Sony, one of the first Android smartphone Original Equipment Manufacturers (OEMs) to operate in India, has announced that it will exit the Indian smartphone market. This decision came after the company failed to generate enough sales for years in a row for its smartphone business. The company has assured that it would continue its customer support operations including after sales support and software updates for existing customers in India.
What led to such a decision?
The Indian smartphone market is currently dominated by Chinese players like Xiaomi, OPPO, Vivo and OnePlus among others, besides the South Korean technology giant Samsung. Fierce competition has drastically reduced the market share of Sony Mobile to less than 0.01% of the total Indian smartphone market share in the first quarter of 2019. During the same quarter, Xiaomi led the smartphone market with 29% share followed by Samsung with 23%, Vivo with 12%, Oppo and Realme with 7% each.
In a recent corporate strategy meeting held in Tokyo, Sony presented its plan to turn its smartphone business profitable by cutting half of its workforce, withdrawing from most markets around the world and by optimising costs. Sony plans to reduce its operational costs by up to 50% and the overall costs by up to 57% by the year 2020. In a statement after the meeting, authorities from Sony Mobile stated, “We will focus only on those markets which drive profitability and future prospects in the 5G era. Although we have decided to exit the Indian smartphone market, we would still continue to monitor the market situations and business feasibility in the country.”
What are Sony’s ‘focus’ and ‘non-focus’ regions?
Sony has listed the countries and regions from where it will withdraw its business and where it will focus on selling smartphones. The company plans to compete with brands like Apple, Samsung and others in European markets and its homeland Japan. The company has already merged its phone and imaging divisions for better performance. Authorities from the company added, “We will focus on European markets as well as our home market Japan along with Taiwan and Hong Kong. We will withdraw from the Indian subcontinent, Australia, Africa, most of Southeast Asia, Korea, South America, Latin America, Mexico and Canada.” However, the company will remain in Russia and the US but will not sell its phones directly, and but through telecom operators or carriers.
How will this decision affect the Indian employees?
Sony Mobile has, in the recent past, shown its deep concern for its rising loses in India. Sony has intended to turn its smartphone business profitable by reducing the operating costs. A recent report claimed that Sony is set to cut its mobile division workforce by half by 2020. This could result in roughly 2,000 employees either losing their jobs or getting moved to a new business division. Sony has said that it will try to ensure that its employees are least affected by its exit from the Indian market.