Report: Sony Mobile USA has cut jobs, moved HQ to Silicon Valley

The sad saga of Sony’s smartphone struggle looks to be taking a turn for the worse. Yesterday a report emerged on re/code that indicates the struggling OEM has moved it’s entire mobile operations from Atlanta, Georgia to Silicon Valley. In the process, layoffs have taken place. It’s unclear as to just how many members the company shrunk its staff by, however the report states that,

Sony Mobile has fewer employees now than it had when it was in Atlanta, though the company declined to say how many currently work in its U.S. mobile unit.

The report continues, explaining that in addition,

Kunihiko Shiomi, who had been head of U.S. development, took over as president in January…The former U.S. head, Ravi Nookala, has returned to Canada and is now CEO of Burnaby, B.C.-based Glentel, which runs a range of wireless service businesses. Nookala worked at Sony Canada before being named to run U.S. operations in January 2013.

Coverage is also given to the fact that the location of Atlanta had been chosen many years ago, during the Sony Ericsson partnership, as a way to work in closer tandem with AT&T’s base of mobile operations. At that time, the OEM had a market share of around 4% in the US. According to reports by IDC, Sony’s US market share has been below 1% since 2012.

Hard times at hand

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This news marks the latest hardship for the Japanese conglomerate’s sagging mobile division, and suggests that the release of its Xperia Z5 series earlier this year has not resonated with American consumers. While it was reviewed quite favorably thanks to a top-notch camera experience and Sony’s excellent build quality and display prowess, carriers in the US failed to gravitate to it, ultimately resulting in limited distribution methods.

The device can only be readily purchased at Amazon and Best Buy, both of which sell the phone unlocked. This, in and of itself, is an immediate barrier of entry for many potential customers given the high price of an unsubsidized premium smartphone. The lack of carrier store presence also means there are far less opportunities for mainstream shoppers to take note of the offering. Regardless of any given product’s hardware quality, the smaller the exposure to a potential consumer base, the more difficult it becomes to move units.

In addition, a report came out of Japan this past February indicating that Sony plans to terminate its Xperia Tablet line. There was some debate as to if the assertion was strictly related to cellular models, or if the Wi-Fi variants would also end production. To date however, Sony has yet to announce a new tablet following last summer’s Xperia Z4 Tablet, and no follow-up to the smaller sized Xperia Z3 Tablet Compact was ever announced despite its release in Fall 2014.

Fight for the future?

Back at Mobile World Congress this past February, Sony unveiled a new permutation of a flagship product, the new X series.  though it appears to be a reboot of its now aging Z series. Indeed the product was immediately met with scrutiny as to any factors that would serve to distinguish it from the current flagship line. Pending release, or at the very least additional information from Sony Mobile, concrete answers as to the definitive future of the Z line are not likely to be provided any time soon.

Irrespective of this latest report, Sony already faces an uphill battle this year. Samsung has already released its Galaxy S7 and Galaxy S7 Edge flagship products, both of which have enjoyed brisk sales and may even contribute to the Korean OEM’s surpassing Wall Street expectations for Q1 2016. Released just days ago, rival LG’s G5 is already off to a strong start in Korea. HTC, too, is posed to launch a redesigned flagship that claims to have a powerful, promising picture producer. Likewise, competition from China continues to grow keener, offering top-level specs often for an extremely affordable price point.

While it’s likely Sony will continue to see strong sales in its home country of Japan as well as enjoy more limited success in parts of Europe and Asia, the chances of the conglomerate making a significant resurgence, much less taking a more commanding role in the global smartphone market seem to be an increasingly difficult prospect.

Especially in the American market, where several products with high rated cameras – including the industry leading Galaxy S7 – are already available, Sony’s support group is largely based on its long-term fans. Even among reviewers, some have taken to tell tumultuous tales about the tribulations traced to touting an Xperia Z5.

Wrap Up

With a new location of operations, Sony Mobile is actually much closer to the big name Silicon Valley companies that make much of the software running on its devices. With a new streamlined staff tally, costs will thereby be cut and possibly allow the company to be more agile. Still, there is a large uphill battle ahead, and sadly the OEM has already stated that if device sales this year fail to break even, it could be the end of the Xperia line entirely:

We will continue with the business as long as we are on track with the scenario of breaking even next year onwards … Otherwise, we haven’t eliminated the consideration of alternative options. – Sony Chief Executive Kazuo Hirai

This coming several months after Sony Mobile’s top executive had stated it had no plans of exiting the business.

What do you, the reader think? Is it finally time that Sony reads the writing on the wall and packs up shop entirely, or does it have a chance of salvaging its situation with a new approach – including better marketing – when the X series releases later this year? Drop a comment below and weigh in!