The Sony Experia Z3 hasn't turned around Sony's mobile fortunes. Source: Sony.

If you've been paying attention to Sony (NYSE:SNE) over the past half-decade or so, you know it hasn't been a good run for the company. If anything, the decline of Sony can best be explained by the fall of its most-famous product: the Sony Trinitron TV. Once considered the top-of-the-line television, the brand has been disrupted by cheaper, good-enough models from Samsung, LG, and Vizio. Even including an amazing run over the past year, the company still finds itself trailing the greater S&P 500 over the past five years. Here's some visual context:

SNE Chart

SNE data by YCharts

More broadly, the company has failed to accurately assess changes in their various industries. In the aforementioned television and personal computer market, the trend was one toward commoditization, whereas Sony continued a premium-pricing strategy. However, in the all-important smartphone market, the trend has been mostly bifurcated: a high-end market dominated by Apple and Samsung and a low-end commoditized developing-country market.

Last February, the company sold its Vaio PC business to specifically focus on mobile. And how did that work out for Sony? In September, Sony cut its dividend for the first time since going public in 1958 amid a $1.7 billion writedown in its mobile phone business. This week, CEO Kazuo Hirai mentioned that he would not "rule out considering an exit strategy" from the TV and mobile phone businesses. I think we're well past the point of consideration for the mobile phone market, and the company should exit as soon as possible.

Is Sony's high-end strategy going to work?
When announcing the writedown, Harai planned to focus only on a premium lineup of smartphones and to reduce the number of midrange models. Specifically, the CEO outlined a plan to use its music and movies to provide value. The company subsequently released the Xperia Z3 in the United States -- although it has received generally positive reviews, the unit hasn't really caught on with consumers in a meaningful way.

And that's the problem for Sony: When it comes to the high end, the company simply lacks the features and overall product to compete with Samsung and Apple at the high end. If it's ruling out the commoditized, low-end market, it's essentially a company without a strategy for success. And while content (movies and music) is important, it's not substantive enough to be a mobile-phone differentiator.

To exit or to sell ... that's the question
My initial suspicion when Harai announced the writedown was that Sony was prepping the division for sale. By cutting hundreds of jobs, writing down the value of the business while still talking up its high-end strategy seems like a way to appeal to buyers eager to enter the smartphone market. And while the CEO played up its focus on mobile when selling the PC business, the economics for Sony (dwindling market share and increasing irrelevance) were similar.

The question for Sony is whether it's better to continue to post losses while waiting for a potential suitor that may never come, or to exit the business as soon as possible to prevent future losses. It's a tough decision, but it's one Sony appears closer to making.