Sony Mobile: marketing magic and a look into an unsure future

Sony Mobile: marketing magic and a look into an unsure future

Dominik Bärlocher
Zurich, on 29.04.2019
Sony’s stepping on the brakes. Its Mobile Division is getting a new boss on top of merging with more profitable divisions. This rescue attempt could succeed, as Alpha Tech could find their calling in smartphones.

Huawei, Nokia, Oppo and Samsung are all showing off their cameras. Among other things. Further back, somewhere in the middle-range, Sony’s Xperia Phones are mucking about. According to reviews as well as dedicated camera tests. Fans of the system have been singing its praises for years, but the rest of the world is watching Sony’s smartphone effort with a bored sigh.

The result: Sony’s smartphones are turning in losses. In 2018, their losses reached almost a billion US dollars. Sony isn’t the only company that’s haemorrhaging money, but they’re the first to enact large-scale restructuring. The company recently announced that their Mobile Division is merging with their TV, Audio and camera teams. On top of that, half of all Mobile Division jobs will be terminated by 2020.

It’s all marketing’s fault... isn’t it?

The causes for these massive losses can only be speculated about, in most cases. Marketing seems to be the prime suspect. Huawei, Samsung and Apple aren’t playing any games. They set up huge placards, produce elaborate ads, adopt aggressive sales strategies during launch and spread news here and there. In contrast: Sony seems to sweat away in their little room until a phone’s done, release it, say «here you go» and then quickly hide back in their little comfort zone. One Sony Xperia XZ follows the next, no WOW-effect whatsoever.

The top dog: Sony’s a7iii is their newest interchangeable lens camera.
The top dog: Sony’s a7iii is their newest interchangeable lens camera.

To compare, here’s an example from the same company: the world is waiting with baited breath for Sony’s new a7siii interchangeable lens camera. For about two years. Leaks and rumours exist, of course. No one really knows what’s true when it comes to this information, but there’s one thing everyone agrees on: Sony’s a7siii will have a massive impact. Or will it? Hope remains, the world is watching.

Here’s the real question: how is it possible for the global leader in system cameras to have such weak mobile performance? The Sony Xperia XZ3 barely manages to scratch 79 points on DxOMark’s 80-point standard grading scale. The Huawei P30 Pro is currently ahead with 112 points. Sony’s Xperia camera, still a one-camera setup, has too many interfering tidbits, doesn’t achieve the Bokeh effect due to an insufficient number of lenses and exhibits bare-bones zoom.

Where’s Alpha Tech?

The reason why their smartphone cameras are this poor is because Sony’s limited to non-existent use of their Alpha Tech camera technology in their phones – named after the «Sony Alpha» series of cameras. Industry service TrustedReviews confirmed this, where Adam Marsh, Senior Manager of Global Marketing at Sony, states:

“ Even though we’re one company, there are still sometimes barriers. Alpha doesn’t want to give Mobile certain things, because all of a sudden you have the same as what a £3,000 camera’s got [in a phone]. ”
Adam Marsh, Senior Manager of Global Marketing Sony, trustedreviews.com, 6/3/2019

This should be coming to an end, not just because the camera and Mobile Division are being merged. Former Mobile Division CEO Kaz Hirai has been replaced by Kimio Maki. Maki, formerly of Alpha Division, is now taking the reigns as Head of Product Development Mobile. One of his first acts in power: stopping development of the Sony Xperia XZ4.

Adam Marsh seems surprised in his interview:

“ [Maki] said: «Okay, so we work with Alpha here. Let’s take this bit. We work with the CineAlta brand. Let’s bring this bit.» He opened up the whole world of digital imaging for us. Because that imaging team is all together, they can share that experience across Cybershot, Alpha and Xperia. ”
Adam Marsh, Senior Manager of Global Marketing Sony, trustedreviews.com, 6/3/2019

Also:

“ It’s possible. If it’s software, it could be possible to bring it across [from Alpha to Mobile]. A closer collaboration with Alpha is a definite, thanks to the management change that’s happened in Tokyo with Mobile now belonging to Imaging. ”
Adam Marsh, Senior Manager of Global Marketing Sony, trustedreviews.com, 6/3/2019

Looks like Sony isn’t abandoning Mobile any time soon. Surprising. Market analysts have been expecting Sony to axe Mobile Division, at the same time selling HTC talent to a market leader.

Holes in the story

Sony Xperia 1 is a first step in a new direction. XZ, the worst enemy of anyone pronouncing the phone, has been removed. On top of that, three lenses have been installed in the camera. A multi-camera setup does see Sony going with the times, but doesn’t automatically mean that Sony Xperia 1 pictures will be any better. If Google Pixel has proven one thing, then it’s that single-lens cameras can still hold up when compared to a multi-camera setup. The number of lenses isn’t the only thing that makes a good picture, it’s also the sensor behind them. Sony’s Alpha Tech has a clear advantage in this regard. This is where the fantasy of a golden future finally crumbles. Multiple cameras in a smartphone don’t always lead to better pictures. Less can be more. Sensors and software are the deciding factor.

Adam Marsh’s story is unravelling.

Mistakes in the timeline start popping up, especially when it comes to employees in Mobile Division and who’s leading them. If we listen to Marsh, then it seems as if Kimio Maki had more or less single-handedly saved Sony Mobile. He jumped in the fray and cleaned house. Here’s the problem: Maki is head of Mobile Division as of 1/7/2018. This would mean that, in ten months, Maki cancelled the Sony Xperia XZ 4 and created the Sony Xperia 1 out of thin air, multi-camera setup included.

According to official business knowledge, it’s currently impossible to produce a smartphone ready for the market in ten months. Especially when a company needs to come up with a completely new camera setup. Even if many competitors have been using double, even triple-camera setups for a while now, Sony has until recently always bet on a single lens. The conglomerate announced their Dual Cam at the Mobile World Congress 2018.

Let’s assume the process from «What next?» to «It’s done» when developing a smartphone takes about two years. Dual Cam would have only been available for Xperia XZ 4 at MWC, if at all. We found out that the demo shown at MWC was only a prototype. Suddenly, a year later, we’ve got Xperia 1 with three cameras. Xperia 10, Sony’s mid-range model, features two cameras. Still, a far cry from the secrecy and WOW-factor we got at MWC. This leaves two theories:

  1. Sony bought the technology for three cameras, then dissected the XZ 4, reassembling it into Xperia 1.
  2. Sony had already been working on triple cameras without telling anyone. Then, in a dark corner of MWC, they presented a dual-camera setup that never would see the light of day. I have no explanation for this kind of behaviour.

The first theory seems much more reasonable, but this would also mean that Xperia 1 doesn’t contain any Alpha Tech. Here’s another gap in the narrative: it’s still highly unlikely that Sony could install a 35 millimetre full frame sensor into a smartphone with a 70 millimetre width. A technological impossibility. As would be Marsh’s statements about adopting Alpha software. This gives a bitter taste to the sentence «Triple Camera System with Sony’s Alpha Technology» used in their ads. After all, it’s economically very simple to buy a sensor then plaster it with branding. Or could this be a cooperation with Light?

*Light**: Die Kamerafirma aus dem Nichts
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It would be inappropriate to already assume that Xperia 1 takes poor-quality pictures. After all, Alpha has a reputation and promises great quality. Sony knows this. It’s very unlikely for Sony to mess up really badly, even if they bought their hardware or fast-tracked its development. This also isn’t supposed to slam triple-cameras or Sony’s lofty ambitions. The only thing I want to disprove is the fairy-tale that «Kimio Maki single-handedly came and saved the day». There’s probably some grain of truth in there, but all this technological back and forth does raise a question: why is this happening?

Just business

It’s not just the consumers and developers who will benefit from Sony’s restructuring. For years, Sony’s Mobile Division has been bleeding losses, most notably 940 million in 2018. Sony’s accounting and image will probably be the biggest victors here.

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Sony is uniting Mobile, a highly deficient division, with their camera, TV and audio groups. This new construct carries the name «Electronics Products and Solutions». As all the other divisions aside from Mobile are highly profitable, Sony can cleverly conceal their losses.

We can see this in the numbers for the second quarter of 2018, as yearly statistics haven’t been released yet:

  • Sony Mobile lost CHF 267,349,719.58.–
  • Sony Imaging Solutions gained CHF 195,577,982.78.–
  • Sony Home Entertainment and Sound made a profit of CHF 219,800,943.95.–

Let’s calculate their net profit in a nice little math exercise: 219,800,943.95 + 195,577,982.78 - 267,349,719.58. Sony’s accountants will be able to note a profit of CHF 148,029,207.15.– The massive Mobile Division losses? Gone. At least on paper, this could definitely impress shareholders.

This could – wildly speculating here – mean new operating freedoms and less pressure for Mobile Division. In an ideal scenario, Mobile would use this opportunity to reposition themselves in the market, work out their strengths and eliminate their weaknesses. After all, Sony has the potential to be a big player in this field.

On the other hand, it can still always happen that Sony axes or sells Mobile Division. Even if there aren’t any more Sony phones on the market, the company will still have a very good standing in the industry. Sony Semiconductors are still producing sensors used in smartphones. On top of that, there’s their partnership with Light, a company they offer «privileged access» to Sony sensors.

Another theoretical positive is the soon to be drastic cut of Mobile Division’s workforce. Some Japanese employees will be transferred to other sectors, China and Europe are encouraging early retirement. And that’s not even all of it: Sony wants to throttle phone sales in South-East Asia in order to better focus on Europe and East Asia. This already lets us guess some things, their market position specifically. The South-East Asian market is dominated by India. Cheap phones with large screens are preferred in that region. This means Sony will probably want to compete with flagship products.

It’ll be a hard battle for Sony to win. But they could win on a camera level with some skill and a bit of luck.

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Dominik Bärlocher
Dominik Bärlocher
Senior Editor, Zurich
Journalist. Author. Hacker. A storyteller searching for boundaries, secrets and taboos – putting the world to paper. Not because I can but because I can’t not.

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