The number of people that would buy a phone just for the camera is a small market and the phone market aside from the iPhone is a low margin commodity market. Samsung makes a lot of money from the phone market - but not from selling phones. They make most of thier money as a component supplier.

Sony's camera division makes money from selling camera parts to other companies - including Apple.

Other factor also contributes to the demise of Sony phone division. Here in my country, Sony Z1 and Z2 boom as they are probably the first premium phone with nice camera and waterprof body. But bad aftermarket support and service destroy that advantages very quickly. Nowdays almost everyone avoid Sony smartphone. Either you choose phone with more support and service center such as Samsung or go to other way with Xiaomi (cheap with almost non existance official service & support).

The had the best cameraphones - the K800, K850 etc were way, way ahead of the game.

Then the iPhone came out and just being a phone wasn't good enough.

Now everyone else uses Sony's sensor anyway so what is their advantage? Lenses?