Launching robot mobile phone:Our expectations on rebuilding company by leveraging ability to develop

Noteworthy product, but we see limited impact on overall earnings

    On 14 April, Sharp [6753] (Reduce) announced that it would launch its RoBoHoN robot mobile phone on 26 May. The product is a humanoid robot that can walk on two legs and that also has typical smartphone functions such as telephony, email, and photography. Sharp has been developing household products designed to appeal to people’s heads and hearts, under the topic of the artificial intelligence of things (AIoT), a combination of artificial intelligence (AI) and the internet of things (IoT). RoBoHoN is the first real commercial product from this initiative, and we see promise for the company’s strategy of reinvigorating its consumer electronics business by leveraging its ability to develop distinctive products. However, the product itself is likely to make only limited contributions to companywide sales and profits.

    Aiming for annual sales of 60,000 units, around ￥10bn

    RoBoHoN was unveiled at CEATEC in October 2015 and attracted a lot of attention from visitors (see our 9 October 2015 Global Research report Consumer electronics). While the hardware has not changed that much since then in terms of functionality, the company has made advances in software, particularly in terms of user experience. It looks as though the company has improved its natural communication abilities, for example using body language and gestures when reading emails aloud and adding comments to photos in slide shows. Sharp is projecting to sell around 60,000 units a year (5,000 a month), representing 1.5% of the estimated 4mn mobile phones it sold in 16/3. These targets look ambitious to us, given sales volumes of household robots to date and the price of ￥198,000, which is higher than for regular smartphones. Achieving its sales projection will result in sales value of around ￥10bn, equivalent to 7% of the estimated ￥160bn in mobile phone sales at Sharp in 16/3. Management also said that they were looking to make the business profitable around six months after launch.

    Expecting synergies with Hon Hai in wireless technologies and mechatronics too

    In our view, generating synergies with the Hon Hai group will be crucial in reinvigorating Sharp’s consumer electronics operations, which includes RoBoHoN. Talks have not progressed that much so far, but we see many possibilities, including in lowering manufacturing costs and collaboration in overseas sales. RoBoHoN packs in Sharp’s wireless technologies and mechatronics technologies, and we think the company will seek out new business opportunities that can leverage these.