Sony (NYSE:SNE) recently introduced the Xperia 5, a new premium Android phone that will launch in October for about $900. The 6.1-inch device is basically a smaller version of last year's Xperia 1, which had a 6.5-inch screen and cost about $950.
Both devices sport 21:9 aspect ratio displays, which are wider than the standard 16:9 and 18:9 screens found on most other smartphones. Sony notes that the Xperia 5 supports wireless PS4 controllers and that the feature will be added to the Xperia 1 in the near future.
During a press conference in Berlin, Sony senior executive VP Shigeki Ishizuka stated that the phone would work with Epic Games' Fortnite -- and that he was "excited to see the growing trend of esports evolving to the mobile space." However, the Xperia 5 probably won't excite Sony's investors since it's just a remix of some dated ideas.
Why Sony keeps launching smartphones
Sony controlled less than 1% of the global smartphone market last year, according to Counterpoint Research. The market is dominated by heavyweights like Samsung (OTC: SSNLF), Huawei, and Apple (NASDAQ:AAPL), and the saturation of the market makes it tough for smaller players like Sony to survive.
Global smartphone shipments also fell 4% last year, according to IDC, as users postponed their upgrades and the Chinese market stalled. That slowdown forced smartphone makers to aggressively introduce new next-gen features -- like foldable screens and multi-camera devices -- to keep consumers interested. That's why Sony launched long 21:9 devices and why it's reportedly experimenting with "rollable" screens.
Unfortunately, Sony's smartphone business is still a dead weight on its growth. Last year, the unit's revenue -- which accounted for 6% of Sony's top line -- fell 31% annually to 498 billion yen ($4.6 billion). Its operating loss widened from 27.6 billion yen to 97.1 billion yen ($890 million), compared to an operating profit of 894.2 billion yen ($8.06 billion) for the whole company. Its total smartphone shipments plunged 52% to 6.5 million.
Despite all those challenges, Sony insists on keeping the smartphone business alive, with CEO Kenichiro Yoshida calling it a "necessary" extension of its brand. To deflect investor scrutiny of the mobile unit, Sony quietly launched the new "electronics products & solutions" (EP&S) unit, which merges its smartphones with other consumer electronics, at the beginning of fiscal 2019 (which started on April 1). The new unit's revenue fell 15% annually in the first quarter as its operating income plunged 23%.
Why Sony's "new" Xperia is just a remix of old ideas
Sony apparently wants to leverage the popularity of the PS4, which sold over 100 million units worldwide, to sell more Xperia devices. But this isn't the first time Sony tried to boost Xperia sales with the PlayStation.
Eight years ago Sony launched PlayStation Mobile, which featured cross-platform games for Xperia phones and the PS Vita handheld. The Xperia Play, which featured a slide-out PlayStation controller, was specifically designed for the platform.
However, PlayStation Mobile failed because its cross-platform games needed to be compatible with lower-end Android devices, which meant the games looked much worse than standard PS Vita games. Sony pulled the plug on PlayStation Mobile in 2014.
That same year, Sony introduced Wi-Fi Remote Play for its Xperia Z3 phones and tablets, which let gamers stream PS4 games over a local network to their smartphones. The Z3 devices could also connect to wireless PS4 controllers. However, this approach was also impractical, because users couldn't play the games when they were out and about.
That's why Sony now believes that a full-fledged gaming phone that can play higher-end games like Fortnite natively will attract more consumers. However, the Xperia 5 costs more than Apple's iPhone XR and nearly as much as Samsung's Galaxy S10. A wide range of wireless gamepads already work with both devices (as well as other phones), most high-end phones already play games like Fortnite smoothly, and there are already a wide range of "gaming" phones on the market.
The Xperia 5 will be another mobile flop
Simply put, Sony is just remixing some old ideas in a new package in the Xperia 5 and claiming that it will appeal to gamers. In reality, it will likely go unnoticed as consumers focus on flagship devices from market leaders like Samsung, Apple, and Huawei.
I've repeatedly stated that Sony should abandon or spin off its mobile business to free up more cash for its more successful gaming business. Yet Sony insists on launching new flagship devices with lackluster features at uncompetitive prices -- which will offset the gains of its stronger businesses.