Sony Ericsson's Mobile Music Strategy

Sony Ericsson's Mobile Music Strategy
Case Code: BSTR215
Case Length: 19 Pages
Period: 2001-2006
Pub Date: 2006
Teaching Note: Not Available
Price: Rs.400
Organization: Sony Ericsson
Industry: Consumer Electronics
Countries: Europe, Asia
Themes: Growth Strategy, Strategic Alliances
Sony Ericsson's Mobile Music Strategy
Abstract Case Intro 1 Case Intro 2 Excerpts

"This was another solid quarter for Sony Ericsson, and has enabled us to finish the year with great momentum. We are now seeing the benefit of our earlier investments in R&D which have enabled us to expand the product line-up and successfully appeal to new consumers with products like the Walkman phone series."

- Miles Flint, President, Sony Ericsson, in 2006.

"Sony Ericsson did well in the high-value phones segment. Profit was clearly better than we had expected."

- Nicolas Von Stackelberg, Analyst, Sal. Oppenheim, in 2006.

The 'Walkman' Phone

On January 18, 2006, Sony Ericsson Mobile Communications AB (Sony Ericsson) announced that its pre-tax profit in the last quarter of 2005 (Oct '05 - Dec '05) was 206 million euros with total revenues of 2.31 billion euros.

The results took many analysts by surprise and beat all market predictions in terms of revenues, and profits. The key driver for this strong performance was the worldwide success of its Walkman branded mobile phones (Walkman phones), launched in the third quarter of 2005. It was estimated that the company had shipped around three million units of Walkman phones from the time of product launch in August 12, 2005, to the final quarter ending December 31, 2005. The success of the Walkman phones series on Sony Ericsson's profit and revenues was significant. The company shipped an overall 16.1 million mobile phone units for the last quarter of 2005.

This was an increase of 28% over the same period in 2004 and a 17% increase over the third quarter in 2005. Miles Flint (Flint), President, Sony Ericsson, said, "This has been a good quarter for Sony Ericsson, proving that our strategy of expanding the product portfolio upward into best-in-class imaging, music, and 3G5 products while increasing the number of more affordable and attractively designed volume models is paying off.

We are increasingly benefiting from the opportunities created by the joint venture (Sony and Ericsson), and with three new Walkman phones shipping in the fourth quarter (W550, W600, W900), we are optimistic that Sony Ericsson can set the standard in music as well as imaging going forward."6 Sony Ericsson had announced its 'mobile music strategy' in February 2005, under which high quality digital music players would be integrated with stylishly designed mobile phones. The Walkman phones were first introduced in Europe in August 2005 and became an instant hit. Stocks were quickly sold out and the company had problems in meeting the rising market demand. The phones were later introduced worldwide and become extremely popular. Analysts pointed out that Sony Ericsson's mobile music strategy had once again demonstrated how innovation and the ability to understand customer needs were key success factors. Investors were also pleased to see the company leveraging on the synergies of the joint venture....

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