Sony Ericsson expands handset lineup, adds 100 engineers to U.S. workforce

Sony Ericsson Mobile Communications L.P. announced eight new handsets in three basic categories, expanding its lines of Walkman and Cybershot handsets and offering four new phones for entry-tier markets around the world.
Among the models announced, Sony Ericsson global spokesperson, Aldo Ligouri, called attention to a “super-slim” (9.4 millimeters) Walkman model W880 for UMTS networks. He said that a number of the handsets would be destined for China. Ligouri said that more specifics on the handsets and their destination markets would be available as carrier and celebrity-endorsement deals are announced in coming months.
The portfolio-building move-with handsets aimed at the market’s low-, mid- and high-tier segments-comes on the heels of Sony Ericsson’s news last week that it will join its top rivals in manufacturing in India. The manufacturing deal will involve partners Flextronics and Foxconn Electronics, both electronics manufacturing service providers that work with major original equipment manufacturers such as the top-tier handset OEMs. Later, the India plants may serve as a manufacturing hub for regional markets, Ligouri said.
Though Sony Ericsson is the last among global players to establish manufacturing in India, Ligouri said, the company has worked since 2002 to establish its brand and distribution channels in that fast-growing market and “it was time for the next step.” The company already offers 19 handsets in India, many of them made in Malaysia and elsewhere, depending on the model. Sony Ericsson currently manufactures in China (both “in-house” and with an EMS), in Brazil with Flextronics and in Malaysia, Japan, France and Mexico with unspecified EMSs.
“For Sony Ericsson, at least, it’s about bringing our brand to a wider group at a lower price point,” Ligouri said.
Analysts have said that in-country manufacturing, if done in high volumes along with direct-to-consumer retail channels, can help a vendor eke out margins at the lower end of a portfolio. Based on fourth-quarter results, Nokia Corp. has succeeded in doing that, particularly in India, where it enjoys about 60 percent market share. In contrast, Motorola Inc. stumbled last year over its efforts to profit from enormous volumes of entry-tier phones, which yielded scant margins.
Sony Ericsson sees strong sales of its handsets from the mid- to high-tier in India, which has a burgeoning middle class. Ligouri said, however, that the company will avoid “cheap,” sub-$40 handsets.
For Sony Ericsson, the portfolio expansion and India announcement underscore that the company, which has been committed to and successful at maintaining enviable average selling prices and profit margins, is carefully expanding its reach in a way that grows volume and market share while preserving ASPs and margins. The Nokia and Motorola examples reflect that success in that endeavor is possible but hardly assured.
In a less heralded move, Sony Ericsson’s North American spokesperson, Cherie Gary, said that the vendor will add 100 more engineers to its United States-based workforce in Research Triangle Park, N.C., about a 15-percent boost to its ranks here. Gary said the engineers would work on the gamut of technical challenges for its worldwide product portfolio but with a focus on U.S. initiatives.