condition, that means smartphone
business was not in loss, but it was not making
that much of profit. Phones which were handling this
business were Sony's high end phones, because their profit
margins were very high. Seeing so many loss, Sony restructured
itself as a company, because their old business strategies
and models were not working, they were only giving loss. So obviously their smartphone
business also got restructured. And because of restructuring they
stopped selling their mid-range phones.

As I told, these phones
were not giving them profit. High-end phones
were giving a profit. So they started to focus on them,
and discontinued mid-range phones. Their method was
good for a while, but till that time Chinese
manufacturers were also established. Just for context, Sony was and is sold mostly in
countries like Europe, Japan, Latin America. In a market like Europe, at around 2016-2017,
Oppo and Xiaomi had stepped their foot. And they made budget phones,
which were in very less price, so people got value for money
devices at a very less price. Obviously their had to be
little drop in sales of high-end phones, and their was drop. Because since then Sony's sales
have been decreasing continuously. You might have this question that, if Sony was able to see that Oppo's and
Xiaomi's mid-range phones were selling a lot, then they could
have copied their model, means they can start
mid-range phones again, and they can launch
value for money devices.

But as we know, nothing
like this happened, And the reason for
this is very confusing. This looks so
stupid from one angle, from the other angle it
looks very sensible. Like we discussed earlier, after this restructure they started
focusing on their high-end phone. From this, one thing was clear that
Sony didn't want to dominant the market. Or you can say that
they were unable to do it. So now they started to
focus on their regular customer, like photo and video professional, and a
small audience who like Sony's phone, they started impressing them. They made this thing very clear when they
discontinued mid-range phones during restructuring, because when they
were able to see, mid-range phones are driving
the most number of sales, then they would have switched. So now if you're removing mid-range
phones, than it will be a stupidity. From the second angle, this point
converted to a brilliant strategy. We'll discuss it later,
but before that, the process of job
hunt is very hectic.

What If I tell you that by giving a
free test, by sitting at home, you can take a
job of your wish. Exactly this kind of job, have been taken
by people like Sarthak, Nisha and Subham. And all these are candidates
of Relevel by Unacademy. Everyone has
their own stories, like Nisha started her career after
10 years in business development, by giving Relevel test. There is only one test
and so many opportunities. 200 + companies like swiggy,
Ola, Upgrad hire from Relevel. Placed candidate also
get goodies from Relevel. Top candidates get prizes
like macbook, iphone, apple watch. From Relevel more than 60 crore
worth job has been deliver, and from this last month 300
plus offer has been delivered. You can also see hoardings of
many candidates across India. You can make your
career in total 19 categories, like sales programming, product
management, analytics, HR, and many more.

It's link is given in the description,
you should definitely check it out. Let's move back
to Sony's smartness. If you're removing mid-range
phones then it was a stupidity, but with the second angle this point
converted into a brilliant strategy, Because they defined their audience, that there are only these amount of people
and we have to sell phones to only these people, If more than this comes,
then it is a very good thing.

If less comes then
there can be a problem, but this many people
should be there. With this smartness, In 2019 Sony exited from India which
is world's second largest smart phone market. Because they could see clearly
that in India budget phones get sold, and they wouldn't be able to
sell, that's why they exited. And they also reduced their
smartphone operation in the USA also.

They put their focus on markets
like Japan, Hong Kong and Europe. Like I told in these countries Sony's
smartphone sales were more, compared to rest of the world. That's why Sony focused on those
phones which were liked by people. They started making phone for such audience
who were able to relate with their vision. Coincidently, this happened
to be a smart decision. The decision was so smart that,
that even Sony was surprised by the results. But what miracle happened, that
a loss-making company started making a profit? The moment Sony flexed its
smartness by defining the audience, after that they
don't care at all. And because of not caring, Sony don't launch 10-15
phones like other manufacturer, they only launch 1-2
premium phones every year. and these are not
random premium phones, they are different from
other premium phones, mainly in camera department. Like Xiaomi is being proud
of putting 1 inch sensor, Sony did the same
thing last year in October. The only thing is to use this premium
phone, you have to give a premium price.

Although this business model
sounds a little like Apple, that launch 2 phones in a year,
and sell them very expensive. The only thing is
it is very expensive. And like always this move
is not taken without thinking. From 2020 till today, their market
share has come down more than 1%. That means they
sell very less phones, but whatever they sell,
they are in such high margins, that in 2020 Sony was profitable. Even though in 2021
their profit increased. This thing is understood that Sony was
not able to become a value for money champ, but they want to inline themselves
with this thing that their phones are costly.

There are some reasons that
their margins are so high, this is that pointer, from which Sony's strategy is able
to give them a significant amount of return, from which they
are able to sustain. Let's understand
this pointer as well, all the high end features in the
phone in Sony are based on it's in house technology. Like phone's camera's technology
comes from their alpha mirrorless camera, display comes from
BRAVIA OLED TV, and their speakers are
inspired from audio tech, because Sony has a vast business, and because they are putting all
the in-house things in their phone, obviously, they make the
phone for very cheap, and sell it so costly. So from here think about how
much profit margin is increased. There is one more reason, every year smart phones brands put
1500 crore for smart phone advertisement, and Sony don't spend at all in
phones marketing and advertisement. They just make such
costly and feature rich phone, those who get to know by
videos and all they know, those who don't know,
don't know at all.

And where other manufacturers,
to satisfy the demand of general customers, started making phones. Sony has not even changed
the look of their phone, they have just
did minor changes, like they will upgrade
their processor every year, they will increase their
screen's refresh rate, they will increase their
camera's resolution. The only factor which we can't be
seen is that is machinery cost. When any new phone is released,
it's design is better than its predecessor, so obviously the changes comes in
the machine which manufactures. To change this
R and D is used, and manufacturer's
money is used.

Sony has not even changed it's
design, it has just changed minor things, So they have saved so many
money from machinery costs. From there also their profit
margin is been increased. Sony is not even
changing its look and feel, their cost is low to
upgrade its machinery. So their profit margin is
also increased from their. Means now you might be understanding
if less people are also buying, then also their business
will be always be profitable. As I told you, this is the only thing
that is helping Sony to sustain, Try connecting all the dots, from the staring till now this
strategy is been working like this.

Its downside is very simple,
their phone has so many features, sometimes that thing is over, Like if the phone has 4k screen,
so it doesn't have much relevance, it has a very less space to see. Phone has manual camera mode,
but it don't have night mode. Small things make it premium,
but it doesn't make it relevant. Whoever buys Sony's product, they
know that it's quality will be top notch, what ever that product is. And this same thing is
applicable in smart phone as well, but it is applicable
for small audience. We've reached to the same point
that there is only a small audience, to whom they sell phone
and keep getting happy, but company is not a failure. Phone sell less, but that doesn't
means they are not having any profit. 2016 onwards every year
phone's sell were getting low, but this trend stopped in 2020, In financial year 2020, Sony made
profit for the first time in 3 years, of 254 million dollars.

And as I said in the beginning, Sony
had a revenue of 695 dollars in 2020, and in 2021 this number
increased to $871. So their phones are reaching their true
customers even after 6-8 months. Because it is known to everyone that Sony phones come
in stock after 6-8 months after they are released. And when it comes in stock, its successor may
have either been released or announced. And some things are still hard to say,
like Sony's future will be bright, their phones will keep
them profitable every year, their revenue will
continue to grow, No, this thing has
less possibility. Even today people are afraid that like LG, one day
Sony will also stop providing updates for these phones. and their software support
will also go away. So Sony phones are
definitely quite exciting. But only time will tell whether he
will bow down or stand like this. But phones in general are also
getting expensive day by day. And if you want to understand
the whole story behind it, the video is here.

And how smartphone companies
take data from your phones? What do they do with it? To whom do they sell it? If you're interested
in all that story, the video is here. If you also want jobs in top products
based companies of India, then do check out Relevel. No degree hassle, no experience
needed, just your skills. So click the 1st link in the description
and check it out yourself.

But for now, this is it from my side. Thankyou so much for watching. I'm Devanshu and I'm on
leave till the next one. Bye bye!.

As found on YouTube