I think Sony could realistically do both in one product. They already make flagship smartphones that are hardware-competitive with everyone else's flagships. They supply the camera sensors for everyone's flagship product. They have the best DSLM and reasonably competitive lenses.

Just take their current flagship smartphone, double the thickness to fit a halfway-between-smartphone-and-full-frame sensor, an SD card slot, ability to export RAWs, and a compact zoom lens, and sell it for like $2000. For extra credit, make a standard lens mount and make it swappable and now you have the manufacturer lock-in that keeping Nikon alive. The margins on the camera business plus the refresh cycle of the phone business might actually save both those divisions.

Instead Sony's camera division and smartphone division are too busy trying to not step on each other's feet and both are suffering for it.