Sony IR Day 2018
Imaging Products & Solutions Segment Mobile Communications Segment
May 22, 2018 Shigeki Ishizuka
Corporate Executive Officer, Executive Vice President, Officer in charge of Imaging Products & Solutions Business/Mobile Communications Business Sony Corporation
Representative Director and President Sony Imaging Products & Solutions Inc.
Imaging Products & Solutions Segment Introduction Mobile Communications Segment Shigeki Ishizuka Corporate Executive Officer, Executive Vice President, Sony Corporation
Imaging Products & Solutions Segment Mobile Communications Segment
Sony Imaging Products & Solutions Inc. Sony Mobile Communications Inc.
Shigeki Ishizuka Mitsuya Kishida Representative Director and President Representative Director and President
Toru Katsumoto Hiroshi Kawano Sony Network Communications Inc. Representative Director and Deputy President Hirokazu Takagaki President and Representative Director
Sony IR Day 2018 Imaging Products & Solutions Segment Agenda Mobile Communications Segment
1. Imaging Products & Solutions Segment Ishizuka
2. Mobile Communications Segment Ishizuka/Kishida
3. Reference Materials
Sony IR Day 2018
1. Imaging Products & Solutions Segment
Sony Corporation InvestorSony IR RelationsDay 2018 Organization: Sony Imaging Products & Solutions Inc. Imaging Products & Solutions Segment
Digital Imaging Group Professional Solutions and Medical Business FeliCa Services Group Group Business Media Cinema Division ILC Lens Education Peripheral Medical Devices Sports Visual Simulation
DSC Camcorder Professional Products Group Surgical Imaging Devices Life Science Broadcasting Professional Network Display System Camcorder Camera
Imaging Platform: Light to Display Image IP Light Source Lens Image Sensor Display Processingg Transmission
Sony IR Day 2018
FY2017 Review Imaging Products & Solutions Segment （bln yen） Sales 579.6 655.9 FY2017 Operating Income (vs FY2016) Operating Income 47.3 +27.7 74.9 Positive factors
1 Forex impact Increased OPEX Value-Added 2 Recovery from the Kumamoto Earthquakes Recovery (insurance income, sales recovery) from the Forex Earthquakes 3 Increased value-added (shift to higher value- Impact added models)
Negative factors ４ Increase in OPEX（due to increase in sales） FY16 Factor Factor Factor Factor FY17 1 2 3 4 Sales and operating income increased significantly due to the recovery from the Kumamoto Earthquakes and the impact of forex Digital Imaging: continued shift to higher value-added, especially in the interchangeable lens camera space Professional Solutions: new solutions service business offset by decrease in existing business sales
Sony IR Day 2018 FY2018 Forecast Imaging Products & Solutions Segment
（bln yen）
Sales 660 FY2018 Operating Income (vs FY2017) 655.9 Operating Income 74.9+0.1 75 Red: negative factor Blue: positive factor
1 Forex impact
2 Improvement in value-added Forex Improvement (shift to higher value-added models) impact in Value-Added
FY17 Factor Factor FY18 1 2 April forecast
Sony IR Day 2018
Mid-Range Plan: Management Policy Imaging Products & Solutions Segment
Business Foundation ・ Sony brand（B2B&C) Sony Brand（B2B&C) Strengthen products & services under the SONY brand ・ Customerʼs Real-Time Benefit Create customer value with “time” ・ Differentiation by L2D* technology Competitive advantage derived edge from in-house SIPS production technology Strength ＋ Quantitative Target Differentiation by Customer Operating Income Margin: L2D Technology Real-Time Benefit 10% or More
* L2D: Light to Display Sony IR Day 2018 Mid-Range Plan: Business Strategy Imaging Products & Solutions Segment
Strengthen and grow the Solutions Business by delivering Real-Time Benefit Solutions Products
Create strong products based on our differentiated L2D*1 technology nology Tech PF PF Light Image Image Lens IP Transmission Display Source Sensor Processing
*1 L2D: Light to Display *2 PF: Platform Sony IR Day 2018
FY2020 Financial Targets Imaging Products & Solutions Segment
Operating Income: 85~105 billion yen
※ Sales Amount (For Reference): 700 billion yen
Maximize profit growth and enterprise value Create strong and differentiated products based on L2D technology, deliver Real-Time Benefit, and strengthen and grow the solutions business
Sony IR Day 2018 Digital Imaging Business: Mid-Range Initiatives Imaging Products & Solutions Segment Win in an increasingly competitive market and continue to generate high profit Industry Trends Initiatives
Aim to be the top brand in the overall . Revitalization of the mirrorless camera market camera market . Strengthen products, especially in the . Competitors becoming more interchangeable lens camera space aggressive in the market . Engage the professional market . Expand the lens business
Basic Resolution Speed Expand Lens Lineup Expand Pro-Support Worldwide
“Camera of the Year” Camera Grand Prix 2018 Sony IR Day 2018
Imaging Products & Solutions Segment Professional Solutions Business: Sales by Business
Media
Sports
Broadcasting System Services & B2B Solutions Education, theater, visual simulation, etc Professional Camcorder
Display Network Camera
Sony IR Day 2018 Professional Solutions Business: Mid-Range Growth Targets Imaging Products & Solutions Segment
・ Real-time solutions that leverage IP & cloud ・ Expand in the sports and B2B arena Sales ・ Develop 5G solutions
FY17 FY20 Actual Target ■︓Product Sales ■︓Solutions Sales ◆︓Professional Solutions Business OP Margin Proprietary Micro LED Full Size Cinema Camera 8K System Camera Crystal LED “UHC-8300” CineAlta “VENICE” Sony IR Day 2018
Professional Solutions Business: Mid-Range Initiatives Imaging Products & Solutions Segment Industry Changes and Understanding of Challenges Action Plan
■ Changes in the media industry - Develop 4K & IP products and solutions - Rise of the OTT market, industry consolidation and greater reliance on IP and the cloud - Develop technology for the 5G era ⇒ Greater demand for cost reduction and efficiency - Full-scale demand for 4K and 8K - Pursue the sports and education markets (Start of satellite and IPTV 4K broadcasting) -Coming 5G era - Revise our product and business portfolio so as to better adapt to changes in the industry ■ Growing new market for B2B - Continuous cost reduction and operational ■ Improving profitability transformation
Remote Integration “REMI” Learnings Solution “Vision Exchange”
Stadium Control Room Data Center
Network
Examples of Solutions Businesses Sony IR Day 2018 Medical Business: Mid-Range Strategy Imaging Products & Solutions Segment
Profit Margin
Surgical Imaging Life Science Device Business Business (For Research and Clinical)
Monitor Peripheral Medical Device Business
IP Converter Printer Transition from single-device business Transition from research device to high value-added business business to medical device business
SOMED & Life Science Time Solutions Business Business (Research)
Cell Sorter 4K Surgical Endoscope System Cell Analyzer Surgical Microscope with 4K 3D Capabilities Sony IR Day 2018
FY2020 Financial Targets Imaging Products & Solutions Segment
Operating Income: 85~105 billion yen
※ Sales Amount (For Reference): 700 billion yen
Maximize profit growth and enterprise value Create strong and differentiated products based on L2D technology, deliver Real-Time Benefit, and strengthen and grow the solutions business
Sony IR Day 2018 2. Mobile Communications Segment
Sony Corporation InvestorSony IR RelationsDay 2018
FY2017 Overview Mobile Communications Segment
(bln yen) FY16 FY17 Actual Actual Sales 759.1 723.7 １ Smartphone unit sales decrease Operating 3.7 10.2 -6.5 (excluding -27.6 (FY16 14.6M → FY17 13.5M units) Income impairment)
２ Sharp increase in component costs
３ Negative impact of foreign exchange rates
４ Improvements in operational efficiency
5 Impairment
1 ２ 3 4 5
Operating loss recorded due to impairment charge Negative impact of unit sales decrease and sharp increase in component costs were offset by cost reductions; full-year profit was recorded on an operational basis Sony IR Day 2018 FY2018 Operating Results Forecast Mobile Communications Segment
(bln yen) FY17 FY18 Actual April Forecast
Sales 723.7 640 １ Impairment Operating -27.6 +12.6 -15 ２ Smartphone unit sales decrease Income (FY16: 13.5M → FY17 FCT: 10.0M units)
３ Positive impact of foreign exchange rates
４ Improvements in operational efficiency
1 ２ 3 4
Year-on-year profitability improvement by shifting away from less profitable models and engaging in continuous operating expense reductions
Sony IR Day 2018
Recurring Revenue Business: Stable Profit Structure & Next Steps Mobile Communications Segment Mid-Term Vision Going beyond being just an internet service provider
Fixed Line Communication Business: Cumulative Subscribers
SmartHome Healthcare Transportation CAGR 7%
LPWA※ Cloud Deep Learning Devices Technology
FY14 FY15 FY16 FY17
• Network quality improvements driving customer satisfaction • Deploying NURO services to more regions Call Centers Data Centers Network *LPWA: Low Power Wide Area Sony IR Day 2018 Smartphone Business: Review (Accomplishments) Mobile Communications Segment
Operating Expenses (billion yen) Warranty-Related Costs Forecast from FY15
Actual
-58%
(150 using FY16 FX rates)
Accelerated reduction through continuous Significant reductions through pursuit of further efficiencies quality improvements
Sony IR Day 2018
Smartphone Business: Review (Outstanding Issues) Mobile Communications Segment
Unit Sales (million units) Forecast from FY15 Issue: not improving Actual product lineup fast enough ⁻ Mid-term product planning and development ⁻ Design and development lead time
Sony IR Day 2018 Smartphone Business: Business Direction Mobile Communications Segment Mid-Term Vision Creating New Value to Customers for the 5G Era
FY2018 Business Direction Lean Transformation for Future Growth
Manufacturing, Product Sales Procurement, Operations
Add to strength and efficiency by leveraging the assets, business know- how and infrastructure of the Sony Group
Reduce operating expenses & lower break-even point
Sony IR Day 2018
Smartphone Business: Key Issues Mobile Communications Segment
Enhance Product Offerings: Fully Utilize Sonyʼs Technological Assets
DesignCamera Lens Sensing Battery
Wireless Data Audio Display Mechatronics Transmission
Product Development Process: Rebuild and Improve Efficiency Sony IR Day 2018 Strategic Direction for the 5G Era Mobile Communications Segment
Sony IR Day 2018
Smartphone Business: Business Direction Mobile Communications Segment Mid-Term Vision Creating New Value to Customers for the 5G Era
FY2018 Business Direction Lean Transformation for Future Growth
Manufacturing, Product Sales Procurement, Operations
Add to strength and efficiency by leveraging the assets, business know- how and infrastructure of the Sony Group
Reduce operating expenses & lower break-even point
Sony IR Day 2018 Smartphone Business: Sales & Operation Enhancements Mobile Communications Segment
Manufacturing, Procurement, Sales Operations
Project Europe Manufacturing Higher efficiency realized by Strategic partnerships with operators automated line introduction while bolstering open channel sales Service evolution through quality improvement
Key Actions Procurement • Technological collaboration including Create long-term partnerships 5G launch as “One Sony” • Realize efficiencies through the integration of Sonyʼs electronics Logistics sales operations • Enrich product lineup through Utilize Sonyʼs global network entertainment propositions Accelerate blockchain initiatives
Sony IR Day 2018
Smartphone Business: Operating Expenses & Break-Even point Mobile Communications Segment
Transformation into a Lean Business
OPEX Rebuild product development process and significantly improve efficiency
-30% Leverage Sony Group business know-how and infrastructure to bolster design, manufacturing, sales and operations
Sony IR Day 2018 MC Segment: Summary Mobile Communications Segment
FY2020 Target: OP: 20~30 billion yen Sales Level: 670 billion yen (reference only)
Recurring Revenue Business: Realizing solid growth by leveraging stable customer base
Smartphone Business: Create a lean, agile business without an excessive focus on revenue and units sold Build a sustainable business structure through ʻOne Sonyʼ initiatives Steadily implement initiatives to bolster and prepare for the future
Creating New Value to Customers for the 5G Era
Sony IR Day 2018 Imaging Products & Solutions Segment
Reference Materials
Sony IR Day 2018
IP&S Sales by Business Category and Geographic Area Imaging Products & Solutions Segment
FY2017 Sales by Business Category FY2017 Sales by Geographic Area
Other Medical Asia Japan
Other Sales Digital Imaging Sales 650 650 bln yen China bln yen
U.S. Still and Video Professional Cameras
Europe
Sony IR Day 2018 IP&S Key Product Market Share (Revenue Basis) Imaging Products & Solutions Segment
FY2017 Still Camera Market FY2017 Video Camera Market Market Size: 1,400 bln yen Market Size: 390 bln yen
Sony ソニーシェアSony 20% 29%29%
ILC (Incl. Lens): 19% (#3) Components of Video Camera Pie Chart (#1 in Mirrorless Camera) Video cameras for consumer (POV + Conventional) DSC: 26% (#2) Video cameras for business (#1 in Premium DSC*1) (Pro-sumer + Professional)
*1 Premium DSC = DSC with large (1/1.7 inch and over) image sensors or high zoom (20x and over) Source: Sony Sony IR Day 2018