Can Sony Corporation's Xperia Z4 Compete Against Samsung Group's Galaxy S6?

By Markets Fool.com

Sony recently announced its new flagship smartphone, the Xperia Z4, with little fanfare. The device will ship this summer in Japan, but other international launch dates haven't been announced yet.

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The Xperia Z4. Source: Sony.

The 5.2" device sports a Qualcomm Snapdragon 810 processor, 3GB of RAM, a 20.7-megapixel rear camera, and comes in 32GB and 64GB flavors. In other words, it's comparable to Samsung's Galaxy S6 and other high-end Android devices. Sony hasn't set the price yet, but the Z2 and Z3 both cost around $700 unlocked.

Can the Z4 help revive Sony's slumping smartphone business? Or is this just another misguided mobile effort destined to miss the mark?

The sad state of Sony's smartphone business
Sony's smartphone business fell off a cliff last year. In the second quarter of 2014, the mobile division posted a whopping operating loss of $1.6 billion, which caused the company to report a net loss of $1.2 billion. But in the third quarter, theunit squeezed out a slim operating profit of $76 million.

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Rumors have swirled that Sony would sell or spin off its mobile business, as it previously did with its PC and TV units. However, Sony dismissed those rumors and stated that its priority was to make the Xperia business more profitable by selling fewer phones at higher prices. Last November, Sony mobile chief Hiroki Totoki warned investors that this strategy could cause sales to decline "by 20% to 30%".

Sony faces the same problems that have besieged Samsung and HTC. On one side, Apple is converting high-end Android users with comparably priced devices. On the other, low-cost rivals like Xiaomi, Lenovo, and Huawei are commoditizing the Android market and lowering price expectations. This leaves little room in the market for high-end Android device makers.

How Sony shot itself the foot
Due to those competitive pressures, Samsung's global market share in smartphones fell from 29% to 20% between the fourth quarters of 2013 and 2014, according to IDC. HTC, which controlled 11% of the market in 2011, now holds less than 2% share. Sony's market share is roughly the same as HTC's.

Sony's mobile business strategy has been a mess. It launched so many smartphones with incremental upgrades that it was tough to keep track of all the Xperia devices. Sony also bet big on China, but was quickly marginalized by local players like Xiaomi. By shedding mid-range devices with its low-sales/high-margin strategy, the Xperia brand will likely keep losing market share until it simply fades away.

Why the Xperia Z4 can't compete against the Galaxy S6
Last year, Samsung's Galaxy S5 failed to outsell the S4 because many consumers saw it as an incremental upgrade. That's why Samsung made sure that the S6 and S6 Edge's sleek metal frames and curved screens made them radically different from previous flagships.

That effort apparently paid off. Samsung recently stated that it expects to sell 70 million S6 and S6 Edge devices by the end of the year, topping analyst expectations of 50 million units sold. That figure would also match first year sales of the popular S3 and S4. Meanwhile, Sony launches new devices every six months which look nearly identical to their predecessors.

The Xperia Z2 (L) and Z3 (R).

Those similarities aren't merely cosmetic. A side-by-side comparison of the Z2, Z3, and Z4 reveals just how incremental the internal upgrades are.

Display

CPU

RAM

Cameras

Battery

Xperia Z2

5.2"

Quad-core 2.3Ghz

3GB

20.7MP/2.2MP

3200 mAh

Xperia Z3

5.2"

Quad-core 2.5Ghz

3GB

20.7MP/2.2MP

3100 mAh

Xperia Z4

5.2"

Octa-core (2 quad-core CPUs)

3GB

20.7MP/5.1MP

2930 mAh

Source: GSMArena.com

Although the Z4 has a much more powerful processor and front-facing camera, it has a smaller battery than both the Z2 and Z3. A beefier chip paired with a weaker battery means that the Z4 probably won't last as long as the Z2 and Z3.

Sony knows that the Z4 isn't a contender
Even Sony knows that the Z4 isn't a game-changing upgrade like the iPhone 6 or Galaxy S6. Sony told CNET that the company is still "considering the feasibility" of launching the Z4 in other markets.

If Sony really wants its mobile business -- which accounted for 17% of its revenue and 5% of its operating income last quarter -- to grow, it needs to change its strategy. First, it needs to launch fewer flagship smartphones at less frequent intervals. Second, it needs to make those devices stand out in terms of design and specs, since the flagship Z devices aren't impressive in either regard.

If Sony continues down this path of launching bland and mindless updates, its mobile business won't stand a chance against market leaders like Samsung and Apple.

The article Can Sony Corporation's Xperia Z4 Compete Against Samsung Group's Galaxy S6? originally appeared on Fool.com.

Leo Sun owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.