Following the break-up of its partnership with Ericsson, Sony is to become a standalone mobile vendor. Michael House asks leading industry figures how they rate its chances
The news, in November last year, that Sony was ditching its decade-long partnership with Ericsson to go it alone didn’t come as a massive shock to the mobile industry.
Sony Ericsson had once had the potential to become a mobile phone superpower, but it had failed. Its global handset sales had slumped to 43 million in 2010 – down from a peak of 103 million in 2007 – and in the UK it accounted for just 5.5 per cent of the total handset market last year.
In January, the manufacturer’s president and CEO Bert Nordberg was forced to stand up in front of shareholders and announce global losses of £206 million in 2011, including a slump in earnings of £173 million in the fourth quarter alone. Sales, too, were down by 16 per cent year on year to £1.1 billion for the year.
It’s a sad state of affairs for a company that started so brightly and, for a brief period in the mid-noughties, captivated its audience by integrating its other consumer technology offerings – most notably the Walkman and the Cyber-shot – into its handsets. At the time, this was something that demonstrated an incredible ability to think outside the box.
But like many established handset manufacturers Sony Ericsson has struggled to compete against the emerging shadow of Apple’s iPhone and the rise of the smartphone it created.
It failed to grasp the concept of the all-in-one mobile device, which was surprising considering the success of Sony’s Walkman brand on its devices.
The emergence of Sony as a standalone mobile vendor has been a long time coming, according to many in the industry. For the past couple of years there have been rumours of an internal power struggle between the joint venture partners over their strategy in a di cult market.
Analysts at business research firm Frost and Sullivan claim the companies’ inability to agree on product and device strategy was the reason for the delay in releasing Sony Ericsson’s much anticipated Xperia Play PlayStation phone.
Rumours still persist that Sony was reluctant to attach the PlayStation name or any of its branding to the device. Some claim this was one of the reasons why it failed to capture the imagination of the gaming community and wider public.
Sony’s future success, it would appear, hinges on its ability to integrate its other propositions, such as its TVs, tablets and online content services, into its mobile offerings, just as it did half a decade ago, to provide increasingly di cult points of differentiation.
Attempts to wrest back market share have already begun with the launch of Sony’s first standalone device, the Xperia S, which was unveiled at the Consumer Electronics Show (CES) in Las Vegas last month and will go on sale through major retailers towards the end of this quarter.
Sony Ericsson has also had a minimal presence in the B2B sector in recent years. A number of dealers have admitted it would be hard to contribute to any piece on the manufacturer because they have had very little demand for its products.
Some also confi rm that even when they have come across the company at distributor events and have looked to do business with them, there has been next to no training support or direct contact.
If you compare this to a company like RIM, whose BlackBerry brand is famous for its dealer workshops and support, it is no wonder there is little willingness from dealers to promote the brand.
But this is not to say there is not potential for Sony to excel in such a space.
In his January address to shareholders Nordberg confirmed Sony Ericsson had shipped 28 million of its Xperia smartphones to date, which accounted for approximately 80 per cent of total sales in the fourth quarter of 2011.
There was also a 65 per cent year-on-year increase in quarterly sales of the Android-based smartphone, and Nordberg confirmed smartphones would become the major focus for future strategies.
A new company with a very decent range of smartphones can do very well in the B2B sector if it can get out among dealers, push its products and o er hands-on support.
If Sony were to take the bull by the horns, it could also encourage the bosses in Japan to agree to use the Sony brand and all its features within devices more freely. This could only be positive and would enable the company to leverage the fan base for its other consumer products in order to increase device sales.
Mobile News asked industry figureswhether Sony has enough in the tank to mount a fightback in an increasingly competitive market. Read on to fi nd out what they had to say.
Full article in Mobile News issue 507 (February 13, 2012).
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