NEW DELHI: Sony Corporation’s revenue from India dropped 9 per cent in the year ended March 2016 – possibly declining for the first time – as the company shifted away from the mass market and the share of smartphones shrank. The Japanese company expects a 20 per cent growth this year, helped by strong sales of television sets.
Smartphones accounted for about 30 per cent of Sony’s roughly Rs 10,000 crore revenue in the previous financial year, narrowing from 40 per cent a year ago, when turnover was Rs 11,010 crore. The share of the devices will drop to about 15 per cent in this financial year, when growth is expected to come from TVs, which contribute almost half of the company’s revenue, Sony India CEO Kenichiro Hibi told ET.
“We have made a more drastic shift from entry to premium. A big chunk of the mass market lies at the entry level that we are now leaving, so the turnover has dropped,” Hibi said.
The company has moved away from mobile phones for the masses, which make up almost 80 per cent of the market in India, to focus on the mid-to-premium segment, where devices cost upwards of Rs 20,000.
Hibi said the drop in revenue was expected. . “This is quite in line with our projection, so it doesn’t surprise us at all,” he said. Revenue for 2014-15 was Rs 11,010 crore and included the Vaio laptop business, which was sold in 2014.
While admitting that increasing revenue levels would be “quite challenging,” Hibi said Sony’s focus on the premium segment, coupled with the rise in demand for smartphone accessories and audio systems, will help net a larger turnover this year and recover from the fall.
“We are losing something but hope to get something. Overall, this business model fits more to our business direction,” he added, pointing to an expected increase of 60 per cent in its average sale price of smartphones despite a limited number of models in the mid-to-premium segment. Hibi reiterated that Sony is evaluating making phones locally.
Sony competes with Apple and Samsung Electronics in the premium segment (Rs 30,000 upwards), which almost have split the market between them.
According to Counterpoint Technology Market Research, Sony’s share shrank to 1 per cent in the quarter ended June from 1.5 per cent a year earlier.
Earlier this year, it offered voluntary retirement to its entire smartphone team and decided to focus on the mid-to-high end segment in select stores and its own outlets.
