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Sony Ericsson sales drop, iPhone to hurt sales

updated 12:05 pm EDT, Fri July 18, 2008

Sony Ericsson Q2 2008

Sony Ericsson on Friday reported spring quarterly results that confirm a continued drop in the company's influence. The cellphone designer today said it has largely met its lowered predictions and shipped 24.4 million phones between April and June, or a two percent drop from the same season a year earlier. Net income for the company was also near-flat at the equivalent of $9.5 million, while the firm also warned that the average selling price for one of its phones dropped from approximately $198 to $184.

This decline is described as largely due to continued troubles in selling mid-range or high-end cellphones, particularly in Sony Ericsson's home region of Europe. The company has a "less favourable product mix" at present that skews towards lower-end devices and dropped the company's margins on its phones by 6.5 percent of the total price as a result. Sony Ericsson isn't expected to ship its Windows Mobile-based XPERIA X1 smartphone until later in the year.

Market share climbed during the period, edging up to eight percent in the spring from 7.5 percent in the winter, but the company still plans to encounter difficulties for the last six months of the year and says it will cut about $475.6 million from its annual costs and 2,000 jobs to reorganize and better compete in the market.

Sony Ericsson faces a "challenging" 2008 and specifically highlights the summer quarter as its toughest of the year due to "increased competition," according to the report.

The company expectedly refrains from mentioning specific firms but is notably faced with the launch of the iPhone 3G during the summer. Apple's device not only has potential to cut into sales of Sony Ericsson's mainstay Walkman music phone line but also its P series smartphones and the future XPERIA line. Sony Ericsson has had touchscreen phones since before Apple but only in 2008 began to introduce devices explicitly made for finger input and for home users.

Extra pressure on Sony Ericsson's market share is likely to come from Research in Motion's BlackBerry Bold and Thunder lines as well as four key Nokia phones that include the E66 and E71 for business as well as the N78 and N96 for home.



By Electronista Staff
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Comments

  1. wr11

    Dedicated MacNNer

    Joined: Feb 2001

    +1

    not surprising

    I've had 4 or 5 Sony Ericsson phones over the years. Hardware wise they were all ahead of the times. That is just about where the positives ended. No easy software updates followed by a sheer lack of bug fixes and support after the phone goes off the market. I decided a year ago that I would no longer by SE phones opting for Nokia or Apple instead.

  1. Guest

    Fresh-Faced Recruit

    Joined: Nov 1999

    +1

    Switched.

    Sony Ericsson was my mobile manufacturer of choice for the past few years, but I opted for the iPhone 3G for my latest upgrade. Although SE makes a good phone, in the end I prefer the iPhone 3G feature set as well as the way in which it is highly integrated with my other Apple products like my MacBook and AppleTV.

  1. coffeetime

    Mac Enthusiast

    Joined: Nov 2006

    0

    iPhone

    It's amazing how iPhone came out of no where. No one expecting Apple is going to rule on cel phone. It's like the revenge of Newton PDA.

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