Since launching in 2001, the company has carved out a niche for its range of Walkman- and Cybershot-branded handsets, making it the world's fifth-biggest mobile manufacturer behind Nokia, Motorola, Samsung and LG.
However, Sony Ericsson's attempt to move into the top three by 2011 has hit a snag. Last week, its global head of marketing, Dee Dutta, announced that he is to leave the company, after a tenure of six years, throwing the direction of the brand into uncertainty.
Dutta was responsible for revamping Sony Ericsson's identity in January 2007, putting its green 'liquid' logo at the centre of its marketing strategy. He also shifted its advertising account out of Saatchi & Saatchi and into McCann Erickson after less than a year.
News of Dutta's departure came just days after Sony Ericsson warned that profits for the first quarter of 2008 will be lower than expected due to slowing sales of mid-to-high end handsets across Europe, traditionally its most profitable market.
Sony Ericsson estimates that it will have shipped a total of 22m phones during the first three months of this year, generating between Euros 150m - Euros 200m in net income before tax, less than in the same period in 2007.
The company plans to bolster its profits and expand its global reach through the addition of 15 handsets to its range this year; it has already debuted the X1, a touch-screen device designed to rival the iPhone.
Despite downgrading its growth forecasts, Sony Ericsson claims to have put in a strong performance in 2007, increasing its share of the global handset market to more than 9%, with 1.1bn phones sold last year.
Dutta's exit, however, could leave the organisation rudderless at a crucial moment, making it even harder for the brand to stand out as it prepares to embark on a brand overhaul.
We asked Ian Pearman, managing director of Abbot Mead Vickers BBDO, who has worked on Motorola's advertising account, and Dominic Chambers, former head of brand and marketing communications at Vodafone, how Sony Ericsson can still achieve its aim of top-three status in the market .
Diagnosis 1
Ian Pearman managing director, Abbot Mead Vickers BBDO
Like a dog with two owners, a joint-venture brand is always at risk of being starved, and this one looks hungry. The tech advantages provided by Ericsson are invisible to consumers and that part of the brand now represents drag, while the potential thrust of the Sony half seems to be constantly dissipated.
Marketing music-functionality to a generation used to carrying around 10,000 tracks was always going to be challenging, but Sony Ericsson failed to build its defensive walls high enough before Apple entered the game.
The Walkman sub-brand will provide a little insulation from the cold, but reminding people they 'love/logo music' is altruistic to the category as a whole, and has done little for the core brand.
The lack of a symbolic design-handset is also an issue in a high-touch category where a 'halo product' is vital.
Opportunities to align the brand with emerging web applications, particularly social networks, have also been missed. Real tech advantage is rare, so it is odd that the brand has not made more of this.
Remedy
- Be more Sony.
- Stop investing good marketing money trying to give the logo a meaning that is ultimately generic.
- Find a 'halo design' product and concentrate on throwing the brand's weight behind it.
- Make more of current tech advantages that lie dormant.
- Work to be the best mobile platform for the next generation of web applications.
Diagnosis 2
Dominic Chambers former head of brand and marketing, Vodafone
The mobile phone market is going through significant changes at present, driven by the decline in voice and text tariffs, which has led to a drop in monthly contract fees. This means there is less money available to subsidise the acquisition of fancy handsets.
In addition, networks have begun offering customers the option of upgrading their contract with a cheaper package, rather than a different handset.
After many years of growth, the key brands are finding that they need to work much harder in what is now a saturated market. Sony Ericsson has not managed to leverage the true strength of the Sony brand - its strong values of innovation, quality and design. Its recent advertising has been product-based and fairly forgettable, and not easily recognisable as Sony Ericsson.
It is difficult to discern what the brand stands for, which makes it resonate less with consumers against a resurgent Nokia and a powerful Apple, which has shown up the whole sector with the launch of the iPhone.
Remedy
- Focus the brand communications, Sony Ericsson needs to be very clear about what it stands for, engage consumers at every opportunity and be known for something
- With the Walkman heritage, Sony Ericsson has more credibility in music than any other handset brand; ditch the tennis sponsorship get serious about music.
- Be clear about the roles of the different communication channels, i.e. let the mobile retailers and networks do the product advertising and promotion, Sony Ericsson should focus on brand and music.
- Combine the power of Walkman and Cyber shot in one handset; people love music and taking pictures.