Sony's expiring Xperia

Hello, this is Takashi in Tokyo. After a decade of loyalty to Sony, I surrendered my Xperia smartphone in favor of a Google Pixel last year, [View in browser]( [Bloomberg]( Hello, this is Takashi in Tokyo. After a decade of loyalty to Sony, I surrendered my Xperia smartphone in favor of a Google Pixel last year, and it looks like I’m far from alone. But first... Three things you need to know today: • The US revoked licenses for Qualcomm and Intel [to sell chips to China-based Huawei]( • Coupang’s quarterly profit fell [short of estimates, sending shares down]( • Reddit’s first earnings report as a [public company impressed investors]( Hanging by a thread It might surprise you to hear that [Sony Group Corp.](bbg://securities/6758%20JP%20Equity) is still in the smartphone business, as its name no longer shows up in global rankings. Its one bastion of hope, at home in Japan, is already overrun with iPhones, but at least Sony remained a prominent player among Android vendors. Well, not anymore. Sony’s mobile sales in Japan declined 40% in 2023 and are likely to suffer a similar drop this year, according to IDC analyst [Masafumi Inbe](bbg://people/profile/23961488). The company hovers around 1 million sales per year in a country with a population of 125 million, where people buy 30 million smartphones every year. [Alphabet Inc.](bbg://securities/GOOGL%20US%20Equity)’s Google is making a [strong push]( in the country and that has hit Sony hard, Inbe said. I’m the embodiment of this shift. In my case, Google’s Pixel Fold enticed me to switch, as the foldable form factor makes for [a whole new device experience](. Sony does not sell a foldable, and the Chinese brands that make China’s market so excitingly dynamic aren’t widely available here. So why is Sony still engaging in this exercise at all, is a question I’ve heard many financial market participants ponder. The Tokyo-based firm has strongly resisted such calls, saying the business is essential for its broader strategy. “We recognize that our mobile communications business is not only a handset business, but also a business with important communication technology that contributes to the entire Sony Group,” a spokeswoman said. “We believe that the communication technology we hone with smartphone technology is a necessary element to connect creators and customers and to provide entertainment regardless of time and place." The tech conglomerate turned around its formerly loss-making consumer electronics business by limiting its range to premium, sometimes niche, products. The Xperia group took the same approach: the ¥180,000 Xperia 1 V comes with a cinematic 21:9 4K HDR OLED display, high-resolution audio outputs and Sony’s latest-generation image sensors allied to software emulating the company’s professional-grade Alpha DSLR cameras. That price, about $1,150 at today’s exchange rates, is closer to $1,800 when the yen’s not in free fall. But in practice, those features aren’t always a strength. The high-resolution display drains the battery fast. A lot of content made for modern smartphones — from games to comics to videos — is not compatible with the elongated aspect ratio, leaving thick black bars on each side. And the highly configurable camera settings turn into a time-consuming chore when all you want is the best possible snapshot. Sony managed to make its camera software both too jargony for ordinary consumers and too limited for tech-savvy users, according to [Waseda University](bbg://securities/0834194D%20JP%20Equity) Professor Atsushi Osanai. So the company went premium and niche, and now I’m posting my tweets (I’m still calling them tweets, thank you) from a Pixel. Sony’s trying some new things that are old by industry standards. It started selling handsets directly to consumers, for one. It’s also targeting younger buyers, though in Japan [Apple Inc.](bbg://securities/AAPL%20US%20Equity)’s iPhone is the primary choice for the youth since it’s so abundantly used. The main demographic for Xperia users are people in their 40s or older, IDC said. The research firm expects Sony’s smartphone share in Japan to keep falling. Even so, and even with people like me walking away — I’ve been an Xperia user since 2013’s Xperia Z1 — Waseda’s Osanai believes Sony shouldn’t give up on smartphones. The phone is where most people consume entertainment today and there’s no merit for Sony, the entertainment giant, to step away from having its own delivery device. One way for Sony to survive in Japan may be to give up the premium fight with Apple, Google and [Samsung Electronics Co.](bbg://securities/005930%20KS%20Equity) and focus on the mid-range of around $500, Inbe said. The company doesn’t have the resources of those international players, so it’d do better to focus on a softer part of the market. I’m not sure that Sony would buy that idea, as the company prides itself on offering premium products. Things like [gold-plated]( music players and [$1,700 earphones](. It’s been years since Sony stopped disclosing the particular earnings of its smartphones division, to fend off pressure from investors to abandon it. As the decline continues, however, Sony will need to reconsider what it gets from remaining in the business — and whether the payoff is worth it. —[Takashi Mochizuki](mailto:tmochizuki15@bloomberg.net) The big story TikTok sued the US government over the law passed by Congress that would force Chinese-based ByteDance Ltd. to sell the popular video app or see it banned in the US. The lawsuit sets up a [legal battle that will pit free speech rights versus national security](. One to watch [Watch former Google CEO Eric Schmidt interviewed on Bloomberg Television about the US law to force a sale or ban on TikTok.]( Get fully charged Meta will offer marketers new generative [AI tools for advertising campaigns](. OpenAI is working on a search product [to rival Google]( and earlier signed a licensing deal [with the publisher of People magazine](. Match Group posted its sixth straight quarter of declines in paying [customers on its dating app Tinder](. Alumni of Google’s DeepMind closed a $200 million funding round for [their Paris-based startup Holistic AI](. US authorities indicted the still-at-large leader of the notorious [ransomware group Lockbit](. 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