Sony Ericsson puts all eggs in Xperia basket

Even as its product portfolio straddles a wide price band from Rs5,000 to Rs35,000, Sony Ericsson is betting on phones in the higher end of that spectrum and consciously avoiding the lower end, which has been getting crowded.

Trying to build on the traction it got with last year’s Xperia series, Sony Ericsson launched two more phones in India on Thursday — Xperia Arc priced at `32,000 and Xperia Play priced at Rs35,000.

“The Xperia series has got a good response and has given them a firm toe-hold in the high-end smart-phone segment,” said Abhishek Chauhan, senior consultant at market researcher Frost & Sullivan.

“While they hope to eat into the market share of Nokia, whose smartphone strategy is in the middle of transition, unless the company manages better differentiation vis-a-vis other Android-based phones and scales up its distribution network, maintaining the momentum can become an uphill task.”

The higher priced Xperia Play incorporates a Sony’s portable console gaming device Sony Playstation and is aimed at serious gamers.

According to Frost & Sullivan estimates, Nokia leads the smart-phone space with aroun 70% market share, followed by Samsung at 13-14%, Blackberry at 8-9% HTC at around 3%. Nokia is expected to see significant erosion in its market-share in the next 1-2 year period as it transitions from its own Symbian operating system to Microsoft’s Windows Mobile platform in the next 2 years.

Sony Ericsson has around 2% market-share in the Indian smart-phone space, according to Chauhan.   

Admitting that Sony Ericsson is not looking to play in the high-volume segment, firm’s country head for India Pawan Chadha said that smart-phone market will see significant growth in the medium-term, especially with increasing adoption of the recently launched high-speed 3G services.

Starting in late 2008, local brands such as Micromax, Lava and Spice Mobiles have flooded the lower-price, higher-volume feature phone segment — typically priced up to Rs8,000 — that once used to be dominated by foreign brands.

In response, multi-national brands Nokia, Samsung, HTC and Blackberry and Sony Ericsson have sought to move up the value chain to the higher end smart-phone segment, which has relatively higher barriers to entry and affords higher profit margins.

In focusing on high-end phones, Sony Ericsson has leaned heavily on Google’s mobile phone operating system Android. While it has worked initially, analysts feel that unless there is significant differentiation, it will become harder to retain customer mind share as LG, Samsung and HTC are all on Android bandwagon already.