Sony Ericsson targets SA growth

By Nicola Mawson, Contributing journalist

Johannesburg, 16 Jul 2009

Sony Ericsson's international relationship with Vodafone and its status as a Fifa sponsor are expected to boost market share in the local sector.

Sonja Shear, head of marketing at Sony Ericsson, says the company has about 4% to 6% of the overall local handset market.

The company has a bigger presence in cellphones sold to contract subscribers, at between 8% and 12% of mobiles bundled with contracts. Shear says mobile operators and other service providers - such as Autopage - supply this information to Sony Ericsson.

Sales to contract subscribers are higher, because the company has focused on the top end of the market, and does not have a range that meets entry-level requirements, she explains.

Its focus on selling handsets into the higher end of the market has also shielded it, to some extent, from the economic downturn, although many contract subscribers are downtrading, and buying less expensive packages, Shear says.

Vodafone's stake in Vodacom is expected to be beneficial for the company, as Sony Ericsson has international alliances with the UK-based cellular operator, in terms of which Sony Ericsson provides handsets that are bundled with contracts.

As a result, Shear says Sony Ericsson expects positive spin-offs locally, although it is too soon to say what the benefits will be, as Vodafone's increased investment in Vodacom has just taken place.

The Confederations Cup bolstered sales for the cellular manufacturer as it is a Fifa partner and advertising was increased during the games. An announcement on a relationship between MTN and Sony Ericsson around the Fifa 2010 games is expected in the fourth quarter, she notes.

Last September, the company said its devices had been appointed the official mobile phone handset of the 2010 Fifa World Cup. In this capacity, Sony Ericsson will enjoy various category exclusive rights globally and will be designated a Fifa World Cup sponsor.

The sponsorship runs to the end of 2010 and includes the 2010 Fifa World Cup in SA. Shear says special devices that have a live portal, allowing people to access information and videos, will be sold specifically for the games.

African goal

The South African office, based in Fourways, serves Africa, up to Nigeria. SA and Nigeria are its two biggest markets. Shear says, as SA already has high levels of penetration, its first aim is to strengthen market share locally before going further outside of the country.

Nigeria has potential, but the challenge is to offer competitively priced cellphones that also offer a range of functions, she says. In addition, based on anecdotal evidence, most of the handsets sold in Nigeria are grey imports, and about 10% are fake, Shear adds.

The company also has an ongoing plan to increase market share in countries such as Angola, Mozambique, Botswana and Ghana, where it has a small presence. “Ultimately, we want representation in as many markets as we can.”

New devices

Sony Ericsson aims to grow in the postpaid market through offering new business devices to challenge the smartphone market. It is also moving to offering all-in-one devices that bundle music, cameras and social networking applications.

Shear says new cellphones will arrive in SA in the new year. Devices to convert music from CD, so that it can be played back on a cellphone, are set to land in SA next year.

Other applications will also become available next year. One is online store Play Now, which is already established in 13 countries, and will go to four more before arriving in SA next year. The cellular manufacturer will launch its successor to the XPERIA X1 smartphone next year, she adds.

Shear says the company is also moving towards manufacturing more environment-friendly phones. The company's Green Heart programme is assessing the potential of chargers that switch off when the phone's battery is full. Through Green Heart, the cellular company seeks greener materials that will do less harm to the environment.

Sony Ericsson says 13.8 million global units were shipped in the second quarter, a decrease of 43% year-on-year. Sales for the quarter were 1.7 billion euros, a year-on-year decrease of 40%. This was due to continued challenging market conditions in all regions, particularly in Latin American markets, it notes.