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axxxr Posts: > 500

"We've all had a nibble at Nokia"

Hot on the heels of the launch of Sony Ericsson's 2004 handset range, Bard Covington asked UK chief Peter Marsden whether the manufacturer is now in a position to challenge the dominance of Nokia
Sony Ericsson UK managing director Peter Marsden, who briefly held a position at Sony just before the creation of the joint-venture with Ericsson, admits the company has failed to meet the market's expectations, but claims this year marks an important turning point:
"The coming together of Sony and Ericsson has been challenging", he admits, but says the venture has had its successes. "The T68i was one successful product. We are now turning the corner and lifting ourselves out of the 'others' group of manufacturers".

Marsden believes good products are what a good brand is built on, and says the current range is as good, if not as broad, as anyone else's. The manufacturer's strategy is to exploit the best of both brands, especially in the area of entertainment.

Differentiation

"You have to supply something that people want and are prepared to pay for", he says. "Our differentiation is the dual approach from Sony and Ericsson. The Sony link gives us huge credibility, as does the fact that Sony is a parent company. People are comfortable with the Sony Ericsson brand to buy imaging and camera-type products. On the Ericsson side, we have the great core technology in Bluetooth and radio technologies. We are in a position to create a unique playing field for ourselves. We are in a strong push on imaging products".

Marsden reckons the latest product launches reflect this, and claims that Sony Ericsson will not suffer in comparison with higher-spec dedicated digital cameras.

"For example, the S700 is a high-quality, 1.3 megapixel camera inside a fantastic mobile phone", he enthuses. "We are not going to battle our rivals in the amount of megapixels we can provide. The best camera you can have is the one you have with you. Because your mobile is always with you, it will become your bread-and-butter camera".

Instead, he argues that the company's heritage and expertise with camera lenses, electronics and software will give it an edge. "I can show you two pictures taken with identical megapixel cameras - one you would love to stick on the mantelpiece, the other you wouldn't. The lens and camera have been optimised for mobile phones. The pictures are easily shared with other users".

Marsden hopes the current range will stimulate more customers to upgrade their handsets:

"There are good reasons to upgrade your handset now. You have great colour screens, entertainment, gaming and music, as well as imaging. There are good reasons for people to move away from monochromatic voice and text to a much better user experience. In the past we saw people upgrade from black and white to colour TV. For a small outlay, you can get so many more features. It is a great time. A lot of these camera phones will be available in pre-pay packs by Q3 and Q4 for £130 to £150".

Marsden acknowledges that Sony Ericsson won't fulfil its full potential this year, but claims it will "make a difference" and carve out a position for itself in the market.

Growth

"The products are starting to reflect the company", he says. "The S700 and K700 handsets are a flavour of what is to come. As we grow in 2005 and 2006 by using more audio and video technologies, then it will develop further. The story isn't ending at the end of this year".

And Marsden believes that Sony Ericsson has built a sound platform with a number of successful products, including the P900 and T610.

"We enjoyed great success with the P800 and now the P900, and the T610 was the number three best-selling handset at the end of last year. The other two products above it were entry-level, pre-pay handsets. If you look at the number of sales we had, and consider the value of those products, we were probably number one in terms of value. With that momentum, we will keep those products going for the rest of this year - the T630 is just entering the market. The Z600 also sold well over Christmas".

Marsden claims that critics who snipe at the company, accusing it of resting on the success of just one or two products, are out of line.

"We had to concentrate our focus on the high end of the market. We need to broaden the product range and attack different segments of the market. We have served the mid- and high end of the market very well. You can't build a brand on an entry-level handset range".

Sony Ericsson's handset range currently numbers six: the P900, Z600, T630, T610, T230 and Z200. This will be increased to eight once the K700 joins in Q2 and the S700 joins in Q4. And Marsden promises a further handset once the manufacturer starts shipping its Z1010 3G handset.

"Within a few weeks we will be shipping the Z1010 in the UK, but not exclusively to 3. There are a number of people we will be shipping the handset to from April onwards".

He defends the manufacturer's decision not to have launched Z1010 sooner, pointing out that 3G network roll-out has taken a lot longer than expected. The timing also fits in with the arrival of more 3G networks in the second half of this year.

Important

"Our product is in line with this", he says. "Publicly we only have one handset out there. 3G will be important, and there will be more handsets to come, but nothing specific we can talk about today".

Aside from bring out new handsets, Marsden says the manufacturer has no plans to alter its distribution strategy:

"We haven't got to do anything hugely different. We have established a fantastic brand. People feel comfortable with Sony Ericsson. The advertising we did with the T610 was very powerful and changed people's perception of the brand. All we need to do is deliver the product in volume. We will continue our advertising to drive people into stores".

And Marsden confirms Sony Ericsson will continue with its policy of proactively training retailers with its field marketing team.

"We have a dedicated team of people visiting the stores educating staff about new products and services. We have two dedicated trainers who support us at dealer events, and create training programmes for the operators' call centres.

"We visit people up to four weeks in advance of a product shipping to explain the product's capabilities and functionality. That means that as soon as the product arrives at the warehouse staff can explain the benefits to consumers, and sales pick up immediately".

The manufacturer doesn't have a direct relationship with its smaller dealers, but Marsden says it will continue to support them through its distributors. However, it has no plans yet to create any specific dealer-support schemes along the lines of those set up by Samsung and Siemens.

"We don't exclude the smaller dealers", he insists. "We have a programme through our key distributors whereby we can communicate with smaller dealers, but we don't have the resources to visit all of those stores individually. We work with our distributors to host training events for dealers on newer products.

Marsden notes that there are around 4,000 shops selling mobile phones in the UK, and says that Sony Ericsson can only service only 2,000 to 2,500 of them directly.

"It's all down to resources. We have had to concentrate on getting back to profitability. We can develop a direct relationship with the dealers once we become more profitable".

Anyway, in view of the declining number of independent dealers, Marsden hints that the end may be nigh for the smaller independent.

Powerful

"It's not a decision affected by manufacturers. It's the operators who dictate who will succeed. The operators are getting stronger and more powerful. They choose the way they will subsidise the market and who they will invest in. Maybe they are choosing their own channels and the larger retailers. Maybe the role of the small dealer is diminishing".

Nevertheless, he sees new opportunities for mobile phone sales as mobile technology converges with entertainment, and believes the products will appear in different channels.

"There are new opportunities opening for us and other manufacturers. Retailers know they have to change and a lot of people are undertaking extra training. There is no reason why these products won't appear in Jessops or a Sony centre. These products will fill a number of different niches. The mobile device is the one device that does entertainment, music gaming and imaging. In a shop like Jessops you'll get a different sell in terms of camera quality".

Although he agrees the take-up of MMS has been slower than anticipated, Marsden is confident it will take off this year:

Critical mass

"The take-up of MMS has been slower than SMS, but then there hasn't been the density of handsets with MMS capability out there. We are just reaching a critical mass of MMS handsets in the market now. The networks are addressing pricing issues because the cost of sending picture messages has been prohibitive.

"If it's affordable and easy to use, MMS will start to grow. If you can start to get good quality images arriving on your phone, it will excite people. Let's face it, you don't want to spend your money sending an MMS if you don't think the person at the other end will receive it".

Having made the jump to the top role in the company, and having had a chance to assess his role, does Marsden feel he can make a difference to Sony Ericsson's sales in the UK?

"I'm not sure how much it is down to me and what I can do. As a company we are aware of our shortfalls and weaknesses. A lot of expectation was created at the beginning of the joint-venture. It has taken longer to realise the dream. Now we need to gear up the supply to meet that demand".

Along with a host of other manufacturers, Sony Ericsson suffered debilitating stock shortages over Christmas. However, Marsden would not be drawn as to whether the manufacturer has plans to tackle this by building its own phones again, rather than outsourcing.

Supply chain

"The decision to outsource manufacturing was taken before the joint-venture came together", he says. "We are assessing the whole supply chain from one end to the other. Whether the manufacturing is internal or external is not the issue.

"We have to get better at supplying the demand we are creating. I would rather have the issue of having great product and great demand and being unable to meet all of the demand, rather than having warehouses full of products that nobody wants to buy.

"There was a huge shortfall of products before Christmas and there still is. What sometimes happens is that another manufacturer may have problems bringing a product to market on time. The demand then gets shared out among the other manufacturers. If you combine that with a general increase in demand for product in the market, you get this odd situation where there is not enough good product to go round. We have to work closer with people to get the forecasting right. We are not blaming anyone for the shortfall. We got our forecasts wrong, too".

Challenge

So will this year see Sony Ericsson finally become a force to be reckoned with and challenge Nokia? Marsden believes Nokia's sheer dominance may hold the seeds of its decline.

"The market leader is always in a slightly dangerous position with such a dominant position in the UK", he claims. "It is going to be difficult to for it to maintain that. Nokia is hugely powerful, but we are happy to take a strong share in certain areas of the market. We have all had a nibble at Nokia's share and will continue to do so".

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[ This Message was edited by: axxxr on 2004-04-02 18:44 ]
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Posted: 2004-04-02 19:24:39
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BobaFett Posts: > 500

@axxr and mr marsden U MADE MY DAY! Great report, very interesting! This message was posted from a R520
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Posted: 2004-04-02 19:34:01
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axxxr Posts: > 500

Your very Welcome!!..