Sanyo M1 at Sprint Nextel: top-line model has rivals

Sanyo Corp. has put its best foot forward at Sprint Nextel Corp. with a top-of-its-line multimedia phone, the M1, at a crucial time for Sanyo and amid a strong, overall portfolio expansion at Sprint Nextel.
The M1 launch comes freighted with context-Sanyo’s global handset business has seen a drop in sales that has contributed to the corporate parent’s continuing financial losses, while Sprint Nextel’s portfolio now includes powerful rivals.
The M1 clamshell handset, at $200 with two-year contract-available only on Sprint Nextel’s Web site until January, when it hits walk-in retail stores-provides CDMA2000 1x EV-DO speeds that facilitate Sprint Nextel’s multimedia offerings, 1 gigabyte of onboard memory, stereo Bluetooth and long music-play time (18 hours, according to Sanyo). With the M1, Sanyo can claim nearly 40 percent of Sprint Nextel’s handset portfolio; it joins 11 other Sanyo handsets in the carrier’s portfolio. (These numbers include color variations of Sanyo models.) Sanyo does not supply the other Tier One carriers.
That makes Sprint Nextel one of Sanyo’s strongest carrier partners among its customers outside its domestic base in Japan. Sanyo also plies markets in Canada, Mexico, New Zealand, with some presence in Europe and Korea, according to the company.
“We’ve built a great business with Sprint,” said Mike Hine, public-relations coordinator for Sanyo at its American headquarters in Chatsworth, Calif. “We consider the M1 the top of the line in our portfolio at Sprint.”
In terms of Sanyo’s strategy with the handset, Hine said:
“Our customers have different needs, so we offer entry-level camera phones and the mid-tier 8400 (an $80 clamshell). The M1 is for those who seek all the good stuff it offers.”
The M1 lands in a Sprint Nextel portfolio that has been strengthened not only by Sanyo’s own offerings-the slim Sanyo Katana comes in a choice of three colors at $50 apiece-but also the relatively recent addition of the 800-pound Motorola Inc., with its Krzr 1m at $200 and red Razr v3m at $50, as well as offers such as the LG Electronics Col Ltd.’s Fusic at $100 and Samsung Electronic Co. Ltd.’s slim clamshell M610 at $180. Competition within Sprint Nextel’s portfolio is thick.
Michelle Leff, a public-relations manager at Sprint Nextel, emphasized that the M1’s 1 GB of internal memory provided “maximum value” for patrons of the carrier’s Power Vision and Music Store offerings. Coupled with the handset’s 2 megapixel camera-only one of two handsets in Sprint Nextel’s CDMA portfolio with that level of resolution-the M1 is “ready to go out-of-the-box,” Leff said.
The M1 also makes its debut at Sprint Nextel at a difficult time for Sanyo. The handset division-No. 9 in the world-held less than a 1.5 percent global market share during the past year in a increasingly tight market being squeezed by market share gains by Nokia Corp. and Motorola, which together account for more than 55 percent of global market share-a slice that is growing. Even No. 3 Samsung has lost market share of late, forcing it to shift focus to entry-level handsets for emerging markets to stem its slide. No. 6 vendor BenQ-Siemens, based in Taiwan, has retreated from Europe to its home markets in Asia, while the French firm, Sagem, has played footsie with Motorola over a possible acquisition by the latter.
Closer to home, Sanyo Electric Co., Ltd., the handset division’s parent, has projected a net loss of $435 million for the 2006-2007 fiscal year. Sanyo said last month that its mobile phone, digital camera and air conditioner units had seen a “sharp reduction” in sales. The company is in the midst of a three-year transformation plan that has already shifted management resources to three core businesses that include “personal mobile equipment.” Just last week, Sanyo’s shares fell in value on the Tokyo exchange after news that two key customers-NTT DoCoMo Inc. and Mitsubishi Electric-announced they would recall some 1.3 million handset batteries. Sony Corp. also has been financially battered by battery recalls.
Asked whether it was a concern to Sprint Nextel to have nearly 40 percent of its portfolio provided by a corporation that has reorganized its approach to business in the face of falling handset sales and overall, continuing financial losses, Leff said “it’s not our place to comment on our business relationship with our vendors.”
According to John Jackson, a leading analyst with M:Metrics, the M1 faces an uphill battle.
“Sprint’s portfolio has gained significant strength in the past half-year, especially in music phone offerings, with entries from Motorola, LG and Samsung,” Jackson said. “The Sanyo M1 is but one of several offerings in this segment of the market that has attracted the attention of OEMs seeking to meet carriers’ music agenda.”
Jackson said the global handset market has become “a scale game,” and with Sanyo’s retreat from the European 3G market, its strength is focused on its domestic Japanese market and at Sprint Nextel. Even at the latter, however, “it is difficult to see how one, two or three SKUs”-stock keeping unit, roughly analogous to a single handset model in the wireless industry-“will change things fundamentally,” Jackson said.
“Without scale or a commanding niche such as HTC enjoys in smart phones, it’s getting tough to survive,” Jackson said. “On the other hand, Sanyo has gained ground at Sprint.”