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Should Sony Ericsson throw in the towel?
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Should Sony Ericsson throw in the towel? The joint venture began its downslide in 2007 as the average selling price of its handsets began to fall and it has continued to struggle. Last week, the company issued a profit warning saying that its first quarter net sales and net income before taxes continue to be negatively affected by weak consumer demand. Specifically, Sony Ericsson said it expects its first-quarter pretax loss to be between $464.9 million to $533.2 million, well below market expectations. The company also said it plans to ship around 14 million phones during the quarter.
Sony Ericsson in 2004 and 2005 saw its profits soar. It focused on the high-end market and positioned itself as the premier music phone using the Walkman brand. Today, the economic downturn is hurting demand for high-end devices and Apple's iPhone is now synonymous with music phones.
Now Sony Ericsson's bailout plan appears to be more high-end phones with high quality cameras. The company reasons that consumers want to have a high-quality camera all the time as posting photos on Facebook and other social networks is a favorite pastime. It seems like a creative niche, but will consumers bite in an ailing economy? Right now, there appears to be a chasm in the market. Feature phones--those that have features like music and cameras and are cheaper than smartphones--are in limbo. The replacement handset market has clearly slowed down in this bad economy, but when people are replacing phones, it appears they are either upgrading to smartphones such as the iPhone or trading down to prepaid and lower-end phones. Sony Ericsson needs some tight relationships with operators to get them to promote its devices.
One thing is for sure, 2009 will be a bumpy ride for all of the handset players. I'll be amazed if everyone is left standing at the end of the year. --Lynnette
Comments
Posted by Anonymous | March 23, 2009 - 10:17am
They are Rocky Balboa in the first fight versus Clubber Lang. No chance! Uhhhhh uhhhhhh!
Posted by Anonymous | March 23, 2009 - 5:52pm
you write
" Today, the economic downturn is hurting demand for high-end devices and Apple's iPhone is now synonymous with music phones."
"Feature phones--those that have features like music and cameras and are cheaper than smartphones--are in limbo. (..) it appears they are either upgrading to smartphones such as the iPhone or trading down to prepaid and lower-end phones."
so you are an Apple fan, try to be less obvious than that, come one! by the way review the figures of the iPhone sold.. iPhone, the handset which has more reviews than users...
Posted by Lynnette Luna | March 23, 2009 - 8:41pm
Actually, I don't even own an iPhone. I just watch the metrics. It's hard to ignore the fact that carriers' subscriber numbers are impacted by the iPhone.--Lynnette
Posted by Anonymous | March 24, 2009 - 9:09am
You don't really answer your own question. The answer is "probably" in the US. Without full support of technology, high cost structure thus high end phones, and lack of operator endorsement, it is difficult to maintain relevance in a market where access to content is more important than feature or design.
Posted by Anonymous | March 24, 2009 - 12:45pm
They should only throw in the towl, if they are wearing pants. And they should only throw in the towl, after Motorola Devices and Palm throws in their respective towls. If MOT and Palm throw in their towls first, then SE may not have to throw in their towl. So now we a towl throwing contest. Wait a second - aren't we talking about mobile phones?
Posted by Anonymous | March 27, 2009 - 9:43am
SE will need to soon decide how they want to position themselves. If they want to be a niche player then they need to scale operations to that (niche) market. If they need to have a complete offering, they need to rebuild their portfolio, which will require additional funding. Something that is near impossible in this economic climate.
Posted by Anonymous | March 31, 2009 - 1:32pm
roll the dice, play the hand, flip the coin, throw away the baby with bathwater, throw the bath water out with the baby, step up to the plate, ship up or shape out, we got your back, we got you by you your you know what, good life; great price, imagination at work, having fun, what's a metaphor but a metaphor. How about some similies?
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