It has been a torrid year for Sony Ericsson with declining revenues and profits, poor product launches and reliability issues following high levels of handset faults.
Now comes the turnaround strategy, details of which emerged last week.
Sony Ericsson has decide to reposition itself as a ‘communications entertainment’ brand with a three point plan and its biggest ever marketing investment, in what appears to be a critical throw of the dice.
The manufacturer’s ambition to re-assert itself as an ‘entertainment’ brand has been building since its announcement of the concept at the Mobile World Congress in February 2009.
Sony Ericsson hopes its internal strategy, nicknamed ‘communications entertainment’ and formerly known as Entertainment Unlimited, will redefine it beyond the Cyber-shot and Walkman ranges.
The three point plan includes:
• increased multimedia features on handsets
• greater integration between handsets and other devices
• greater sharing of multimedia between users on handsets
The manufacturer said it was responding to an evolving marketplace that is moving beyond pictures and music.
Sony Ericsson’s marketing director, Dave Hilton, says: ‘We’ve questioned how we should embrace this new world and how we will shape it in the way we did with Cyber-shot and Walkman – we want to be the market leader in “communications entertainment”.’
The unprecedented marketing investment will start with the launch of its new flagship handset, the Satio, formerly known as ‘IDOU’ when it was at concept stage in February.
Cyber-shot and Walkman brands ditched
Although Sony Ericsson will still make low-end, prepay Cyber-shot and Walkman handsets, other new phones will be own-branded with individual names.
The manufacturer has kick-started new handsets with the announcement of the Satio, Aino and Yari handsets.
Sony Ericsson’s customer feedback said there was a ‘polarisation effect’ from the Cyber-shot and Walkman devices, as customers felt they were missing out on features. The new handsets aim to side step this, giving customers the ‘best of everything’, says Hilton.
Underpinning the strategy is the development of the PlayNow arena
to contain video, film and applications content, but the manufacturer said this won’t be pushed onto operators.
The PlayNow plus service allows customers to easily download music files through the device. The latest W995 handset is the first example of the service being made available.
The move follows similar strategies from Nokia (with the Ovi store) and Samsung (with its film store) to boost revenues from handset sales by offering value-added services through applications.
Sony Ericsson appears to want to build a services strategy with greater intent than the likes of Samsung, but not as ambitious in its scope as Nokia.
One crucial aspect is that it will focus on music, film, internet and entertainment. Another is that it will be built to collaborate with operators rather than take the more aggressive stance seen by Nokia.
Hilton says: ‘We will continue to develop the service and it will become more important to the customer experience, but we won’t do that at the exclusion of operators’ services.’
He adds: ‘We’d like to convince the operators that it’s the right thing to do, but we’re not forcing it.’
Sony Ericsson will face the challenge of building a service that consumers actually want rather than becoming too distracted by trying to placate operators.
Although the manufacturer will not ‘hard launch’ the services side of its comeback, some believe Sony Ericsson faces a challenge in terms of operator support with its applications.
A source close to the manufacturer says: ‘Their Walkman and Cyber-shot devices have done so well. The applications are not very operator friendly.’
Meanwhile, one analyst adds: ‘Sony Ericsson has been a lot more operator friendly in terms of services – nevertheless, it may face an uphill struggle. Why would an operator want to sign up to the services?’
The simple answer is that PlayNow plus has the potential to be a hugely compelling, groundbreaking service that consumers love and want.
Sony Ericsson’s new handsets
Sony Ericsson has launched three new handsets with Japanese names to kick-start its comeback - the new Satio, Aino, and Yari handsets were announced recently.
Satio - is the flagship handset with the best of everything, including a 12-megapixel camera.
Aino - is the handset that is targeted towards a deeper integration with other devices. Using MediaGo software, the handset will wirelessly sync to a computer as well as a PlayStation3.
Yari - is the more mainstream offering with a focus on gaming. It comes preloaded with games and becomes a Nintendo Wii-like device to enable motion gaming.