Thumping to Success

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Last year, Sony Ericsson found itself in the big league with a revenue increase of 122.4%: from Rs 1,386 crore in FY 2006-07 to Rs 3,082 crore in FY 2007-08. Sony Ericsson is second to Nokia in the mobile handset segment with a market share of around 13%.

India has emerged as a key market for Sony Ericsson as it plans to decrease its presence in Europe, which traditionally has been its strong market. Globally, the average selling price (ASP) has come down for the company mainly due to the impact of softer sales of high- to mid-end models.

Sony Ericsson plans to further augment its Walkman and Cybershot series. In the Walkman series, it launched the W200i, W580i, W960i and W910i models. New models like K850 and K810i were added in the Cybershot series. Last year, the company launched fifteen models of handsets apart from introducing a new range-Emotive-represented by S500i and T650i. The company also unveiled a new sub-brand in the premium segment, Xperia.

Sony Ericsson 9

In keeping with its strong position in the music phone category, Sony Ericsson plans to launch FM/AM radio handsets-R300 and R306. Likely to be priced between Rs 4,000 and Rs 4,500, and hopes to offer a stronger proposition to the low-end segment with these products. Though known mostly as a strong player in the mid-to-high category, the company launched the J121i and T250i models to cater to the entry-level market last year.

The last year saw Sony Ericsson double their production capacity in the country, and this year, sensing the growth potential in the mobile handset segment, the company set up an R&D unit in Chennai to boost growth. The yet to be launched models R300 and R306 will join the ranks of J110, J120 and W200i, which are already being manufactured in India. The company plans to double its production capacity by 2008.

The company roped in Bollywood heartthrob Hrithik Roshan as their brand ambassador. The successful 'Thump' campaign is believed to have played an important role in increasing Sony Ericsson's brand recall.

Sony Ericsson wants to maintain the same growth rate this year too, and wants to increase the number of exclusive outlets from 65 to 200 in another two years time. As of now, most of the exclusive stores are in tier-1 cities, but shops are now being planned for tier-2 cities. There are rumors that the company is planning a reshuffle of its distribution network as well.

With the mobile market all set to grow and Sony Ericsson increasing its focus on low-end handsets, the current year looks promising.

We aim to penetrate deeper into the market to cash in on the telecom boom

General Manager

Sudhin Mathur

Address: Sony Ericsson Mobile Communications
Ericsson Forum, DLF Cyberciti, Sector 25A, Gurgaon - 122 002, Haryana, India
Tel: +91-124-2560808
Fax: +91-124-2565456
Website: www.sonyericsson.com/cws

Highlights

Increase of revenue by 122.4%
Launch of R300 and R306 for low-end segment
To increase the number of exclusive retail outlets
Set up R&D unit in Chennai

What factors are driving the growth of the Indian mobile phone segment?
The newly tapped category B and C circles coupled with higher disposable incomes have boosted mobile growth in the country. Acquisitions in B and C circles have increased, as the total cost has become more accessible both in terms of mobile handsets and mobile services and is within reach of a greater number of consumers.

Additionally, a wide range of handsets are becoming increasingly available with innovative features and value add-ons, and contributing to the robust growth of the sector. Apart from this, the upgrades, or the step-ups to the handsets in the market have also seen a splurge in demand. Attractively priced smart-phones are also contributed to this growth.

What are your major concerns? Has profitability taken a beating due to pricing pressures?
The gross margins remained relatively stable for Q1 2008, as expected. We have substantially invested in R&D as a percentage of our sales. We are also focusing on widening the existing portfolio and have introduced fifteen new handsets including our new premium sub-brand Xperia. These are in line with our future growth plans and strategy to become one of the top three players globally by 2011.

However, the global economic downturn and moderating sales growth of mobile phones has started to affect the telecom industry. Also, the sluggish market growth in mid- to high-end phones is a cause for major concern. In addition, certain component shortages for popular mid-priced phones have contributed to modest unit sales growth in the first quarter.

What are your plans on the distribution front?
Ingram and Salora are our distribution partners. In the next two years, we are aiming to penetrate deeper into the market to cash in on the telecom boom in the country. We are also planning to have 200 exclusive retail outlets. As of now, we have sixty-five exclusive retail outlets, with most of them in the tier-1cities.

What are the major market trends in the Indian mobile phone sector?
Consumers have put mobile entertainment on the forefront of the emerging trends in the Indian mobile handset industry; be it listening to music on-the-go, or clicking images and videos, sharing it all though their GPRS/EDGE-enabled handsets, catching up with friends on Orkut through their phones and much more.

The increasing popularity of radio has seen mobile users demanding FM/AM-enabled handsets. We have introduced the first ever handsets with both FM and AM capabilities-R300 and R306.

Indian customers are evolving and their enchantment for smartphones represents this trend. Sophisticated smartphones with touch-screens are not just a style statement but also help to keep in touch with business and entertainment needs on the move. However, staying in touch with friends, peers, and fellow bloggers through the Internet is a rage this year. Coupled with the global positioning system (GPS), this Web-enabled handset makes a great companion.