LEX COLUMN: Sony Ericsson
Financial Times; Jan 30, 2003
If Sony and Ericsson thought their joint venture in mobile handsets would deliver quick wins, they will have been disappointed. In a strong fourth quarter for the industry, Sony Ericsson Mobile Communications managed to increase volumes and reduce its loss. But it remains dependent on its parents for funds. For Ericsson, the latest cash injection looks to be the smallest amount it could decently get away with.
Fourth quarter shipments increased SEMC's share of the handset market to 6 per cent, below the 7-10 per cent it says it needs to achieve the benefits of scale. But SEMC's lack of profits has more to do with inefficiencies and a muddled product strategy. It failed to deliver enough of its most popular handsets to satisfy demand and has concentrated on the top end of the market, which will not deliver volumes. The combined product, marketing and brand expertise of Ericsson and Sony ought to have generated profits. As it is, they have fumbled the opportunity and reduced the joint venture's market share to half that of the two partners before they got together 15 months ago.
Network suppliers no longer need to be in the handset business to promote their own products. Ericsson, with problems aplenty in its core telecommunications network business, should withdraw from the venture. This would leave Sony, still underweight in Europe, to go it alone or find another partner. Motorola, which recently held unproductive talks about acquiring Siemens' handset business, might fit that bill. |
