Sony (SNE, Financial) is popular for manufacturing consumer electronic products such as televisions, but the company is now aggressively focusing on its games and network services segment. Sony’s television business is gradually moving downward, as it endures to face tough competition from rivals such as LG and Samsung.
Not only this, Sony’s market share in the smartphone space worldwide continues to decline at a swift pace. According to statista.com, the company now holds approximately 1% to 2% of the market share around the globe, down from 4.7% in the second quarter of 2012.
Currently, Samsung holds a leading position in the smartphone industry, with at least 20% market share globally, which is remarkable. Moving ahead, Apple (AAPL, Financial) sits at the second position with over 12% market share. This clearly suggests that Sony could not beat its rivals, at least in the next few years.
However, this does not mean that Sony is out of the race, as it holds a leading position when it comes to console gaming. In 2015, the company managed to sell approximately 21.5 million units of PlayStation 3, PlayStation 4, as well as PlayStation Vita combined, which is significantly greater than the consoles offered by Microsoft (MSFT, Financial) and Nintendo.
In the second quarter of 2016, Sony’s gaming and network services division accounted for the biggest share of the company. As a matter of fact, the company’s video game segment has now became the center pillar of the company and the foundation for building branch-out projects, comprising subscription-based streaming TV service PlayStation Vue as well as its latest PlayStation VR headset.
As per SuperData, Sony will sell around 750,000 units of PlayStation VR this year, considerably higher than 450,000 units for HTC Vive and 355,000 units for Oculus Rift. If everything goes according to the forecast, it will be a great achievement for the company keeping in mind that virtual reality is still in its infancy.
The PS4 continues to hold a leading position in the gaming console market this year. The PS4 is performing much better than its foremost rival, Microsoft’s Xbox one. Furthermore, the company recently released the new version of PS4 titled “PlayStation Pro”. PS4 Pro should help the company conserve unit sales and pricing power.
All in all, the PS4 line-up looks poised to maintain sales headship in the future.
Conclusion
Despite facing huge problems, Sony managed to perform well over the past few years. The stock was up approximately 20% in 2015, and it is up almost 15% year to date. The company recently launched its new PlayStation VR headset and PlayStation Pro which are projected to outperform the market next year.
As an outcome, the stock still has more upside to offer and investors should continue to hold the stock.
Disclosure: I do not hold positions in the stocks mentioned in the article.
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