axxxr
Joined: Mar 21, 2003
Posts: > 500
From: Londinium
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Urban Gillstrom talks to: www.business2.com
Like the Red Sox and the artist currently known as Prince, Sony Ericsson is enjoying an incredible turnaround. Earlier this month it announced its fifth straight profitable quarter. With profits of $110 million on sales of $2.1 billion, the London-based company made a 20 percent jump in market share, hurtling past Korea's LG to become the world's fifth-largest mobile-phone maker.
Sony Ericsson's success is all the more remarkable because for years it seemed the company was destined for failure. The progeny of a 2001 mergers between two ailing businesses -- Sony's (SNE) and Ericsson's (ERICY) cell-phone divisions -- Sony Ericsson lost more than $1 billion in its first two years of existence. During that period, its corporate parents had to pony up hundreds of millions of dollars to keep the joint venture afloat.
Their efforts paid off. Marrying Sony's penchant for beautiful design and consumer electronics know-how with Ericsson's mastery of WG {18679} {GSM}] networking technology, Sony Ericsson has scored some massive hits during the past 18 months. Its T610 won numerous design awards and has been a hit with consumers. More recent devices, like the just-launched P910a and the S700, showcase Sony's signature design. And Sony Ericsson says it's just getting warmed up. Urban Gillstrom, president of Sony Ericsson and an avowed gadget freak, sat down with Business 2.0 to talk about the death of the PDA, Sony Ericsson's future, and where the convergence trend will take the wireless industry.
How did Sony Ericsson finally turn things around?
It took more time than we thought it would to launch phones that showed what the joint venture could do. In 2003 we finally had our first full lineup of Sony Ericsson-designed phones. The T610, for example, is really the love child of the joint venture. It became an industry icon, and that's when you really started to see the benefits of the Sony design. We also restructured our R&D operations and focused on fixing our supply chain. We have a well-oiled supply chain, which is something that was missing previously. We closed down two unprofitable research facilities in North Carolina and Germany, which helped save a lot of expenses on the run rate, and we are really seeing the benefit of that now. We also run a very lean company. With only 5,000 employees worldwide, we are what you could call a very large startup.
You've been successful using Symbian, but many see Symbian as dominated by Nokia. Do you have any plans to try out different operating systems?
No, we're fully focused on Symbian. As an operating system, Symbian is really the only one designed for smartphones. It offers great communication for both voice and data, and that's something the other operating systems don't always do a great job with. I can't speak about future products, but we think that is the ultimate operating system for smartphones. In the United States, there are Windows- and Palm-based phones, but you don't see that as much overseas.
Do you have any plans to develop CDMA phones again?
If you go back a little bit, we were a CDMA player -- but not a very successful one. In 2003 we decided to focus our research and development efforts on GSM, so we discontinued our CDMA efforts in the United States. We do have some CDMA modules for the automotive industry, but we have no plans to go back into the phones again. This is one of the decisions we had to make to get profitable again. It was a very difficult decision to make because it limits the U.S. market to 50 percent, but we can address half the market in the United States and still be successful.
Did Sony Ericsson's success with smartphones lead to Sony's decision to stop selling PDAs in the United States?
Definitely. The collapse of the PDA market is driven by the success of smartphones. Of course, we've benefited from many of the lessons Sony learned with the Clié. We have the same Memory Stick and the jog dial and a great display. Yet I think within the family they see that smartphones are the next step. PDAs are not coming back.
Convergence married digital cameras with mobile phones. What's next?
There's nothing you can do on an MP3 player that you can't do on some of our newest phones. The next step is really about entertainment, and I would focus on music going forward. When you start looking at something like the P910a, there's nothing you can do on an iPod that you can't do with this phone. You have a removable Memory Stick, up to 1 gigabyte, and a built-in music player. We will also take all the benefits of working with PlayStation to bring those types of games to our devices. We already have some of the most advanced 3-D gaming capabilities on any phones, and we will keep getting better.
Is network convergence important as well?
There's a lot of hype and different technologies out there, but we're mainly interested in what the consumer is asking for. Wi-Fi is at that point, and it's something we are really looking at right now. Fixed-mobile integration is interesting, but it will take a while before Wi-Fi makes its way into mobile phones. It takes time for these things to be adopted, even if the industry is pushing it heavily. Size and battery are the two big issues that need to be dealt with.
[ This Message was edited by: axxxr on 2006-11-21 00:17 ] |
Posted: 2004-10-27 18:39
