Ericsson sets sights on Nokia's crown
By Total Telecom staff
20 June 2001
Ericsson has set its sights on overtaking runaway market leader Nokia as the
world's biggest handset vendor through its joint venture with Sony, Reuters reported
on Wednesday.
Kurt Hellstrom, chief executive of Ericsson, told Swedish business newspaper
Finanstidningen that the joint approach to handsets could propel the company into
a world leadership position.
"It's not just about being one of the three biggest. In this situation it would be
foolish not to try to be number one," he said, as quoted by Reuters.
The target is ambitious to say the least, particularly after Ericsson recently lost its
number three position to German challenger Siemens and now only holds fourth
position in the global market for handsets.
Ericsson held a 6.8% market share in the first three months of 2001, according to
figures from research house Gartner Dataquest, while runaway leader Nokia
increased its share to over 35%, number two player Motorola held 13% and
Siemens 6.9%.
Finland's Nokia grew its world share to 35.3% from 33.9% in the fourth quarter of
2000, nearly three times more than number two vendor Motorola, which held
13.2%, down from 12.7% in Q4. Ericsson lost the number three spot after its share
declined from 8.7% to 6.8%, while Siemens' share stayed flat at 6.9%, according
to the Gartner Dataquest figures.
Hellstrom gave no timetable for the target, Reuters reported, but said competition
would force rivals into alliances similar to Ericsson's Sony venture in order to
provide a full range of products.
"It's not about voice telephony any more. None of our competitors have all the
technology and all the knowledge in-house, so I expect new alliances," he said.
Hellstrom said the U.S. would continue to be a weak market and that growth would
be slightly lower in Europe, higher in Asia and fairly strong in South America,
Reuters reported.
"But my fundamental belief is that growth will continue. New subscribers are
signing up at a more or less steady pace, even if it is different in different markets,"
he was quoted as saying.
Hellstrom reiterated in the newspaper interview that Ericsson's restructuring was
going to plan. "We have a strong chance of succeeding with this, to achieve a
lower cost level and grow at the same time. I am not concerned that we are cutting
back too much. I believe we will emerge as a stronger company," he said.
Ericsson lost 4.9 billion Swedish crowns ($487.2 million) in its first quarter and
expects to report a similar shortfall in its second quarter, Reuters reported, due to
the unprofitability of its handset business and falling demand for networks. The
company has moved to cut its workforce by 22,000, or 20%, in an effort to return to
profit, and outsourced its handset manufacturing to Japan's Flextronics in January.
Ericsson and Sony announced plans in April to create a 50-50 joint venture
combining their mobile handset design, development and sales operations. Based
in London, Sony Ericsson Mobile Communications will be operational from 1
October. Existing Ericsson and Sony branded products will be gradually phased
out to be replaced by a new brand, and the venture hopes to produce its first
product in 2002. |
