Sony Ericsson Transforms Its Mobile Phone Industry

The "Society" decade of marriage has come to an end. The news of Sony’s acquisition of a 50% stake in Sony Ericsson’s mobile communications company held by Ericsson in November last year has finally become a reality. At this point, the changing international smartphone landscape is now a stirring factor.

The Public Relations Department of Sony (China) Co., Ltd. confirmed to the "Daily Economic News" reporter that the transaction was completed on February 15, 2012. "This marks the completion of the acquisition plan jointly announced by Sony and Ericsson on October 27, 2011. Sony Ericsson has become a wholly-owned subsidiary of Sony."

"I think that the recent movement of Sony's mobile phone will really impact the current pattern of Apple, Android, and WindowsPhone. It is unlikely that this will happen." Chen Zhigang, a communications industry expert, made clear during an interview with the reporter of the "Daily Economic News". "The Japanese brand will return to China. The opportunity behind this may be to see the opportunity brought by the advent of the smart phone era."

It is worth noting that the Sony Ericsson brand was formally attributed to Sony's event, which coincides with the current trend of Japanese mobile phone manufacturers returning to the Chinese market. At present, Japanese mobile phone brands such as NEC and Kyocera embark on the road to return to the Chinese market.

Sony's 1.05 billion Euro Layout Mobile Phone Business

It is reported that after the formal completion of the equity transaction, Ericsson received approximately 7.5 billion Swedish kronor (about 1.05 billion euros) in revenue from this transaction, and will include revenue in the first quarterly report released on April 25, 2012. "Other operating income" in the table.

As a result, the "Sony Ericsson" brand that Chinese consumers are familiar with will officially become history, and the company will formally be renamed "Sony Mobile AB" with headquarters in London, England. Sony revealed that Sony Mobile AB has established R&D centers in Lund, Silicon Valley, and Tokyo, in addition to an R&D center in Beijing, China. The number of employees is about 8,000 and the registered capital is 100 million euros.

It is reported that the cooperation between the two parties can be traced back to the time when Sony Ericsson was established on October 1, 2001. At the beginning of the joint venture, both Ericsson and Sony have integrated their uncertain future mobile phone business. However, it is hard to say that "run-in" is effective.

After more than ten years of running-in, Sony Ericsson did not launch enough models to shake the market when the era of smart phones arrived. The market share of Apple, Android, and Windows Phone series continued to rise.

The data of Sony Ericsson in the third quarter of last year showed that the company barely stopped the momentum of multiple quarterly losses and its net income was zero. In the second quarter, the net loss amounted to 50 million euros (US$70.6 million), and handset shipments decreased by 6.2% from the 8.1 million units in the first quarter, which was a sharp drop of 30.9% from 11 million in the same period last year.

The plight of Sony Ericsson can be said to be a typical example of the difficulties encountered by Japanese mobile phones in China. Just a few years ago, when the wave of feature phones began to shift to smart phones, many Japanese mobile phone manufacturers, including Toshiba, Matsushita, Mitsubishi, Kyocera, and Sharp, all lost.

Chen Zhigang told reporters that Sony is more optimistic about these companies. "After all, Sony brand is very powerful. NEC and Panasonic are brands that are more well-known in the equipment and home appliances industries than the rest of the brands. Smartphones are typical consumer goods, and the public's awareness of the brand is particularly important. In addition, Sony is also a relatively open company in its marketing practices."

Japanese mobile phone is back to the road or difficult

Some sources pointed out that the Japanese NEC Group, which is undergoing a drastic downsizing of the mobile phone business division, has recently returned to Beijing to establish a mobile phone division. This action has been planned since August last year. Yesterday, the Japanese Kyocera mobile phone brand, which was also defeated by the Chinese market due to poor performance a few years ago, and China Telecom jointly launched the customized mobile phone KSP8000, which has taken the lead in returning to the Chinese market.

Since the Japanese functional mobile phone manufacturers entered the Chinese market in 1999, many brands, such as Sony Ericsson and Sharp, have taken advantage of the iconic exquisite designs and accurate Chinese strategies of Japanese mobile phones to quickly gain ground. However, when the era of smart phones arrived, Japanese companies' "prudent and cautious" style of operation caused them to fail to keep up with the pace of the times, and eventually withdrew collectively from the Chinese market.

Among them, in March 2005, Toshiba’s mobile phone announced its withdrawal from Nanjing Putian Wangzhi Co., Ltd. under the long-term loss situation, and it was particularly concerned about the formal withdrawal of China’s CDMA mobile phone market. Insiders told the "Daily Economic News" reporter that Sony was only established because of Sony Ericsson's joint venture with Ericsson, but its performance was not good.

This person predicts that the Japanese mobile phone's model of re-entering the Chinese market may be copying Japanese models. The development of 3G mobile phones in Japan is already very mature. All of the above companies have existing models and operating experience. It is only necessary to move the mature Japanese models into the Chinese market. In addition, the construction of the industry's eco-environment has always been a good thing. It is only necessary to remove customized content and make changes in UI, APP, and other aspects.

Kyocera Corp., which has just returned to the Chinese market, and Fang Yeewen, head of its China operations, told the media that the withdrawal from the Chinese market in 2008 was "a bitter choice for Kyocera." “The Chinese 3G market started to burst in the second half of 2011, once becoming the fastest growing market for smart phones in the world, and Kyocera also spotted this opportunity.”

However, under the “Red Sea” situation in which the three camps divide up the high-, mid-, and low-end mobile phone markets, it is perhaps unknown whether the Japanese legion can successfully find its own position and win back the market.

In this regard, Chen Zhigang pointed out that Japanese mobile phones have always been very expensive. Unlike Korean companies, they hold display screen resources and technologies in their hands. At the same time, Japanese companies also face the disadvantage of having a small output and failing to achieve economies of scale. In addition, its overall style of conduct is very cautious and it is easy to miss the fleeting industry opportunities.

“In the industry, it is forecasted that the Japanese mobile phone will collectively return to China to attack the mid to high-end market. The current overall mobile phone trend in the country is low price, no matter what the three major operators push the thousand yuan machine or even the newly pushed '700 "The yuan smart machine' trend, as well as millet phone prices continue to decline, ZTE Huawei also played a big price war situation are both evidence. Therefore, for the return of the Japanese system, I expressed pessimism, very optimistic about not," Chen Zhigang frankly.