Global Economics

Can Xperia Redefine Sony Ericsson?


The much-anticipated mobile device may have lost its edge to the likes of Apple's iPhone, thanks to a six-month lag between announcement and launch

Sony Ericsson, unveiling its much-anticipated Xperia Xi mobile device on Sept. 15, released a nine-part promotional "Webisode" about a man named Johnny X who is trying to piece together his personality and identity.

The same could be said for Sony Ericsson, which is seeking to redefine itself as it struggles to differentiate its product lineup from those of rivals such as Apple (APPL), Samsung, and Nokia (NOK). Much is riding on the Windows-based Xperia, which goes on sale in Britain, Germany, and Sweden on Sept. 30 and will become available across Europe, Asia, and Latin America during the fourth quarter.

Analysts say Sony Ericsson has become too reliant on its Cybershot and Walkman brands, which have grown a bit stale. The London-based company's performance in 2008 has been lackluster. It broke even during the second quarter on a slide in sales of 9%, to $4 billion, from the quarter a year earlier. Analysts say it clearly needs a new hit (BusinessWeek.com, 6/30/08).

"They really need this product to be a success, given their current circumstances," says Geoff Blaber, an analyst at mobile communications consultancy CCS Insight.

The Xperia, announced in February at the Mobile World Congress, an annual industry gathering, caused lots of buzz because of its touchscreen, rich graphics, and ability to switch seamlessly between screens and menus. But in the six-month lag between announcement and launch, analysts say, the new product line has already lost its edge.

"More of a Follower"

London-based Sony Ericsson is relying on a third-party manufacturer, Taiwan's HTC, which has experience working with Windows. But HTC meanwhile has come out with its own Windows-based high-end phone, the Diamond, which uses a lot of the same technology and has some of the same look and feel. Apple, meantime, has launched the iPhone, and Samsung and Nokia have introduced high-end models that compete directly with the Xperia.

"Sony Ericsson doesn't have any devices that I would consider to be the iPhone killer," says Neil Mawston, an analyst at tech consultancy Strategy Analytics, in Milton Keynes, Britain. The company has become, he says, "more of a follower."

What's more, the Xperia's market positioning is fuzzy. Sony Ericsson initially said it would be targeted toward business users. But that field is getting more and more crowded: Just last week Nokia announced it was teaming up with Microsoft (MSFT) to battle Research in Motion (RIMM), the maker of the BlackBerry.

With the Johnny X Webisode, it now appears the Xperia is being tilted toward consumers. Stiff competition will make it tough to build market share, though. "It's not going to turn the company's fortunes around," analyst Blaber says.

Schenker is a BusinessWeek correspondent in Paris.

Later, Baby
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