Sony Ericsson is failing? Why?
We all know the first quarter reports this year were not Sony Ericsson’s big achievement. The second quarter, which will be announced on July 18 is no better. Compared to last year performance, Sony Ericsson goes deeply into profit warning.
Currently they have only 8% of global market share, even less than 10% they had last year. Now they are only positioned in number 5, behind the Korean manufacturer, LG. When will Sony Ericsson chase Nokia or Samsung to be the best in mobile business?
Business Week published a comprehensive article about this issue. Written by Jennifer Schenker, she noted there are three major reasons why the Sony Ericsson sales is not as expected. The first reason is because of slowing down of global sales. Since this situation happened globally, not much Sony Ericsson can do. As we all concern, the price of gasoline and food are raising up lately. Instead of buying new mobile phone, people will logically try to fulfill their primary need first.
The second, which probably wrong decision in reading the market view, is Sony Ericsson heavily too dependent on Western Europe market. Yes, Western Europe is filled with prosperous citizens, but remember they are not typical consumptive spenders, especially for mobile phone. Instead, most sales occured in developing countries, especially Asian region.
Nokia smartly hit Asian market with complete handset variants, from low-ends to high-ends, make them very success in making money. Sony Ericsson, in the other hand, although having several models in J and K still cannot compete with the Finn.
The third and probably the most unlogical way is the late anticipation of Apple’s iPhone. The phenomenal has been launched a year ago, yet Sony Ericsson has just announced the iPhone-killer, Xperia X1, early this year. Even we still don’t know when will Xperia hit the market.
How can they solve it then? According to Sony Ericsson’s spokewoman, Merran Wrigley, here are their steps in chasing other manufacturers:
- Cooperation with France’s Sagem to fulfill demand shortcomings
- The full buying of Symbian by Nokia will release Sony Ericsson from paying millions of dollars for royalties
- New distribution deal with AT&T to enhance their present in land where iPhone and Motorola are still the rulers
Will this move help Sony Ericsson hitting more profit next quarter? I promise to revisit this post and update this issue.
Source: Business Week
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