By Juro Osawa
While Japan’s ailing consumer-electronics sector struggles to regain momentum, it turns out that Sony Corp. actually climbed to the No. 3 position in the global smartphone market in the third quarter. Sony, which was the No. 6 player in the same quarter a year earlier, came only behind Samsung Electronics Co. and Apple Inc., according to the latest data from research firm IDC.
Does this signal a comeback for Sony, the brand once synonymous with the coolest gadgets?
Probably not.
Sony’s rise to the third place is mostly because of huge market share losses at Nokia Corp., HTC Corp. and Research In Motion Ltd., the maker of BlackBerry handsets.
In the third quarter, Sony held a 4.8% share of the world’s smartphone market by shipments, down slightly from 5.0% a year earlier, according to the IDC data. Meanwhile, Nokia’s market share for the quarter tumbled to 3.4% from 13.6% a year earlier, while HTC’s share dropped to 4.7% from 10.3%. RIM’s share fell to 4.2% from 9.6%.
Last month, IDC released its preliminary smartphone market share data for the third quarter, but Sony wasn’t among the top five, because the Japanese company’s shipment data wasn’t yet available at the time, according to IDC.
The updated data for the third quarter also showed that Samsung, the market leader, increased its share to 31.3% from 22.7% a year earlier, while Apple’s share rose to 14.6% from 13.8%. Samsung and Apple together control nearly half of the market, while none of the other players holds more than 5%.
Moreover, Apple and Samsung are the only ones enjoying strong profits from their handsets, because the iPhone and Samsung’s flagship Galaxy models dominate the high-end segment — the only lucrative part of the entire smartphone market.
Whether Sony can turn around its mobile business likely depends on whether it can grab a larger chunk of the high-end market, where overall growth is not as robust as the low-end segment. To do that, Sony would have to steal some customers away from Apple and Samsung.
Sony’s mobile products and communications division, which includes the mobile handset business, posted an operating loss of Y23,1 billion ($280 million) in the fiscal second quarter through September.
A spokeswoman for Sony’s mobile unit acknowledged Friday that the company’s rise in ranking is due in part to sequential declines at other vendors.
She said Sony is trying to grow in the high-end smartphone market by working closely with the company’s movie business, among others, to promote new handsets.
“The smartphone market is increasingly bifurcating into premium (above $450) and low-end (below $200),” Sanford Bernstein analyst Mark Newman wrote in a report this week. “All the industry profits go to the premium segment and most of the growth is in the low-end, with the mid-end unprofitable and relatively shrinking.”
The market share ranking in terms of shipment volume may change over the next year, given the increase of low-end smartphones in China, as the country is set to become the world’s largest smartphone market this year. Chinese personal-computer and handset maker Lenovo Group Ltd., for example, saw its global market share increase to 3.7% in the third quarter from 0.37% a year earlier, thanks to robust sales in the domestic market.
Even so, there’s little money to be made in the low-end segment, because margins are very thin and a sales growth doesn’t translate into a lot of profit.
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