Daily Brief: Sony Has Evolved Beyond Its Humble Origins To Electric Vehicles And Mobile Gaming

Daily Brief: Sony Has Evolved Beyond Its Humble Origins To Electric Vehicles And Mobile Gaming

almost 2 years ago3 mins

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Sony announced plans to double down on its push into the EV and autonomous car sector last week.

What does this mean?

Sony already revealed its plans to dabble in the car business earlier this year when it launched its own EV division. But it went all in on the sector last week, saying it’s aiming to supply imaging sensors to 15 out of the 20 world’s biggest carmakers by 2025, who it argues will sell around 80% of all cars globally by then. This comes as the company looks to diversify the segment beyond smartphone camera parts for the likes of Apple, Google, and Samsung. There’s no cheat code for the ambitious expansion though, which might be why it said it’s planning to spend about $7 billion over the next two years on improving and producing its sensors – nearly three times as much as it spent on the segment between 2015 and 2017.

Sony stock
Source: Google Finance

Why should I care?

The bigger picture: You can’t carry a PS5.

Sony isn’t leaving its gaming segment by the roadside, mind you: the company said it was looking to buy up more game studios and add to a roster that already includes the creator of the Destiny franchise Bungie. It also told investors that it’ll be making a push into mobile and PC gaming, and aims to release nearly half of its new games on the formats by 2025 – a ballsy plan given how little the platforms currently make up of its business.

Zooming out: People need their Angry Birds fix.

Smart timing: a report out last week showed that the mobile gaming market grew around 21% a year from 2014 to 2021, compared to around just 8% for the console market. And that trend is set to continue this year, with mobile gaming expected to make up 61% of the entire gaming market – three times as much as PS5s, Xboxes, and the like.

Mobile gaming market

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Costco Posted Better-Than-Expected Quarterly Results

Costco image

Discount retailer Costco reported better-than expected results late last week.

What does this mean?

Investors came into Costco’s update with trepidation, not least because Walmart’s disappointing earnings update and bleak outlook highlighted just how much US shoppers have been cutting back. But Costco has a couple of advantages over its rival. For one, its average shopper earns a lot more, so they haven’t had to watch the pennies as much. And for another, the retailer has made a point of keeping its gas prices several cents below the national average. That’s not just driven traffic to its forecourts: analysts estimate that as many as half those customers end up buying other products in store. All this fell together nicely last quarter, helping Costco bring in $1 billion more revenue than expected and keeping the retailer on track for its first $200 billion financial year.

Costco customers

Why should I care?

For markets: Business 101: make money.

So it breaks our heart to say that Costco’s shares still dropped after the announcement, which might have something to do with the fact that Costco’s profit margin – already lower than most of its rivals – fell last quarter. That means the company’s one step closer to crossing the line between making money and losing it, which is probably the wrong direction to go in. But Costco’s not taking this lying down: it said it’s increasing some product prices to try to offset the damage.

Zooming out: Cheaply does it.

Costco wasn’t the only discounter to report strong results last week, with Dollar General and Dollar Tree posting impressive quarterly results. They both pointed out that spending on nice-to-haves has been dropping off, and that food is making up a bigger proportion of Americans’ weekly shop. But a tight-fisted customer is their kind of customer, so they’re taking full advantage: they both have plans to open up new stores.

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