Few people remember that, less than a decade ago, Sony was still one of the top 5 smartphone brands in the world. The successive mistakes with the Z series as well as the strong resurgence of Chinese brands made the Japanese giant gradually lost its foothold. Today, Sony’s market share is not even equal to obscure brands like Tecno or Itel.
One of the Chinese rivals that helped push Sony back into the past was Xiaomi. Released quite late, it only took Xiaomi 5 years to surpass all the big names to reach the top 5 in the world. The configurable dumping strategy has helped Small Rice Grain go into the user’s mind with limited budget, not to mention the design with Too much influence from Apple And controversial media campaigns have made Xiaomi one of the most popular smartphone brands today.
Once one of the top smartphone names, Sony is now far behind in terms of sales and market share from its Chinese rivals.
It is safe to say that the top Xiaomi smartphones will attract more attention than any Xperia. Sony’s market share today is indeed a mere dot when compared to Xiaomi. But if you choose a different angle, you will see that Sony is still easily beating Xiaomi in a key aspect.
The aspect we are talking about is profitability. According to official Sony data, in the second quarter, the Japanese manufacturer sold 800,000 smartphones, a decrease of 100,000 units compared to the same period in 2019. But with this super small sales, Sony’s mobile segment still can brings operating profits to over 100 million USD.
On the opposite side, Xiaomi solidifies its position in the top 5 with smartphone shipments reaching 28.3 million units. In many major markets, Xiaomi is occupying the leading position and / or growing impressively. But even with this impressive sales volume, Xiaomi smartphones only brought in a gross profit of about $ 353 million.
Every Xperia sold remains surprisingly profitable for Sony.
You may have noticed a difference. The number of Xiaomi smartphones sold worldwide is 35 times higher than Sony, but the profit is only 3.5 times higher. Although our calculations are only relatively accurate (operating profit by Sony and gross profit by Xiaomi), On average, each Xperia sold produces a profit equivalent to 10 Xiaomi phones. That can be considered a quite surprising phenomenon, because Xiaomi is still the brand that is more loved by many people than Sony.
You have probably guessed why. From last September until now, Sony has only released only 4 smartphone models, of which only one low-cost model is the Xperia L4 and the mid-range model is the Xperia 10 II. Both 2 Xperia “soft price” are configuration … lower than the competition and are quite lackluster, less advertised. To compete with Apple and Samsung, earlier this year Sony launched the Xperia 1 II with a “paranoid” price of 1200 USD. The upcoming Xperia 5 II will certainly still belong to the high-end segment at $ 750 like its predecessor Xperia 5.
Sony has an extremely small portfolio of products that can be considered as expensive. This is in stark contrast to Xiaomi: in the same period from last September until now, Xiaomi has unveiled the screen on less than 50 different phone models. Up to now, Xiaomi still brings the idea of selling smartphones in a “massively” way, with a variety of models and very cheap prices. ASP, or the average amount of money users spend to own a Xiaomi phone is about 163 USD, which is lower than the Xperia with the lowest price.
The average amount consumers spend on a Xiaomi phone is not enough to buy the cheapest Xperia.
Unknowingly, Xiaomi and Sony have become the representatives of two completely different extremes of the smartphone market. And when you compare the premium product with the low-cost one, the inevitable rule of market happens: an expensive Xperia is many times more profitable than a cheap Mi / Redmi.
Over the years, this is also the reason why Apple “eat” all profits of Android brands: Although only 1/5 of the market share, the strategy to focus on the high-price segment has made the iPhone much more profitable. In the past quarter, both affected by the epidemic and the quarter with low iPhone purchasing power on the annual calendar, Apple still brought in $ 10 billion in profit, higher than the profit of Samsung, Huawei and Xiaomi in the same period. total.
In the end, profit is still the most important principle of each company. There is no one in business that does not care about profit or loss. And as Sony and Xiaomi have proven, even in the difficult season, high-end smartphones are still more profitable than cheap smartphones. When the economy recovers, when things return to normal trajectories, the mobile industry will understand what the goal is to aim for. Cheap smartphones will increasingly fail, and more and more the big players will focus on killing each other in the high-end segment.