Sony IR Day 2015
Mobile Communications SegmentMay 27, 2015
Hiroki TotokiPresident & CEO, Sony Mobile Communications Inc.
Group Executive, Sony Corporation
Sony IR Day 2015
Agenda
1. FY2014 Review FY2014 Results
2. FY2015 Action Plan Smartphone Market Trends Forecast Management Direction Important Initiatives FY2015 Results Forecast
3. Reference Materials
Mobile Communications Segment
15*FY2014 = Fiscal year ended on March 31, 2015
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Mobile Communications Segment
16
1. FY2014 Review
Sony IR Day 2015
FY2014 Results vs FY2013
1
2
3
1,323.31,191.8
Profit decreased due to the goodwill impairment, the unfavorable impact of foreign exchange rates, and an increase in intellectual property related reserves
and restructuring charges, partially offset by an improvement in product mix
12.6
-220.41 2 3
4
4
FY13 FY14(bln yen)
Mobile Communications Segment
Unfavorable impact of foreign exchange rates*1
Improvement in product mix with focus on high value-added models
Increase in intellectual property related reservesand restructuring charges
176.0 billion yen goodwill impairment charge
Sales
OperatingIncome
*1: Impact of foreign exchange fluctuations is calculated using the sales and costs denominated in each currency in FY2014 and comparing them with the previous fiscal year17
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Mobile Communications Segment
18
2. FY2015 Action Plan
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Smartphone Market Trends Forecast (by Price Segment)
Source: Sony MobileCAGR: Compound Annual Growth Rate
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
FY2015FCT
FY2016FCT
FY2017FCT
FY2018FCT
34.436.4 38.0 39.8
CAGR (FY15-18)
5.0%
5.3%
4.1%
9.2%13%
25%
62%
ASP 26,000 yen 25,000 yen* wholesale price
ASP slightly decline in overall market due to slowdown in the high-end and rapid growth in the low-end
Mobile Communications Segment
Value (trillions of yen)
FY15 FY16 FY17 FY180.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
FY2015 FY2016 FY2017 FY2018
1.34 1.44 1.531.62
CAGR (FY15-18)
8.2%
9.6%
8.2%
6.7%
38%
33%
29%
Units (billions of units)
FY15 FY16 FY17 FY18
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FY2015 Management Direction Mobile Communications Segment
20
Complete transformation in order to record a profit in FY2016 Focus resources through model count reduction and develop
technology and appealing products for FY2016 and beyond Clarify regional strategy and enhance profit management in
each region Take bold steps to develop new businesses
Sony IR Day 2015
Complete Transformation Mobile Communications Segment
7,100
5,000
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
As of Oct 1, 2014 As of Apr 1, 2016
Operating Expenses Headcount(bln yen) (Headcount)
Approx. 2,100Reduction300
240 210
0
50
100
150
200
250
300
350
FY2014 FY2015 FY2016
Approx. 60 Billion YenReduction
Approx. 30 Billion YenReduction
Delayering: Layers from CEO are reduced from 8 to 6. Simplify and avoid duplications: No. of operating units reduced from 43 to 32.Centralize HQ functions in Tokyo: 20 out of 32 unit heads are based in Tokyo.
(Forecast) (Forecast)
As of Apr. 1, 2016As of Oct. 1, 2014 FY14 FY15 FY16(Forecast)
21
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Major Xperia Products in 1st half of FY2015
22
M4 Aqua
PremiumSegment
Super MidSegment
TabletSegment
Tablet
・Excellent waterproof: IP65/68 certified ・Battery life lasting up to 2 days ・Sophisticated design
・Design focusing on ultimate quality and functionality
・25mm wide-angle lens main/front camera・LDACTM compatible high quality sound experience
Main Feature
・Worldʼs slimmest and lightest・Latest CPU/OS installed・Excellent waterproof: IP65/68 certified
Mobile Communications Segment
Sony IR Day 2015
FY2014 FY2016FY2015 FY2016
Examples of Focusing Resources Through Portfolio Size Optimization
Number of VariantsNumber of Platforms
Realize more efficient development by focusing resources on a smaller number of models
R&D Expense
91.0 bln yen
FY2014 FY2016
7 61
Mobile Communications Segment
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FY14 FY16 FY15 FY16 FY14 FY16(Forecast) (Forecast) (Forecast) (Forecast)
Approx. 50%reduction
Approx. 60%reduction
Approx. 30%reduction
Sony IR Day 2015
Defining Each Regionʼs Position Mobile Communications Segment
Split the 13 sales companies into 5 regions and develop an optimal sales & marketing strategy for each region to enhance investment efficiency and improve profit management
Japan: As the most important region due to its high profitability, aim to maintain profits and expand new business opportunities by leveraging the business platform
Europe: Despite relatively high market share compared to otherregions, profitability is low, so aim to enhance profitability byimproving model mix and strengthening profit management
China: Drastically downsized this business, so continue to operate the business in limited channels with minimized costs
US: Minimize losses by concentrating on limited carriers and focus only on the premium segment
24
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Internet of Things(IoT) Strategy Mobile Communications Segment
25
Wifi/Ethernet
COMPONENTS/SOC
DEVICES
GATEWAYS
CellularNETWORK SERVICESACESS AND DATA CONNECTION
DEVICES &HW
SERVICES &HW
ACCESS
Leverage Sony competenceCreate HW ecosystem
Utilize accumulated knowhow in
communication technologies, customer management, billing,
CRM etc.
APPLICATIONS
DATA ANALYTICSANALYTICS, STORAGE, BROKER
DEVICE MANAGEMENTSW UPDATES, DM, REMOTE ACCESS
Expand business together with Sony Mobile and So-net
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Challenges for New Business Creation
Launch of Seed Acceleration Program by Sony Mobile
Accelerate the development of smart productswith communication at their core, in the area ofInternet of Things (IoT)
Enter the B2B market through collaboration with So-net Corporation and strengthen efforts to build recurring businesses
Mobile Communications Segment
Sony IR Day 2015
Sales Trends (FY2014/FY2015) Mobile Communications Segment
(bln yen)
1,410.21,310
FY14 FY15 Apr Forecast
-7%vs FY14
Smartphone Unit Sales Sales Amount
(k units)
Other Smartphones
Others
Z SeriesSmartphones-7%
-32%
+1%
-22%
So-net
39,100
30,000
FY14 FY15 Apr Forecast
OtherSmartphones
-23%
vs FY14
Z SeriesSmartphones
・ The figures for sales include So-net Corporation and its subsidiaries which were previously included in All Other. 27
FY14 FY15 Apr. Forecast
FY14 FY15 Apr. Forecast
Sony IR Day 2015
Changes in FY2015 Operating Income vs FY2014
5
2
3
4
1,3101,410.2
Complete structural reform within FY2015, aiming for a business structure that generates profits without relying on volume. Despite the favorable impact of FY2014
restructuring efforts, operating loss is expected to decrease slightly due to an increase in restructuring charges and the negative impact of FX (excluding the impairment in FY2014).
-217.6
-39
1
FY14 FY15Apr. Forecast
(bln yen)
6
1
-41.6
2 3
4 5 6
Reduction in low- and mid-range smartphoneunit sales
Sales price change
Cost structure improvement throughOPEX reduction
Increase in restructuring charges
176.0 billion yen goodwill impairment charge
Mobile Communications Segment
Unfavorable impact of foreign exchange rates*1
Sales
OperatingIncome
・ The figures for sales & operating income include So-net Corporation and its subsidiaries which were previously included in All Other.・ The FY2015 forecasts for the segments have been calculated using the assumed foreign currency rates of approx. 118 yen to the U.S. dollar and approx. 136 yen to the euro.*1: Forecasted impact of foreign exchange fluctuations is calculated using the sales and costs denominated in each currency in the FY2015 business plan and comparing them with the previous fiscal year. 28
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Mobile Communications Segment
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3. Reference Materials
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FY2014 Sales by Key Product / Region
30
Tablet
Accessories and Others Japan
North America
Europe /Middle East
China
Asia-Pacific
Other Areas
Sales13,233Oku yen
Smartphone
Sales by Key Product Groups Sales by Region
Sales13,233Oku yen
Mobile Communications Segment
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1.9 trillion yen
15.7%0.6%
6.7 trillion yen5.2 trillion yen
8.7%
0.6%
8.8 trillion yen 4.3 trillion yen
4.9% 6.0%
2.3 trillion yen
7.1%
2.0 trillion yen
Japan
Latin AmericaChina
North America
Middle East and Africa
Europe
Asia-Pacific
Mobile Communications Segment
Inside figure: FY2014 market sizeOutside figure: Sony share
FY2014 Smartphone Market Share in Key Markets (Value basis)
Source: Sony Mobile
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