Sony Ericsson’s product demonstrator, ‘Tom’, is a caricature of the typical Sony Ericsson customer: spiky haired, mid-20s and an infectious enthusiasm for gadgets.
Tom tells his small audience to think beyond the eight megapixels on the new Cyber-shot phone, the C905. He is flicking through a Sony PlayStation console keypad with everyone staring at a massive Sony Bravia plasma television on the wall.
There are no wires between the PlayStation, the C905 Cyber-shot phone or the games controller.
He flicks through the PlayStation control pad to show photos taken from the phone on the television.
The C905 uses DLNA technology over Wi-Fi to link different devices with minimal effort.
Sony Ericsson’s UK MD, John Harber (pictured, right), had been championing DLNA years before he took the reins at the manufacturer. He previously worked on Sony’s Bravia and Vaio brands, where he was, to use his own words, ‘boring people with this amazing but geeky technology’.
Harber, who joined Sony Ericsson two-and-a-half years ago, adds: ‘Now we’re able to see it in a way that people are excited by.’
Harber has long been frustrated by what he calls ‘the commoditisation of features’ such as megapixels. ‘It’s not good for anyone to go down the “how many megapixels for how much” route.’
Harber along with sales director Nathan Vautier and marketing director David Hilton have the job of explaining that the C905 is more than just an eight-megapixel phone.
He wants Sony Ericsson to stand out from rivals by being widely known for ‘phones that offer a richer and better customer experience’.
Another leap is about to be taken on a new Walkman phone. No details are available at the moment, but it is expected to have a monster 16GB of memory and what is rumoured to be a large touch-screen format.
Both the C905 and the new Walkman will address the big criticisms aimed at Sony Ericsson over the last 18 months: too many similar phones and nothing that stands out.
Sony Ericsson enjoyed critical success with its first two Walkman handsets, the W800i and W810i, as well as the first Cyber-shot phone, the K800i.
Since then, the manufacturer has tried to move beyond its slightly geeky heartland (or ‘pioneer youth’ as Sony Ericsson’s marketing-speak calls it), and has been criticised for failing to produce more stand-out phones. Critics say that the manufacturer has appeared to hit the market with a huge carpet-bombing assault of phones that deviate only slightly from a single mother template.
Harber accepts some of the criticism but says: ‘We’ve got a chance to make a step change with our two major phones this year. We’ve had a fantastic response from people we’ve showed the two phones to.’
Sony Ericsson’s share of the UK market has crept up throughout the last 18 months, and even gave Nokia a run for its money in the run-up to Christmas. Sony Ericsson was just 3% shy of Nokia’s 30% - a remarkable achievement given Sony Ericsson’s lack of handsets in the ultra-low category, an area where Nokia shifts thousands of handset per week in the last few weeks of the year. Throughout 2007, Sony Ericsson took 23% of the UK market.
Despite the growth in sales, there is a feeling that Sony Ericsson lost the momentum last year.
Harber says: ‘Our share for the year was OK, but we could’ve been better. We’re not behind our targets, and we’ve got the potential to make a big jump this year.’
There are some pretty severe obstacles standing in Sony Ericsson’s way, and some are of the company’s own making. There was a return to the bad old days of delays and shortages - the C902, W980i and W350i were late to market, and frustrated the likes of Carphone Warehouse, Phones 4u and Orange.
There is also the small matter of Sony Ericsson’s competition. Apple’s new subsidised 3G iPhone will test the loyalty of Sony Ericsson’s ‘pioneer youth’.
He refers to his time at Vaio and says: ‘I’ve been in markets already with Apple in it. I’ve seen what they can do to computers and personal audio.’
The same threat comes from Nokia’s new Comes With Music handsets offering unlimited free music downloads. Harber’s closest competitor is Samsung, which is locked in a similar strategy to reach into prepay.
Harber says sales at the top end of the contract market have been difficult, with the likes of the K850i and W980i not quite hitting the heights many had hoped.
It appears to be a combination of customers tied into long contracts, consumer belt-tightening and the strength of the Euro against the pound.
Harber says: ‘New products are definitely being hit by the exchange rate.’
Because the pound was weakening in 2007, manufacturers were finding it difficult to bring the price in stores down as they were continually fighting against a rising Euro.
The two new Walkman and Cyber-shot handsets are aimed at exciting consumers, but the new Xperia X1 (pictured, right) will also do a similar job. But does it just pick up from where the Pseries of handsets left off? The likes of the P900 and P1 acted as phones that won a lot of positive noise on the online message boards among the small but loyal band of techy consumers, but also served to enhance the Sony Ericsson brand in the wider market.
‘Xperia is not a replacement, but it is a technology statement,’ says Harber. ‘It takes us closer into the business and professional user area.’
Xperia is another sub-brand for a company that has effectively built a business around Walkman and Cyber-shot, and it seems logical that names like PlayStation, Vaio and Bravia will be next.
‘Sony has a very strict requirement on this. If we use a Sony brand on a handset, the experience on the phone has to be as good as on the original product. That’s why we didn’t have Cyber-shot until we had a fantastic imaging phone like the K800i.’
The next most likely sub-brand is Bravia, which is already in use on Sony Ericsson handsets in Japan. ‘It depends on size and quality of screens and video on phones taking off.’
The prospect of a Bravia handset will no doubt excite Harber, Tom and the techy Sony Ericsson customers, but in the meantime, Harber is more consumed with the chance of turning Sony Ericsson from a challenger to the dominant power in the market.
Sony Ericsson’s supermarket sweep
The mass retailers like Tesco and Argos are a big priority for Harber this year. With prepay in the ascendancy, and contract handsets struggling, Harber has shifted the strategy.
So far, Sony Ericsson’s prepay efforts have appeared to be old contract handsets sneaking in the top end of the prepay market towards the end of their shelf life. Harber says there was a remarkable amount of thought into that strategy and it was the single biggest factor in the 2007 success: ‘We had 55% share of prepay phones between £75 and £100 in December.’
Efforts will now step into the rung below. ‘We had 30% of the £50 to £75 market, and a lot less of the segment below, so you can see where the opportunities are.’
He says the mass retailers are becoming increasingly important players in the market, and it is critical that Sony Ericsson is represented well there. But average prices are a lot lower for supermarkets.
Given that 11% of Nokia’s share from the so-called ‘ultra-cheap’ category, Harber says it is important that the manufacturer responds. ‘We will address that in the autumn. We want to bring the customer something in that area that they’re not getting, while making us some money.’
A deal between Sony Ericsson group and Sagem was signed last