Tech Transformers

Sony to expand Internet of Things business

Sony is looking to bolster its new Internet of Things (IoT) business by expanding into Europe this year, the company's mobile chief told CNBC, as the Japanese electronics giant seeks out new avenues of growth.

The internet of things refers to devices from thermostats to smartwatches which are all connected to the internet.

Last July, Sony set up an IoT business in Japan which is currently very small, consisting of between 20 to 30 people. It is currently housed under the "mobile communications" segment of the company's earnings.

It is now planning to expand the business to Europe this year as interest in the IoT rises.

"Currently our IoT business group is 20 or 30 people. In Europe we will set up that sort of size at the initial stage and try to expand gradually," Hiroki Totoki, the chief executive of Sony's mobile business, told CNBC last week at Mobile World Congress in Barcelona.

"In 2016, we have to do a lot of trials and a lot of test case(s) we have to develop."

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The nascent division has so far struck a deal with autonomous driving startup ZMP to manufacture drones. Sony will provide the camera, sensing and telecommunications network and robotics technologies.

And earlier this year, Sony bought Israel-based Altair Semiconductor, a company which makes chips that can connect devices to the internet.

'Growth in the future'

Much of the focus is on business to business (B2B) and business to business to consumer (B2B2C), an area where Totoki sees a chance for recurring revenues and licensing deals. Sony's mobile chief admits that the consumer wearable market isn't expanding as fast as "we had originally expected", but still feels like the company's SmartBand fitness tracker for example, could be effective in a B2B scenario.

"We won't give up the (consumer) business but in addition to that, the B2B business and B2B2C business is much more efficient in the area of IoT," Totoki said.

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He explained that it's hard to find out exactly what consumers want with wearables, but often the business case is clearer. For example, a business may want to buy lots of Sony's SmartBands for its employees to use and the Japanese firm can also sell its cloud technology around that.

Totoki's comments come as the overall growth of the smartphone market slows and Sony tries to stabilize its mobile business and it looks to new areas to drive revenues. It recently cut its full-year smartphone sales forecast for the fiscal year 2015 but in the three months ending December 31, operating profit in the division rose 133 percent, according to official results. The earnings reflect Sony's strategy of shifting away from focusing on unit sales to profitability.

"Developing a new business like IoT is an important area for us to get growth in the future. We should not rely on only smartphone services," Totoki told CNBC.