Sony-Ericsson Will Not Do Cheap

In the Hutong
Recovering
1408 hrs.

One more case to prove volume and share leadership is overrated in the mobile device business: Sony-Ericsson CEO Bert Nordburg explained to The Wall Street Journal why the company doesn’t make cheap handsets. From the WSJ:

After several fiscal quarters of net losses, Sony Ericsson became profitable earlier this year, thanks to a restructuring and successful releases of Android-based smartphones.

Mr. Nordberg said analysts have been too focused on sales-volume declines in the July-September period. Sony Ericsson could easily increase sales volume by offering more inexpensive phones, but profitability is more important, he said. “We do no phones under €50 ($68.43), because we won’t make money,” he added.

You need scale to make money in that business, and SNE does not have that scale. Nor, apparently, does it want it.

I wonder if Nokia is at all worried that the rest of the industry is prepared to cede the low end to the Finns and a growing host of low-cost Chinese manufacturers?

Probably not: I think we are still a year or two away from Nokia realizing they really don’t want to be the cheap phone provider to the world. That will only happen when one or two large Chinese (or Indian) volume handset producers start beating Nokia with The China Price.

Michael A. Robson

Good for them. Though it wouldn’t be the first time Sony copied Apple, Sony has been a premium brand since…. forever. They’ve got the right attitude on pricing, I just think they lost their way a bit in terms of Branding.