Ap­ple’s win, an­droid’s loss as Sony mobile faces extinction

Business First - - CONTENTS - by Paul Lin

Paul Lin

is CEO of Em­pir­i­cal Works

When the BBC asked about Sony’s ve-year plan for its mobile divi­sion in March, chief ex­ec­u­tive Kazuo Hi­rai re­sponded, “ ere is no guar­an­tee that we will be in any busi­ness in ve years’ time. at’s just the na­ture of the elec­tron­ics busi­ness,” im­ply­ing that Sony may be ex­it­ing the mobile phone busi­ness in the near fu­ture.

Mr Hi­rai is clearly a real­ist when it comes to the land­scape, and the profit-driven move in Fe­bru­ary to re­duce Sony to a com­pany with just three core o er­ings is re ec­tive of that. Tra­di­tion­ally, this was a com­pany as­so­ci­ated with TVs, au­dio, and cam­eras – as of now, the fo­cal points are Sony Pic­tures En­ter­tain­ment, PlayS­ta­tion, and im­age sen­sors (which are used in iPhones).

Of par­tic­u­lar in­ter­est is that the former con­sumer elec­tron­ics jug­ger­naut will as­sumedly cease to pro­duce phones. Sony makes great phones, so it’s a shame to have to eu­lo­gise them.

Tech-wise, some of the fea­tures, like wa­ter­proo ng, cam­era qual­ity, screen qual­ity, and even the de­sign, are Ap­ple-level or bet­ter. e prob­lem is that no one knows this, and no one is buy­ing them.

In fact, no­body be­sides Ap­ple is mak­ing money from high-end smart­phones. If you want an ex­pen­sive, fancy phone, an iPhone is rst choice for the ma­jor­ity.

Sony ob­vi­ously doesn’t make any money, and sur­pris­ingly nei­ther HTC nor Sam­sung are gen­er­at­ing much rev­enue from their high-end, fea­ture-rich ag­ship phones.

In Q4 2014, An­droid ac­counted for just 11.3 per cent of all smart­phone pro ts, as per Strat­egy An­a­lyt­ics, and most of that comes from the mid or low-level An­droid phones.

Ap­ple clearly dom­i­nates when it comes to mar­ket­ing, brand mes­sage, and con­sumer per­cep­tion. Sony’s tech is bril­liant and they’re dili­gent with re­search, but do you feel cool when you go into its store, as you do with Ap­ple? Why are you pay­ing al­most $1,000 for a Sony phone? When was the last time you saw an ad for a Sony phone?

e prob­lem with An­droid has al­ways been Google’s phi­los­o­phy and ap­proach, which has never been about mak­ing money or be­ing rst-to-mar­ket. It’s about push­ing a plat­form that is open and free to its hard­ware part­ners, which sounds noble, but what has hap­pened is that com­pa­nies have taken An­droid, modi ed it, and cheap­ened the brand and prod­uct in or­der to grab the lower end of the mar­ket.

As a re­sult, what you now have is a litany of cheap Chi­nese knocko s that run An­droid, some of which are ac­tu­ally quite de­cent for knocko s, but have vastly un­der­cut the mar­ket for so­phis­ti­cated An­droid phones, like Sony or HTC’s o er­ings.

It has achieved Google’s goal of ood­ing the mar­ket – An­droid ac­counts for 80% of all shipped smart­phones in Q4 2014, but at the cost of only mak­ing 11% of the pro t de­spite the mar­ket share.

It’s akin to what has al­ready hap­pened with lap­tops and PC. Peo­ple will pay good money for an Ap­ple MacBook, but who would pay more than $1,000 for a desk­top PC or PC lap­top th­ese days?

e sad corol­lary of this is an across-the-board de­cline in qual­ity and pres­tige, which is the rst step in a race to the bot­tom i.e. the pre­cise sit­u­a­tion desk­top PC and PC lap­tops are in th­ese days. is over­sat­u­ra­tion will also sti e Ap­ple’s cre­ativ­ity, since An­droid doesn’t chal­lenge them. So they could just set­tle for mi­nor up­dates to the iPhone ev­ery year if they so wished, as they’ve been do­ing with their own MacBook lap­top lines.

In the tech world, you want to see things im­prove, evolve, and con­tinue to be in­no­va­tive. With Sony ex­it­ing the An­droid phone mar­ket, this is a threat to all three.

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