Sony warned about the outlook for its smartphone division when it released quarterly earnings on Thursday, raising the question of whether the firm should just cut its losses in the highly competitive sector.
Sony doubled its operating profit to 69.8 billion yen ($679 million) from April to June, from 35.5 billion yen a year earlier, boosted by its games and networks division and a one-off asset sale. But it also cut its smartphone sales target by 14 percent.
Sony executives have previously said the company wanted to focus on expanding its smartphone business because many of its strongest businesses – such as cameras, videogames and movies – have presence on mobile devices. A downgrade of its smartphone sales forecast signals a blow to these original plans, analysts say.
"It was naive to assume that smartphones would ever be an element of Sony's salvation," said Steve Durose, senior director and head of APAC TMT Ratings at Fitch Ratings at Fitch Ratings.
"Sony's not going to make a profit in smartphones this year. There are 7 or 8 players in that 2-5 percent market share that Sony is in in the smartphone market and they are all struggling to make money," he added.
But in more recent times the firm has attempted to turn around its fortunes, by unloading its failing PC division and spinning off its TV division into a separate company.
Restructuring its TV business seemed to pay off this quarter, as Sony reported it was on track to break a 10-year streak of annual losses there, although it did move to trim its TV sales forecast for the year.
But Fitch Ratings' Durose said Sony's mistake is that it is refusing to let go of the businesses it has not been successful in, and needs to streamline even further.