Sony is to cut around 15% of its mobile phone workforce as it attempts to reduce costs for its struggling business. Around 1,000 jobs will be cut from Sony Mobile, as the Japanese company tries to stay in touch with smartphone industry leaders Apple and Samsung.
The bulk of the cuts – around 650 jobs – will come from Sony’s mobile headquarters in Lund, Sweden, as the company moves its base of operations to Tokyo. The relocation will begin in October, and is scheduled to be complete by March next year.
Sony says that it will not be completely shutting down its Sweden-based operations, with consultants remaining in the Scandinavian country to focus on the development of mobile software and applications.
Some 700 jobs in the mobile phone sector are to go this financial year, with the remaining jobs set to be cut the following year.
The move is part of Sony’s target of reducing its total global workforce by around 10,000 jobs – a downsize of around 6% – in coming years. The restructuring and reorganizing plans come after the company posted a $5.8 billion loss for the financial year ending in March.
Tough Market Conditions
A strong yen, as well as a drop in demand for Sony’s Bravia flat-panel television and stiff competition from South Korea’s Samsung were among the main reasons for the loss.
Sony took over complete ownership of the ailing Sony Ericsson joint-venture in February, buying out its Swedish partner’s share for $1.3 billion and renaming the smartphone business Sony Mobile.
Last year, Sony had just 4.2% of the smartphone market, behind Finnish giant Nokia and Blackberry maker Research In Motion, according to a report from market research firm Gartner.
Apple remains the number-one smartphone maker with almost 19% of the market, and Samsung is rapidly gaining ground with 18.5%.
Sony has put its efforts into its Xperia line of mobile devices, which has struggled to gain ground on Samsung’s Galaxy brand and Apple’s iPhone and iPad.
In 2011, the Xperia brand accounted for around 12% of global sales of devices powered by Google’s Android mobile operating system, while Samsung made up some 41%.
Key Statistics - Mobile Phone Market in Japan (source: MarketLine)
- The mobile phone market in Japan saw total revenue of over $14 billion in 2010, which represents a compound annual rate of change of -2.7% for the 2006-2010 period.
- The volume of market consumption dropped in 2010, with a compound annual rate of change of -1.8% from 2006-2010, reaching a total of 44 million units.
- Market performance is expected to jump for the 2010-2015 period, with analysts predicting an annual growth rate of close to 7%, which is forecast to push market value to almost $20 billion through 2015.