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Sony Ericsson Mobile Communications Turns Corner on Profitability

Posted on: Monday, 14 February 2005, 18:00 CST

Feb. 14--When Sony Ericsson Mobile Communications -- the joint venture between Japan's Sony and Stockholm-based Ericsson, a major producer of mobile networks and wireless handsets -- was formed in 2001, it set a lofty goal.

Tapping the expertise of both its parent companies in telecom and consumer electronics, the new company aimed to be the No. 1 player in the mobile multimedia products market in five years.

More than three years into the venture, Sony Ericsson has turned the corner on profitability and has gained a reputation for developing innovative and trend-setting products.

It has been a leader in the market for camera phones, which accounted for 65 percent of all the units Sony Ericsson sold during the fourth quarter. A total of 220 million camera phones were sold worldwide in 2004 by all manufacturers, according to Strategy Analytics in Boston.

Overall, Sony Ericsson is the sixth largest manufacturer of mobile phones worldwide, behind Nokia, Samsung Electronics, Motorola, Siemans and LG Electronics.

Sony Ericsson had a 7-percent market share after the 2004 fourth quarter.

In order to propel its growth, Sony Ericsson decided in late 2003 to concentrate on GSM (Global System for Mobile communications), the wireless technology standard that's now used by 71 percent of the world's cellular market.

The Herald caught up with Jan Wreby, corporate executive vice president and director of global sales, and Anderson Teixeira, corporate vice president in charge of Latin America, in Miami as they were winding down Sony Ericsson's annual executive conference, which brought together the company's 220 top executives from all over the world.

As they relaxed over a glass of Chardonnay and a Diet Coke at the JW Marriott Hotel on Miami's Brickell Avenue, Wreby and Teixeira talked about camera phones, market expansion and women's tennis.

QUESTION: What are Sony Ericsson's plans for expansion in 2005?

ANSWER: Wreby: The total market for mobile phones is expected to grow a bit under 10 percent this year to about 620 million phones. Our clear ambition is to grow faster than the market -- and design high-quality wireless phones.

The strongest regions are Latin America, Europe and China.

Q: Where do you see the best opportunities for growing market share in Latin America?

A: Teixeira: This industry is booming across the region. The only country where there was a bit of a problem was Argentina. We saw a slowdown in investment for network expansion by the carriers. But now Argentina has rebounded, and it's growing again.

We foresee significantly faster growth in Brazil, primarily because the company is making an enormous investment there to grow in this emerging market.

Countries that deregulated their telecom markets later will also grow faster for us.

Sony Ericsson also has strong relationships with the major wireless carriers in Latin America, including América Movil in Mexico and Telefonica of Spain and TIM (Telecom Italia), all major wireless carriers in Latin America.

Q: Where will the product innovation be this year?

A: Wreby: We'll continue to focus on camera phones. In building camera phones, we've used a lot of the software and knowledge Sony has gained in building its cameras. It's important for the phones to have all these nice features, but it's most important that they're good phones.

There's also entertainment. First, it was gaming, and it will be music this year. We have three models with MP3 players, which use Sony's memory stick so you can carry around a big chunk of CDs with you.

A bit later, with 3G (third generation wireless technology) and higher broadband speeds, it will be video phones, both for video telephony and streaming video.

Q: With all these bells and whistles, wireless phones are increasing complex machines. How is Sony Ericsson supporting retailers and carriers?

A: Wreby: We actively support retailers by providing marketing materials, training and demonstrations. The training and demos have become increasingly important because our products are getting so advanced.

If you see a phone on the store shelf, you really can't experience how great it is. You need to switch it on, you need to try the camera. You need to touch and feel it.

Q: In January, Sony Ericsson signed on as the global sponsor for the WTA (Women's Tennis Association) Tour, a six-year sponsorship deal, as part of a new marketing campaign. Why women's tennis, and what's the connection to wireless phones?

A: Wreby: We have done well in establishing our brand in the past three years. Sony Ericsson's products are known for being cool, being unique and innovative.

But now with a more stable financial situation, we wanted to make our brand even stronger globally and felt we needed to work with other means than just product advertising.

There are many parallels between the women's tour and Sony Ericsson. The women's tour is a bit of a challenger, like Sony Ericsson. There are strong performers in the sport and strong performers in our people and company. Also, many of the players are role models and trendsetters.

A: Teixeira: Tennis is a truly global sport. It has big and balanced interest across the globe.

If you look at other sports, their appeal isn't so universal. In Europe, there's a huge interest in Formula One racing, but in the United States, it's nonexistent. Soccer, you have in parts of the world that are crazy for soccer.

American football -- it's just American football.

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(c) 2005, The Miami Herald. Distributed by Knight Ridder/Tribune Business News. For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

SNE, ERICY, NOK, SSNLF, MOT, SI, SIE, LGEAF, TEF,

Source: The Miami Herald

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