Sony spins off PlayStation and doubles down on the Internet of Things

Sony is spinning off PlayStation, one of its few profitable divisions, into its own separate company in April. It also announced its acquisition of Altair Semiconductor, which makes LTE chips for Internet-enabled devices.

Lucy Nicholson/Reuters/File
Sony announced that it will spin the PlayStation off into a separate business. Here, a PlayStation logo is seen at the Electronic Entertainment Expo, or E3, in Los Angeles, Calif. on June 17, 2015.

Electronics giant Sony has been struggling financially for a few years now. In 2014 the company sold its VAIO PC division and its mobile division lost $172 million last quarter. But Sony has also had two bright spots. One is its image sensors, which are used in Apple's iPhone and in many Chinese handsets; the other is the PlayStation video-game division, the strong sales of which allowed Sony turn a modest profit last quarter.

This week Sony announced that the PlayStation division will be spun off into its own company, called Sony Interactive Entertainment. The new company will handle PlayStation consoles and software; Sony’s subscription services such as PlayStation Vue, which lets viewers watch live TV on Playstation 3 and Playstation 4 consoles; and the PlayStation Store, which offers downloadable games. It will be headed by Andrew House, who currently runs Sony Computer Entertainment, and headquartered in San Mateo, California with $2 million in capital. Sony Interactive Entertainment will start business on April 1st .

PlayStation owners probably won’t notice too much of a change from the new company spinoff. Sony says it’s aiming to “further accelerate the growth of the PlayStation business” by developing “pioneering services and products.” In other words, this is a way for the company to devote additional attention to the successful PlayStation brand, rather than to make a major change in direction. Last November Sony announced that the Playstation 4 console had sold more than 30 million units since it launched in 2013, which is even more than 2000's wildly popular Playstation 2 had sold by the same point after its launch. 

In a separate announcement, Sony noted that it has acquired Altair Semiconductor, an Israeli chipmaker, for $212 million. Altair’s chips use low-power LTE – the same technology used in 4G cellular networks – to connect smart devices to the "Internet of Things." Most current Internet of Things devices use WiFi or Bluetooth to connect to one another, but LTE and other cellular technologies can connect a greater number of devices at once, and can use existing networks such as the 4G cellular networks that already exist in many parts of the world.

Sony’s acquisition of Altair puts the company in a better position to compete with Intel, Ericsson, and Nokia, which are working together on a cellular technology called Narrow Band-LTE, and with Vodafone and Huawei, which are working on a separate standard called Narrowband Cellular IoT. As the Internet of Things grows, Sony wants to make sure that its chips are at the heart of as many drones, smartwatches, and sensors as possible.

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