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Sony Ericsson Hits The Big Time
Sony Ericsson's management are seen as a cautious bunch. The company that combines the characteristics of the modest Japanese and the self-deprecating Swedes has not wanted to cause any trouble, content with its status as a niche player. Until now.
The UK team have displayed a new-found confidence over the last few weeks. Sales figures for May and June show that Sony Ericsson spiked past Motorola and Samsung on several occasions to take the number two spot in the UK for market share. In July, it stopped just spiking, and pushed ahead of the chasing two.
The black W810i was the lead handset for several operators and it was the best seller at most of the major retailers. Now Sony Ericsson and its recently appointed UK MD, John Harber, have to try and hold on to that share as Samsung, Motorola as well as LG and BenQ-Siemens follow closely behind.
Handsets
The new boss arrives just as the manufacturer reaches a crossroads. It appears to be moving from being a contented small player to one wanting a bigger piece of the pie. This means broadening its range of handsets and distribution channels, strengthening its brand and improving supply. Close partners to Sony Ericsson say it is now doing all these things.
Since April 2002 the joint venture has been on an upward curve. Sales started flying this year after the launch of the first Walkman handset at the end of last year. Between April and June the company doubled its global income from the same period the previous year, raking in nearly £100m.
The highly subsidised UK market is a major contributor to the company's coffers given the demand for Sony Ericsson's high-value handsets. There has been a steady flow of hero handsets here in the UK. The K800i seamlessly picked up the baton from the W810i last month as the black Walkman was approaching the end of its life cycle. The K800i is currently touted by sales staff as the best handset on the market. It also hit the top of Mobile's contract tracker, indexing sales volumes from multiples and independents.
Other mid-range Sony Ericsson handsets are supporting the K800i; notably the black and red K610is and the W300i flip phone. The manufacturer has gone from having a series of one-hit wonders to developing a broad and well-balanced portfolio.
There are now 35 handsets in Sony Ericsson's range, including seven Walkman-branded phones. UK marketing chief Ben Padley says: 'We're now matching the other three with the size of our range.' Although, he admits that Nokia's colossal portfolio is still way ahead of anyone else.
Six new Sony Ericsson handsets with different customer types in mind are set to launch in time for Christmas and have raised interest with all the prospective buyers. The range will feature high-quality phones in every consumer segment: the high-end P990i will finally appear after an eight-month wait, the Z710i has a sporty and a business variant, the touch-screen emailing M600i has started to appear in shops, and two 3G Walkman handsets will soon be on the market – the touch-screen W950i and Sony Ericsson's first slider, the W850i.
These handsets will be supported by Sony Ericsson's existing phones, including the low-end prepay J-range of handsets, such as the pink J220i, which has enjoyed brisk trade at Woolworths as a result of being sold for just £40 on Vodafone.
One network buyer says: 'The range is really broadening. [But] it's not just weakening their existing mix like other manufacturers, who just split the existing market into more phones.' The manufacturer previously relied on a conservative tactic of having a very slim range of hero handsets which found broad popularity, allowing it to punch above its weight.
Until recently, Sony Ericsson's growth has been tightly controlled. Stock has been limited to networks, and the big retailers and distributors have had to buy stock via the networks.
Channel
Operators have invariably given their own stores priority when Sony Ericsson stock arrives, leaving the independent market with smaller volumes. A source says: 'Sony are also very controlled with their distribution channel. They like to grow slowly.'
The manufacturer has traditionally always been very conservative with the number of phones it allocates to the UK, giving it even tighter control of stock. A three-tier policy emerges where availability and pricing is skewed to favour the networks, then the big retailers and the distributors at the end. Padley says: 'We were in survival phase when we launched and had to focus on international [sales] with the networks. We've been a very small team locally and we've grown our team now to 30 people in the UK.'
He adds that the company now has a well-equipped sales team and product portfolio to take its phones more aggressively into the open market, and has this year started to work more closely with The Carphone Warehouse and Phones 4u. The idea is to slowly move away from its closely controlled business of small volumes and decent margins, and now that it has a widely recognised brand, loyal following and extensive portfolio it can try and fight without the networks' help.
Ben Wood, mobile analyst from Collins Consultancy, says: 'The brand has a lot of resonance now. The smart thing has been moving away from numbers [to identify names of handsets] to things like 'Walkman' and 'Cyber-shot' – consumers really connect with both those names.'
Despite the strong brand names and the apparent high demand for its handsets, the manufacturer is still pursuing a softly-softly approach. Uppermost in the strategy is to make money and not become a manufacturer with a growing market share but a failure to be profitable.
A close client of Sony Ericsson says: 'They're reluctant to lose that control and start discounting just to get volume.'
Supply
Sony Ericsson has had its fair share of stock problems. Sources say parent company Sony has a track record of cynical restricted supply schemes in the early weeks of a product's launch which are calculated to exaggerate demand.
Only 50% of orders made by the Big Three retailers for Sony Ericsson phones turned up last year.
Jan Wareby, the global VP for sales, admitted to Mobile in March earlier this year that the company had traditionally not believed enough in itself to take big gambles, but vowed it was now confident to increase supply.
Sony Ericsson was also hampered by a crisis in sourcing camera lens components, affecting supply for handsets such as the W810i. Retailers say supply has definitely improved. One network buyer says: 'We're seeing a real change from the improvements in their production facilities.'
Although the company is working to stand on its own two feet in the open market, Padley says handsets such as the exclusive V630i Walkman handset for Vodafone underline that operators are still the company's bread and butter: 'We are effectively a supplier. We help networks with churn and ARPU, and now we've got to help retailers sell more contracts.' Nevertheless, a new bolder edge is detectable from the manufacturer.
The new boss
New UK boss John Harber comes from a consumer background. He has run the company's Cyber-shot and Walkman brands as well as the Vaio laptop brand.
He started his new job at the end of March and takes over from Peter Marsden, who was moved into a group role to look after the global Vodafone account. Harber's consumer credentials come into play just as the company takes on greater responsibility to whip up consumer demand for its own phones rather than simply piggy-backing the networks' marketing campaigns.
Scaling up
• Bolder forecasts and increasing production
• Spending more on marketing
• Expanding the prominence of retailers as major buyers
• Broadening the handset portfolio to include more market segments
Courtesty of our friends over at
Se.nse.net
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T18s>>>T300>>>T610>>K700>>S700>>J5>>W900i
[ This Message was edited by: goldenface on 2006-09-05 11:55 ]
[ This Message was edited by: goldenface on 2006-09-05 16:20 ]
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Posted: 2006-09-05 12:53:35
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good job SE
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Posted: 2006-09-06 03:16:00
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Well Done, not long now before you beat Nokia
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Posted: 2006-09-06 03:21:45
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Quote:
On 2006-09-06 03:21:45, apolloa wrote:
Well Done, not long now before you beat Nokia
. . . that will take about 5-10 moooooooooooore years mate
! Going from 5th to 1st place will take soooooooooooome time . . .
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Posted: 2006-09-06 03:43:30
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SE can suddenly leap frog all the current big three immediately
if coincidently all three manufacturer have serious problem of their own
which SE is isolated from it.
errr well tht will be a very slim chance.
i rather like to see they promise in keep on producing good quality and feature rich phone.....as tht's the real technological niche we love to see.
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Posted: 2006-09-06 07:23:07
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Its great that its finally knocked the awful RAZR off the top spots and whatever manages to outsell Samsungs sliders deserves a medal - how many of them is there now - 13
What the above commentary overlooks is that fact that the K750i, which was launched before the W800i and was neither Walkman or Cybershot branded, managed to fly off the shelves - proving somewhat that
doesn't necessarily have to rely on Sony sub-brands, even though at this stage it must seem like the magic- formula for success.
Not everyone wants to have a
branded handset, especially if they carry a dedicated music player with them so it would be great to see a another compact all-rounder to carry on where the K750i left off - although how could you improve a K750i an not give it a
player or Cybershot imaging?
_________________
T18s>>>T300>>>T610>>K700>>S700>>J5>>W900i
[ This Message was edited by: goldenface on 2006-09-06 14:55 ]
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Posted: 2006-09-06 12:34:18
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they have an excellent strategy. focus on product quality and profitability and don't get obsessed with being no.1 in volume. besides, being no. 1 in volume does not in any way mean you have the best product.
GM and WalMart are NOT better than Porsche and Armani...
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Posted: 2006-09-06 12:50:16
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Exactly!
If you can get a good product to market and a reasonable price then market share will follow naturally.
Its not a good strategy to spend millions developing good phones only to offer them at bargain basement prices just to grab market share and throw away profit in the same time.
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Posted: 2006-09-06 14:34:17
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i rather they focus on remaining profitable and continue to make phones that are reliable that won't break down(re: se joystick)
marketshare will come with a quality product...
_________________
Shaolinmonk on HOFO Official PHONE JUNKIE
MyProfile
http://www.howardforums.com/m[....]s=&action=getinfo&userid=20841[ This Message was edited by: DragonEye on 2006-09-06 14:14 ]
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Posted: 2006-09-06 15:14:12
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Good info here!
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Posted: 2006-09-06 15:39:58
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