Sony Xperia 5 and the Future of Sony’s Mobile Phone Business
Sony Mobile Is Now a Division of Sony Electronics
After losing close to $900 million dollars on its smartphone business in fiscal 2018, Sony consolidated its mobile unit with its electronics division. While profitability is no longer broken out for the phone business, Sony’s smartphone revenues have fallen further in the two quarters since then. This is not surprising. While Sony is still a major Android phone vendor in Japan, it has not been able to beat back Chinese competition in Europe, and it has not had even a single phone on U.S. carrier shelves in over four years. Sony has pulled the plug on its Vue OTT live TV streaming service, has made tough decisions in its TV and PC businesses. Phone manufacturing benefits from scale, and Sony is rapidly losing that battle. Why is Sony seemingly insistent on remaining in the money-losing smartphone business, and does its latest phone, the Xperia 5, hold any hope of breaking the current pattern?
Sony is a conglomerate with strong brands in gaming (PlayStation), imaging (Alpha), television (Bravia), and content (Sony Pictures and Sony Music, along with other brands). Aside from content, Sony has tried to apply each of its brands to elements of its Xperia smartphones with little positive impact. Sony has tried to differentiate its phones with timeline-oriented user interfaces, 4K HDR displays, and 3D modeling. None of this has worked, so with its latest phones it is trying a slew of new features and a significant change to the form factor.
Xperia 1, 10, and 5
After years of selling wide rectangles with the same boxy corners/bulging rear design language, Sony’s latest trio of phones uses a longer-and-narrower 21:9 aspect ratio. The idea is that by lengthening the display, media is more immersive, and it gives consumes the larger screen they want without requiring larger hands as well (smartphone evolution has been much faster than human evolution as of late).
Techsponential got hands on with the Xperia 1 ($949) flagship phone at a launch event earlier in the year, and we remain fond of the mid-tier Xperia 10 ($350 - $420) launched at the same time. However, the Xperia 1’s bulk negates the main benefits of the aspect ratio – it’s still hard to hold – and the Xperia 10 feels cheap and underpowered. The Xperia 5 offers a better blend of flagship-level features and size at a more palatable $799 price point.
Techsponential tested the Sony Xperia 5 for several weeks, and it is the most interesting phone the company has launched in ages. The Xperia 5 is competitive on specs with the best phones on the market, but with a unique narrow form factor that solves a real pain point: it's easy to hold, while still offering a fairly large 6.1" display.
The fact that the Xperia 5 isn't available through U.S. carriers shows just how far Sony's mobile brand has fallen. U.S. consumers generally don't know that Sony even makes phones, and carrier device portfolio managers lost faith long ago that Sony could deliver on its promises. That leaves the Xperia 5 in a unique position: it is available unlocked at Best Buy and Amazon and it will work on most U.S. networks (even Verizon), though there are some limitations. It is priced in the same range as other Snapdragon 855 phones, but it is being sold through channels where U.S. consumers can't get the cost financed for free and added to their phone bills.
“The Xperia 5 is fast, has a beautiful display, and the unique extra-long, narrow form factor makes it easier to hold than nearly any other phone on the market. It also comes with a long list of compromises. ”
Hands on with Sony’s Xperia 5
The Xperia 5 is fast, has a beautiful display, and the unique extra-long, narrow form factor makes it easier to hold than nearly any other phone on the market. It also comes with a long list of compromises.
Web pages and apps generally benefit from the Xperia 5’s long rectangle. However, the display's 21:9 aspect ratio is less than ideal for consumers with poor eyesight - the default magnification size makes everything tiny in order to cram in a full complement of text and icons into the narrow space. Unlike Samsung’s latest One UI, Sony’s version of Android does not move interface elements to the bottom of the screen for easier reach. The Xperia 5 may be easy to hold, but it can still be a struggle to use one-handed.
The super-wide display does not have any cutouts for the front camera, and the full-screen, extremely wide aspect ratio really does improve content filmed in 2.35:1 CinemaScope. Apollo 11 looked terrific on the Xperia 5, the OLED display does a nice job with high dynamic range (it supports HDR10), and Dolby Atmos is onboard for virtual surround sound. However, the screen isn’t big enough for a truly immersive experience; you’re still watching a movie on a phone, and non-widescreen content suffers. YouTube and other video require such thick bars on either side of the content that there is no point in even holding the phone in landscape orientation.
There is no better proof that cameraphone photography is more than just optics and image sensors than the Xperia 5. Sony makes several elements of the imaging engine that goes into the iPhone 11 Pro and many other phones on the market, but in head-to-head shots, the iPhone had better detail and more accurate color balance. It is worth nothing that on some images, the Sony's over-saturated colors may be more appealing than accurate ones when used for social network posts. Where the Xperia really falls down is in extremely low light - it does not have a night mode. The Pixel 4 and iPhone can turn night into day (and Huawei's P30 Pro can even capture moving subjects in the dark), but when I tried taking pictures in the dark with the Xperia 5, all I got was dark.
Sony has also stuffed the Xperia 5 full of (thankfully defeatable) gimmicks that make the user experience worse, not better. Side Sense adds capacitive sensors to the thin bezels around the screen for pop-up icon menus. This is not just a gimmick - it's a gimmick that actively doesn't work, and when it does get triggered, it's often at random, which makes the phone appear possessed. Dynamic Vibration adds haptic effects in lieu of deep bass that no phone speaker can provide, thanks to the laws of physics. If you're holding the phone, this gimmick quickly gets annoying, and if you put the phone on a stand, it just vibrates all over the place.
Where This Leaves Sony
“The key opportunity for 2020 is fitting into carriers’ 5G plans. The other prospect is folding phones.”
No phone is perfect, and other unique form factors bring their own compromises. The Xperia 5 is a premium phone that is easy to recommend to anyone who complains that nobody makes small phones anymore. However, competitively, it is hard to see Sony making much headway with the Xperia 5. Samsung's Galaxy S10e is narrower, uses the same processor, has better distribution, and is $50 less expensive. Even if the Xperia 5 was discounted to take on Samsung and OnePlus, consumers wouldn't buy it because they don't know that it exists. Sony is not investing in marketing its phones, and, in the U.S., it probably shouldn’t: an ad campaign would cost Sony more to promote the phone than it could ever get back in sales in the open market channel.
If Sony intends to sell phones in the U.S., it needs to get back on carrier shelves and get carriers to shoulder the burden of promoting the phone with online and TV advertising. Then Sony can invest in incentives at point of sale – custom store displays, training, and sales incentives for retail salespeople. Currently, carriers are locked to the two OEMs that consumers walk into the store asking for (Apple and Samsung). Anyone else needs to justify their shelf space, and that means more than offering a reasonable alternative to the Galaxy S10e.
The key opportunity for 2020 is fitting into carriers’ 5G plans. The other prospect is folding phones, which are experimental today, but could drive traffic to Verizon once the Motorola razr launches. If Sony has a competitive folding 5G phone on the near-term roadmap, it needs to start leaking its plans to generate some excitement around the brand ahead of launch, and perhaps convince carriers to pick it up if they haven’t already. If Sony does not have 5G folding phones coming, and it cannot make a business case for investing massively in marketing, it is not clear why Sony should be building phones at all.
Final Note:
Sony does have one differentiator that it has not tried to exploit: its content. I asked Sony’s previous CEO Kaz Hirai why Sony did not simply include a device-specific license to Sony’s extensive movie and music library with the purchase of every phone. Sony’s phone sales are low enough that free content would not materially affect sales/licensing revenue of library titles, so why not use content to fuel full-margin hardware purchases? Kaz responded that he had considered this, but that Sony is simply too siloed to make this work; the content business owners demand full payment for each piece of content, even when distributed internally. Instead, the only vendor offering free content with the purchase of a phone is Apple, which includes a year of Apple TV+ when you buy a new iPhone, iPad, or Apple TV.
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