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Given the difficulties of phone division, Sony’s strategy has undergone a 180 degree turn in recent months. A change that approaches the mark for excellence and has increased its profits in recent months.
The phone division has always been one of the cornerstones in the strategy Sony . The company has invested large amounts of capital in product development and the expansion of its brand. The result of this are the many sponsorships around the world and families as Xperia Z, one of the most popular sector.
But despite heavy investment, the results do not seem to meet the expectations of the company . The levels of market share worldwide, Sony relegate to the lower positions of the table, below the industry leaders: Xiaomi, Lenovo, Huawei, Apple and Samsung. Revenues at the same time, also collected with an eyedropper.
Given this complex situation, the continuity of the division began to be called into question in the medium and long term. In fact, the CEO himself had to publicly deny all information and announce, at the same time, the intention of the company: keep the phone division, but with a different approach
After several months, this new approach begins to take effect in the financial results of the company, where you can see the double net profit in 2014. what are the keys to this new proposal?
Cuts in key areas and a new portfolio have enabled the company to partially soar Mike Fasulo, chief operating officer of Sony Electronics, was interviewed in early 2016 by the Verge, where he said the new focus of the company is not going to reach all people, all markets and all industry niches. The new approach of the company happens to make the best possible products and deliver them into the hands of consumers in the best possible conditions . In other words: one closer to the excellence of brands like Apple strategy to verticality brands such as Huawei and Xiaomi
This new strategy Sony and could be seen throughout 2015, the year. which the company significantly reduced the number of products launched worldwide and focused most of its efforts on the middle and upper range. A clear example is the number of flagships released worldwide, two in 2013 and 2014, one in 2015 -except the Z3 + Xperia (for US only) and Z4 Xperia (in only specific regions of Asia ) -.
This new strategy Sony has raised its ASP ( average selling price , or average selling price), an index that reflects the average price for which the company has sold its products. The higher it is, the higher the average price of its devices sold (usually a good sign).
As can be seen in the datos, Sony is the second largest manufacturer ASP , located just behind Apple ($ 691). Likewise, the average and net profit per device sold exceeds even that of Samsung, a situation that contrasts with the rest of the Android ecosystem, where it becomes even negative in manufacturers like HTC.
A key aspect that has improved the profitability of the division, beyond the change of portfolio , is the better management of expenses. The company has suffered a drop in revenue of 14.7% over the last year , as a result, in part, the new portfolio – but the benefits, however, have doubled in the same period of time.
Sony excellence approaches instead of fighting through the verticality Specifically, Sony has increased its profits operating in a 133.2% over the same period last year with the new focus of your portfolio product and, above all, a more intelligent management of company expenses (lower investment in marketing , reductions in spending on R & D, etc.). Measures that have been very noticeable from the outside and which fortunately seem to have worked for the company.
Throughout 2016, this trend should continue thanks to the arrival devices with higher profit margin and belonging to upper ranges (such as the Xperia X family introduced during the Mobile World Congress). However, only time will determine whether this new strategy will be fruitful Sony long and medium term.
April 2, 2016
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