ECONOMY

Sony Ericsson eyes Balkan mobile phone markets with cheap models

It appears 2002 has not been Sony Ericsson’s year, as the union of the Japanese electronics group and the Swedish mobile telephone maker has had to deal with the shock bound to result from any merger. The repercussions have taken their toll on the conglomerate’s Greek branch, where almost the entire management team has been laid off and a new general manager is expected to be appointed in a few day’s time. Hervé Fontaine, vice president of Sony Ericsson Mobile Communications International AB and responsible for the Greek subsidiary, says the company is ready for the counterattack. In the first nine months of 2002, Sony Ericsson’s share in the global mobile telephony market remained steady at 5 percent, which is about half of the total which the two companies commanded together before their merger, but a far cry from Nokia’s 36 percent and Motorola’s 16 percent. «In Greece, we may have had a smaller volume, but sales were up in absolute figures,» says Fontaine, who insists that the company’s goals are quite ambitious. «Sony Ericsson has second place in the Greek market behind Nokia, but has a market share almost twice as big from the third competitor,» he added. Fontaine says that about a year ago, when the merged company began operations, it chose to focus on the high segment of the market with the expensive but successful T68i. The goal was to tap Ericsson’s close ties with cellular phone operators and Sony’s advantages in consumer electronics, design and marketing. T68i, with a color screen, new design, and optional camera won out these impressions but the company lost a share of the low segment of the market to Siemens Mobile and Alcatel. It is now preparing its counterattack with cheaper models targeting the mass market, which are about to be launched in the Greek market. «There is room for growth in Greece and the rest of the Balkans,» says Fontaine. The Greek branch is also responsible for other Balkan markets and Cyprus and sees good prospects in Romania and Bulgaria. «Most of these markets on the whole still have the cheaper models and expensive T68i would not have good chances for penetration.» T68i is included in the test trials of MMS technology (allowing the transmission of image, sound and video through mobile phones) by the three operators, Vodafone, Stet Hellas and CosmOTE. Fontaine explains that Sony Ericsson’s effort is centered on developing mobiles with entertainment facilities through easy connections with other apparatus, such as cameras. The market for such models, which allow users to send photographs, is growing at a fast pace. According to analysts, 4.6 million such apparatus were sold in the third quarter of 2002, against 3.2 million in the second quarter. However, this still represents a very small segment of the overall market, which is estimated to approach 400 million mobile phones in 2002. Bluetooth «The Bluetooth model for wireless communication, developed by Ericsson, is one of the company’s weapons,» says Fontaine, while Sony’s inroads in the areas of cinema, music and video games, provide important raw material for the content that mobile telephony companies will have to provide when third-generation networks get off the ground. How quickly this comes about depends on the recovery of the mobile communications market, which is now in the midst of huge debt. «The market is undergoing realignments,» says Fontaine, who now sees the first signs of recovery. Forecasts put the number of mobile phone users at 1.5 billion by 2005, that is, 500 million more than today. But analysts believe that Sony Ericsson’s attaining profitability requires the global mobile phone market to double the number of mobile phone users.