Sony Ericsson fights back

Sony Ericsson fights back

Sony Ericsson chiefs must have savoured the news that the joint venture's financial results this week had beaten analysts predictions by a mile.

Whilst a Reuters poll of 27 analysts predicted a mean loss of £138m, the joint venture romped home reporting profits of £18m for the first quarter of 2010 this week.

The turn around is significant when compared to a loss of £146m for the fourth quarter of 2009 and a loss of £257m from the first quarter of last year.

This surprise result will be welcome news at Sony Ericsson. It has been through tough times over the past 12 months, with the disastrous software problems on its flagship Satio and Aino handsets at the end of 2009 being a distinctly low point for the joint venture.

Radical changes in Sony Ericsson's strategy are clearly bearing fruit at last. An ongoing major restructuring which has cut costs drastically is clearly delivering results.

So too is Sony Ericsson's overhaul of its portfolio and its concentration on high end handsets with the launch of the Xperia X10 and the Vivaz, both of which have proven best sellers and are - thanks to an overhaul of the joint ventures R&D division - glitch free, so far anyway.

However, Sony Ericsson must not rest on its laurels. The battle is not over and Sony Ericsson president Bert Nordberg will continue to drive through change.
One area that must be addressed is Sony Ericsson's mobile phone sales, which are 28% lower than last year at 10.5 million handsets.

To be fair, Sony Ericsson's priority over the past twelve months has been to improve its profitability and not its marketshare and its move to realign its portfolio to focus on higher end products means that these inevitably shift in smaller volumes.

However, with RIM breathing down its neck and showing, coincidentally, identical sales volumes of 10.5m units for Q4 of last year, Sony Ericsson needs to address this problem fast.

The manufacturer is placing its hopes on the soon to be launched Xperia X10 Mini and the Vivaz Pro, which will take its high end portfolio to the mass market with lower price points.

It also has plans for more new phones, not all of which will be aimed at the high end of the market. It has already announced two new Walkman phones, the Spiro and the Xylo.

Another threat looming fast on the horizon is the welter of Android phones coming out this year. Sony Ericsson will need to find some way of standing out from the crowd if it is to continue to recover its place in the market.

Aligning its smartphones closer to parent Sony's products would be one way of distinguishing itself in a crowded marketplace. There are signs that this long overdue move is on the cards, with Nordberg hinting that a move in this direction is on the cards.

Written by Mobile Today
Mobile Today

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