Sony's mobile strategy puts priority on wearable tech
Now that Sony plans to sell off its fashionable Vaio laptop business and convert its TV business into a subsidiary, the Japanese electronics giant appears poised to beef up its line of mobile products, including smartphones and tablets—but especially wearable tech.
At International CES in January, Tokyo-based Sony showed off a small Core sensor for use with its coming SmartWear products. The first product in that line is SmartBand, which works with a new Lifelog app on a smartphone.
Sony revealed few details on the device. The company is expected to release more information about the SmartBand, Core, and other wearables at Mobile World Congress in Barcelona on February 24. Sony is also running a “Wearables Workshop” and a VIP reception at the conference that are clearly meant to generate excitement and press coverage.
Needs to ramp up
Sony might be able to win plenty of customer attention for the emerging wearables market, but it faces an uphill climb in smartphones and tablets where it is getting a late start, analysts said.
In smartphones, research firm IDC ranked Sony Xperia devices seventh globally behind sixth-ranked CoolPad for all of 2013, with a 3.8 percent market share and shipments of 38 million devices. For its Xperia tablets, Sony wasn’t even in the top 15 for the fourth quarter of 2013, with less than 1 percent of the worldwide tablet market. IDC hasn’t begun publishing rankings for wearable tech vendors since the market is relatively new.
Those low smartphone and tablet rankings are somewhat peculiar, since Sony has a storied electronics history that goes back six decades. Sony has launched successful products, including the WalkMan portable audio cassette player first unveiled in 1979, the PlayStation gaming system in 1994 and the Trinitron TV in 1985. Sony was also behind the first-to-market Betamax, which lost out to VHS videocassette technology in the mid-1970s.
Given all it has been through, Sony’s move into wearables could signal a kind of rebirth.
“Sony used to be known for design innovation and pushing the envelope,” said Jack Gold, an analyst at J. Gold Associates. “Over the past few years, that hasn’t been the case. If they can recapture that spirit with mobile, they have a shot, particularly in up and coming areas like wearables and other smart devices. Can they build the brand back? We’ll have to see if they are up to the challenge.”
Sony management “has put mobile right, left and center of their strategy, but I think they need to pick up the pace as they are coming to this from behind,” said Carolina Milanesi, an analyst at Kantar WorldPanel.
Making headway in a crowded market
Moving from seventh place in smartphones into the top five spots in the next five years would be a major feat. “The smartphone market is pretty crowded, with Samsung on top and then Apple, Huawei, LG and Lenovo in the top five,” noted Ramon Llamas, an IDC analyst. “Sony would do well to maintain its position in the top 10.”
Sony gets high marks for strong design of its new products, “but they need to rethink how they address software and distribution,” noted Patrick Moorhead, an analyst at Moor Insight & Strategy.
Speaking of limited distribution, the only U.S. carrier offering a Sony smartphone is T-Mobile US, which sells the waterproof Sony Xperia Z1S, with a 5-inch display and Android 4.3 at a full retail price of $528.
Sony sells other smartphones, such as the Xperia Z1 on its Web site, but that’s not good enough, analysts said.
“Distribution is truly a limiting factor for Sony smartphones,” Llamas concurred.
To catch on in the U.S, Sony smartphones need to be sold by the nation’s two biggest carriers, Verizon Wireless and AT&T, Llamas said. In recent years, AT&T sold cheaper Sony-Ericsson phones that didn’t do well.
The newer Sony phones, including several models sold on its Web site, “are definitely more expensive [than the average smartphone] and show an attention to design,” Milanesi added. “In the U.S., consumers don’t know Sony for smartphones, even though they are known for gaming and TV.”
For Sony to do well, smartphones, tablets, and the new wearables must fit into the company’s broad mobile marketing strategy. “There’s no question Sony can produce great hardware both from a specs and design point of view,” Milanesi added. “If they crack marketing and are able to tell a compelling story on the end-to-end ecosystem, then I think they have a shot.”
Sony already has released a second generation of its smartwatch, the $200 SmartWatch 2 (or SW2), which is compatible with Android 4.0 and higher smartphones and tablets and works with 200 apps from Google Play. Smartwatches from Sony and other manufacturers are still highly dependent on smartphones, which serve as a wireless hub to connect to the Internet and apps. That’s an example of the kind of mobile ecosystem that Milanesi is talking about.
According to Milanesi, Sony “focuses on the user experience better than Samsung does,” which is significant. Samsung is clearly the biggest smartphone maker in the world with 31 percent of the market according to IDC.
Samsung, based in Seoul, South Korea, is also expected to introduce the next-generation Galaxy S smartphone, probably called the Galaxy S 5, at the Barcelona show on February 24, putting greater emphasis on style and design than in the GS4.
Samsung also sells the $300 Galaxy Gear smartwatch for use with a few of its Galaxy smartphones, and an update is expected shortly, possibly at MWC.
Samsung continually faces a design and style contest with Apple and its wildly successful iPhones at the high-end of the market. The market for expensive smartphones is, however, saturated, and might not be where Sony can shine.
To swim with the big fish like Samsung, Sony will need to “do something radical and get market awareness and share,” Gold said. “Wearables is something they could make a difference in, since it is such a nascent market and most first-gen devices are pretty weak offerings.”